Solving the chicken or egg dilemma for electric vehicles. Image credit:Photobucket,Goodstuff1852
Electric cars have the potential to improve our energy system, resuscitate the automobile industry, and dramatically reduce America's oil use.
At least, that's the goal.
President Obama has called for one million plug-in vehicles on the road by 2015. One million! Sounds huge, right? Well, not exactly. That's less than one-half of one percent of the entire U.S. fleet--a pretty modest market share.
Still, there is plenty of ground to cover in the meantime. Replacing gasoline-powered vehicles with PEVs will require a rapid, market-wide diffusion of this technology.
The question is, how do we get there from here?
Rocky Mountain Institute is finding opportunities to accelerate the adoption of electric vehicles. Project Get Ready, an RMI initiative, brings together city leaders and technical advisors across the country to prepare for the arrival of electric vehicles. By creating a better understanding of the needs of key decision makers, PGR hopes to facilitate a seamless transition to electrification.
A Chicken and Egg Dilemma
Like any other vehicle of the past, the future of the electric vehicle is tied to the relationship between the automaker and consumer. Given the current state of the economy, automakers are understandably conservative. A dramatic rise in the production of vehicles, let alone PEVs, isn't likely right now.
To be sure, there is excitement about this technology on all sides. However, before automakers ramp up production, they'll need greater confidence in consumer demand.
"It's the classic chicken and egg quandary," says Matt Mattila, who leads RMI's Project Get Ready. "A billion dollars is a lot to bet on new technology with unproven consumer demand."
Will EVs Cost Too Much?
First and foremost, cost-related fears must be assuaged. Some concerns are justified-most first generation PEVs will come with a significant premium over their internal-combustion counterparts. The Chevy Volt, for instance, is expected to cost around $40,000. As with many innovations, it's reasonable to expect falling prices as the technology becomes more common. But in the interim, consumers need clear and factual information on the true costs and benefits of this technology.
Rather than resting on assumptions, RMI recently released the Total Cost of Ownership Calculator, which compares total lifetime costs of PEVs, hybrids and traditional gasoline powered vehicles.
For example, compare the $27,000 price tag of an electric Nissan Leaf to the Honda Accord's, $21,860. Although the Leaf has a higher up-front cost, its total lifetime cost (mileage, gas prices and the like) comes out lower than the Accord's ($25,186 versus $31,860) if the owner drives it 15,000 miles or less per year with today's prices at the pump.
Opponents to PEVs have raised concerns over travel distance capable with an electric battery. The typical PEV will in fact have a range of 40 miles per charge; though the Volt will actually get 100 miles.
The vast majority of charging needs will be met while plugged in at home or at the office, but public options are still needed. With charging stations at accessible locations--grocery stores, retail outlets, etc--drivers need not worry about battery depletion.
Placing charging stations in convenient and highly visible locations could temper range anxiety and create the sense of permanence for vehicle electrification. They could also create opportunity for business.
Take McDonald's, for instance. They recently installed a station in Cary, North Carolina, despite an absence of commercially available PEVs. What's the benefit?
RMI's new report, "Plugging in: A Stakeholder Investment Guide for Public Electric-Vehicle Charging Infrastructure," helps answer that question. Targeted at potential investors, this guide provides an impartial look at the business case for installing charging stations. Also included is a tool for predicting upfront costs (purchase price, installation and maintenance) and revenue from selling the electricity to drivers.
If businesses can profit or build brand awareness with charging stations, then PEVs will be one step closer to widespread adoption. It won't make sense for everyone, but it may create opportunities for technology to improve and the market to grow.
There is no single pathway to widespread vehicle electrification. The stakeholders involved are unique and their needs vary considerably. However, with an effort from all sides and an understanding of each, the electric car will claim a legitimate and substantial place in the automobile industry.
--Ben Holland, Rocky Mountain Institute
Ben Holland is Outreach Coordinator for Rocky Mountain Institute. He works to build greater awareness of the organization through public, corporate and media relations.