My friend and colleague John Petersen has it in for the electric car. Recently he wrote a summary of his anti-electric car views, entitled "It's Time to Kill the Electric Car, Drive a Stake Through its Heart and Burn the Corpse." Did I mention he also has a flair for the dramatic?
Many electric vehicle (EV) advocates, or "EVangelists," as he calls them, have tried to refute his arguments. One of the more coherent attempts was "Tesla and the Future of the Electric Car," which I recently reprinted as a guest article on AltEnergyStocks.
Innovation
I personally find both arguments incomplete. Petersen has a strong libertarian streak, and the thought of wasteful subsidies drives him to distraction. EV subsidies top his list of pet peeves, although he's curiously a fan of government meddling in the transportation market when it comes to CAFE standards. The EVangelists often correctly point out that Petersen is overly pessimistic about innovation, but they focus too much on the potential of innovation to reduce the price and increase the durability of vehicle battery packs. Yet even the true battery experts are skeptical of the rapid advances in batteries EVangelists predict. I find both sides to be too focused on "winning" the argument when what we all should be doing is trying to overcome the very real economic barriers to EV adoption.
Like the EVangelists, I believe in the power of innovation. But it is the nature of innovation to appear where it is least expected. Battery technology will advance, but the innovations which reduce our dependence on fossil fuels for transportation need not be innovations in battery technology. Innovations to our mobility system have the potential to reduce the use of oil far more quickly than than improvements in batteries, even while battery innovation will continues. Such innovations are likely to include potential better battery chemistries and manufacturing, as well as improvements in the rest of the battery, such as better separators, or other changes most of us have not yet thought of.
Systems Thinking
Those battery innovations we can foresee will only bring marginal improvements to battery performance. As energy efficiency professionals know, giant qualitative improvements come not from replacing a building's components with more efficient ones, but by redesigning the whole system with energy use in mind. The same is likely to be true in our transportation system: just replacing internal combustion engines (ICE) with electric motors leaves all the potential gains from system improvement on the table.
To get some idea what sorts of system changes may be effective, it helps to understand the costs of our current car paradigm, and why simply replacing the ICE with electric drive alone is unlikely to lead to the widespread adoption of EVs.
Most of the objections to electric cars, and certainly Petersen's, focus on the up-front cost of the car, and the difficulty of paying this back based on the lower operating costs of an electric car. The key to understanding EV economics (or "EVconomics") is that compared to the cost of the fuel a gas tank holds over its lifetime, it is practically free, while the cost of a rechargeable battery is comparable or even greater than to the cost of all the electricity/fuel it will hold over its useful life. While ICEconomics is all about the cost of fuel, EVconomics is about getting the most out of the expensive battery, while the cost of the electricity to charge it is relatively unimportant.
EVconomics
A car battery which is only recharged at night will be fully cycled no more than once daily, and probably much less if the car is not driven to its full range every day and may stay in the garage some days. Because of this, it seems unreasonable to expect an electric car battery to go through more than 300 full charge cycles a year, while 200 full cycles per year is probably closer to the real world average for cars charged only at night. Since EVs get between 2 and 6 miles per kWh, while gasoline vehicles (not counting hybrids) get between 15 and 40 mpg, I will use as an approximation that 1 gallon of gas can be displaced by about 8 kWh. That means that each kWh of a battery pack will displace approximately 25 gallons of gas with 200 kWh, and at most 38 gallons of gas with 300 kWh in a year's use. The following chart shows the number of annual savings expected for each kWh of an electric car's battery for different driving/battery recharging intensities.
If electric cars are to become truly mass market, they will need to accommodate drivers who normally only use half of their potential range a day, and don't drive some days (for about 100 full charge cycles per year, represented by the yellow line) as well as the most intensive users with 300 or more full charge cycles per year. The yellow line only reaches breakeven over five years with the most optimistic (many would say unrealistic) battery improvement scenario, and then only with gasoline prices doubling to $9 a gallon, meaning that EVs will not make sense for casual drivers any time in the foreseeable future.
EVconomics of the Urban Commuter
Yet even EVangelists do not consider causal drivers to be ideal electric car users. They tend to focus on the urban commuters. Such urban commuters have regular commutes that allow them to use most of their battery range on a near daily basis (300 full charge cycles per year, represented by the middle green line on the chart.) For this group, a five year payback can be achieved if we assume battery prices falling to a more believable $750 per kWh and gas prices rising to a not-incredible $4.80 per gallon.
Yet such intensive usage might reasonably be expected to shorten battery life, meaning that a shorter three year payback might be needed to make the electric car economic. (Note that a battery's life depends not only on the number of times it is cycled, but the depth of those cycles, and how long it is kept at full charge. Keeping a Lithuim-ion battery at full charge or fully depleted can be particularly damaging.) A three year break-even would require either a battery cost breakthrough and gas at $5.20, or significant battery improvement and gas at $7.50 per gallon, which seems possible, but is not likely in the next few years.
In other words, without daytime recharging, significant increases in the gas price and significant reductions in battery prices are required to make electric cars economic for even the most intensive drivers. Only with daytime recharging and average usage of more than a full charge cycle per day (500 full charges per year) do EVs begin to make economic sense with current ($4) gas prices and ($1000/kWh) battery prices. Current prices lead to a five year breakeven at 500 full charge cycles per year, although some increase in the gas price or reduction in battery prices will probably be needed to accommodate the reduction in battery lifetime that would come from such intensive usage.
Societal Benefits and Costs
At this point, it would be easy to conclude that Petersen is right, and EVangelists are high on "hope-ium," since massive improvements in battery economics or massive increases in the price of gas would be required to make EVs economical beyond the small niche comprised of vehicles that can be recharged frequently.
That conclusion would be premature, as it only considers the economic benefit of fuel savings as a possible motivation to buy an EV. If we were only motivated by economics, no one would ever buy a sports car, let alone a Hummer. (Admittedly, no one is buying Hummers anymore, but there was a time in the early 2000s when they were wildly popular.) Most people buy vehicles because of what the vehicle says about them, not for the economics.
In addition to non-fuel economic benefits such as the possibility of using EVs for grid services such as frequency regulation, and the much lower maintenance costs of EVs (bye-bye oil changes and brake pad changes, not to mention trips to the gas station.) Even if EVs are not lower cost than ICEs, they do a good job lowering the volatility of fuel costs, which can be a significant help in budgeting, as monthly expenses will not swing wildly with the price of gas.
In terms of societal benefits of electric vehicles over conventional vehicles, there are:
1. Advantage that electricity is produced from domestic sources, leading to increased economic growth
2. The reduction of conventional pollutants in our cities leading to better health
3. Less noise pollution
4. The ability to use our existing electricity infrastructure more intensively and so get more value out of it
5. The potential to reduce the cost of renewable electricity integration
On the other hand, EVs come with some cost as well. Lowering the unit cost of driving will encourage more of it, and while more driving brings marginal benefits to the driver, it also comes with costs to society. Societal costs of driving include
1. Traffic congestion
2. Pollution (even if a vehicle is charged with renewable electricity, that electricity could have been used to reduce the use of fossil electricity if it had not been used for driving)
3. Traffic accidents leading both to property damage and injuries/fatalities
4. Increased road maintenance and construction costs
5. The potential increases in the cost of electricity infrastructure (these may be minimal with smart charging, but could be substantial without it)
Why Not Natural Gas?
I'm not swayed by arguments that it makes sense to subsidize natural gas vehicles in preference to EVs because they currently are a more economic solution. Natural gas vehicles are a band-aid "solution" to the problem of peak oil, as they depend on a limited fossil resource. Natural gas vehicles only delay the day we will have to transition to renewable transportation fuels, and so the necessary infrastructure for refilling natural gas vehicles will only delay the day that we shift to a truly sustainable transportation infrastructure.
It makes sense for society to subsidize a technology to the extent that society benefits from that technology. Natural gas vehicles lack some of the societal benefits of EVs (the potential to lower the cost of renewable electricity integration, reduced noise,) and have more societal costs, namely an increase in the price of natural gas which will be a consequence of increasing demand. As such, the case for societal subsidies for natural gas vehicles is much weaker than the case for subsidies for EVs.
The Right Sort of EV Subsidy
To the extent that the societal benefits of electric vehicles outweigh the societal costs, it makes sense to subsidize their adoption. Nevertheless, there are much better ways to do this than to subsidize the purchase of vehicles. Such subsidies will maximize societal benefit from EVs, not the benefits to individual EV owners.
Any intervention to favor EVs should focus on maximizing societal benefit, not benefits to individual users. From my discussion and chart above, it is clear that there are at least three possible paths to broad EV affordability:
1. Increased gasoline prices would make EVs more practical by increasing the incremental savings of using electric drive.
2. Breakthroughs in battery manufacturing and technology would increase EV affordability by reducing the cost of batteries.
3. Increased deployment of charging infrastructure would allow EV owners to recharge more often and receive more benefit from each kWh of battery pack. This would in turn make EVs with smaller battery packs more practical, and bring down the overall cost of EVs.
4. Funding EVs for public use.
We'll need to make significant progress on multiple fronts before EVs are truly competitive with fossil fueled vehicles. Note that direct subsidies for the purchase of plug-in vehicles are not in my list. That is because the benefits of such subsidies flow directly to the EV buyer, but do much less for society as a whole.
http://www.renewableenergyworld.com/rea/news/article/2011/09/its-time-to-kill-the-car-culture-drive-a-stake-through-its-heart-and-electrify-mobility?page=2
Many electric vehicle (EV) advocates, or "EVangelists," as he calls them, have tried to refute his arguments. One of the more coherent attempts was "Tesla and the Future of the Electric Car," which I recently reprinted as a guest article on AltEnergyStocks.
Innovation
I personally find both arguments incomplete. Petersen has a strong libertarian streak, and the thought of wasteful subsidies drives him to distraction. EV subsidies top his list of pet peeves, although he's curiously a fan of government meddling in the transportation market when it comes to CAFE standards. The EVangelists often correctly point out that Petersen is overly pessimistic about innovation, but they focus too much on the potential of innovation to reduce the price and increase the durability of vehicle battery packs. Yet even the true battery experts are skeptical of the rapid advances in batteries EVangelists predict. I find both sides to be too focused on "winning" the argument when what we all should be doing is trying to overcome the very real economic barriers to EV adoption.
Like the EVangelists, I believe in the power of innovation. But it is the nature of innovation to appear where it is least expected. Battery technology will advance, but the innovations which reduce our dependence on fossil fuels for transportation need not be innovations in battery technology. Innovations to our mobility system have the potential to reduce the use of oil far more quickly than than improvements in batteries, even while battery innovation will continues. Such innovations are likely to include potential better battery chemistries and manufacturing, as well as improvements in the rest of the battery, such as better separators, or other changes most of us have not yet thought of.
Systems Thinking
Those battery innovations we can foresee will only bring marginal improvements to battery performance. As energy efficiency professionals know, giant qualitative improvements come not from replacing a building's components with more efficient ones, but by redesigning the whole system with energy use in mind. The same is likely to be true in our transportation system: just replacing internal combustion engines (ICE) with electric motors leaves all the potential gains from system improvement on the table.
To get some idea what sorts of system changes may be effective, it helps to understand the costs of our current car paradigm, and why simply replacing the ICE with electric drive alone is unlikely to lead to the widespread adoption of EVs.
Most of the objections to electric cars, and certainly Petersen's, focus on the up-front cost of the car, and the difficulty of paying this back based on the lower operating costs of an electric car. The key to understanding EV economics (or "EVconomics") is that compared to the cost of the fuel a gas tank holds over its lifetime, it is practically free, while the cost of a rechargeable battery is comparable or even greater than to the cost of all the electricity/fuel it will hold over its useful life. While ICEconomics is all about the cost of fuel, EVconomics is about getting the most out of the expensive battery, while the cost of the electricity to charge it is relatively unimportant.
EVconomics
A car battery which is only recharged at night will be fully cycled no more than once daily, and probably much less if the car is not driven to its full range every day and may stay in the garage some days. Because of this, it seems unreasonable to expect an electric car battery to go through more than 300 full charge cycles a year, while 200 full cycles per year is probably closer to the real world average for cars charged only at night. Since EVs get between 2 and 6 miles per kWh, while gasoline vehicles (not counting hybrids) get between 15 and 40 mpg, I will use as an approximation that 1 gallon of gas can be displaced by about 8 kWh. That means that each kWh of a battery pack will displace approximately 25 gallons of gas with 200 kWh, and at most 38 gallons of gas with 300 kWh in a year's use. The following chart shows the number of annual savings expected for each kWh of an electric car's battery for different driving/battery recharging intensities.
If electric cars are to become truly mass market, they will need to accommodate drivers who normally only use half of their potential range a day, and don't drive some days (for about 100 full charge cycles per year, represented by the yellow line) as well as the most intensive users with 300 or more full charge cycles per year. The yellow line only reaches breakeven over five years with the most optimistic (many would say unrealistic) battery improvement scenario, and then only with gasoline prices doubling to $9 a gallon, meaning that EVs will not make sense for casual drivers any time in the foreseeable future.
EVconomics of the Urban Commuter
Yet even EVangelists do not consider causal drivers to be ideal electric car users. They tend to focus on the urban commuters. Such urban commuters have regular commutes that allow them to use most of their battery range on a near daily basis (300 full charge cycles per year, represented by the middle green line on the chart.) For this group, a five year payback can be achieved if we assume battery prices falling to a more believable $750 per kWh and gas prices rising to a not-incredible $4.80 per gallon.
Yet such intensive usage might reasonably be expected to shorten battery life, meaning that a shorter three year payback might be needed to make the electric car economic. (Note that a battery's life depends not only on the number of times it is cycled, but the depth of those cycles, and how long it is kept at full charge. Keeping a Lithuim-ion battery at full charge or fully depleted can be particularly damaging.) A three year break-even would require either a battery cost breakthrough and gas at $5.20, or significant battery improvement and gas at $7.50 per gallon, which seems possible, but is not likely in the next few years.
In other words, without daytime recharging, significant increases in the gas price and significant reductions in battery prices are required to make electric cars economic for even the most intensive drivers. Only with daytime recharging and average usage of more than a full charge cycle per day (500 full charges per year) do EVs begin to make economic sense with current ($4) gas prices and ($1000/kWh) battery prices. Current prices lead to a five year breakeven at 500 full charge cycles per year, although some increase in the gas price or reduction in battery prices will probably be needed to accommodate the reduction in battery lifetime that would come from such intensive usage.
Societal Benefits and Costs
At this point, it would be easy to conclude that Petersen is right, and EVangelists are high on "hope-ium," since massive improvements in battery economics or massive increases in the price of gas would be required to make EVs economical beyond the small niche comprised of vehicles that can be recharged frequently.
That conclusion would be premature, as it only considers the economic benefit of fuel savings as a possible motivation to buy an EV. If we were only motivated by economics, no one would ever buy a sports car, let alone a Hummer. (Admittedly, no one is buying Hummers anymore, but there was a time in the early 2000s when they were wildly popular.) Most people buy vehicles because of what the vehicle says about them, not for the economics.
In addition to non-fuel economic benefits such as the possibility of using EVs for grid services such as frequency regulation, and the much lower maintenance costs of EVs (bye-bye oil changes and brake pad changes, not to mention trips to the gas station.) Even if EVs are not lower cost than ICEs, they do a good job lowering the volatility of fuel costs, which can be a significant help in budgeting, as monthly expenses will not swing wildly with the price of gas.
In terms of societal benefits of electric vehicles over conventional vehicles, there are:
1. Advantage that electricity is produced from domestic sources, leading to increased economic growth
2. The reduction of conventional pollutants in our cities leading to better health
3. Less noise pollution
4. The ability to use our existing electricity infrastructure more intensively and so get more value out of it
5. The potential to reduce the cost of renewable electricity integration
On the other hand, EVs come with some cost as well. Lowering the unit cost of driving will encourage more of it, and while more driving brings marginal benefits to the driver, it also comes with costs to society. Societal costs of driving include
1. Traffic congestion
2. Pollution (even if a vehicle is charged with renewable electricity, that electricity could have been used to reduce the use of fossil electricity if it had not been used for driving)
3. Traffic accidents leading both to property damage and injuries/fatalities
4. Increased road maintenance and construction costs
5. The potential increases in the cost of electricity infrastructure (these may be minimal with smart charging, but could be substantial without it)
Why Not Natural Gas?
I'm not swayed by arguments that it makes sense to subsidize natural gas vehicles in preference to EVs because they currently are a more economic solution. Natural gas vehicles are a band-aid "solution" to the problem of peak oil, as they depend on a limited fossil resource. Natural gas vehicles only delay the day we will have to transition to renewable transportation fuels, and so the necessary infrastructure for refilling natural gas vehicles will only delay the day that we shift to a truly sustainable transportation infrastructure.
It makes sense for society to subsidize a technology to the extent that society benefits from that technology. Natural gas vehicles lack some of the societal benefits of EVs (the potential to lower the cost of renewable electricity integration, reduced noise,) and have more societal costs, namely an increase in the price of natural gas which will be a consequence of increasing demand. As such, the case for societal subsidies for natural gas vehicles is much weaker than the case for subsidies for EVs.
The Right Sort of EV Subsidy
To the extent that the societal benefits of electric vehicles outweigh the societal costs, it makes sense to subsidize their adoption. Nevertheless, there are much better ways to do this than to subsidize the purchase of vehicles. Such subsidies will maximize societal benefit from EVs, not the benefits to individual EV owners.
Any intervention to favor EVs should focus on maximizing societal benefit, not benefits to individual users. From my discussion and chart above, it is clear that there are at least three possible paths to broad EV affordability:
1. Increased gasoline prices would make EVs more practical by increasing the incremental savings of using electric drive.
2. Breakthroughs in battery manufacturing and technology would increase EV affordability by reducing the cost of batteries.
3. Increased deployment of charging infrastructure would allow EV owners to recharge more often and receive more benefit from each kWh of battery pack. This would in turn make EVs with smaller battery packs more practical, and bring down the overall cost of EVs.
4. Funding EVs for public use.
We'll need to make significant progress on multiple fronts before EVs are truly competitive with fossil fueled vehicles. Note that direct subsidies for the purchase of plug-in vehicles are not in my list. That is because the benefits of such subsidies flow directly to the EV buyer, but do much less for society as a whole.
http://www.renewableenergyworld.com/rea/news/article/2011/09/its-time-to-kill-the-car-culture-drive-a-stake-through-its-heart-and-electrify-mobility?page=2
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