'Lectric Lip Service
By Bill Weaver
What a difference a few months make. Now that gasoline is $1.49 gallon and oil hovering around $40 a barrel, what's happened to interest in electric vehicles (EVs)?
From my perspective, it would appear to be waning now that the American consumers -- not known for their long attention span even on a good day -- now seem preoccupied with an economy in a tailspin and stopping the bleeding on their own personal financial situation. The issues that were important six months ago under the Bush administration -- the war in Iraq, nuclear enrichment in Iran, genocide, terrorism, and the environment -- all may as well have occurred under the U.S. Presidency of Millard Fillmore (1850-1853). They're distant memories.
But what will happen when the economy finds its floor, and demand for oil picks back up? The forces that cut the price of gasoline in half in a few short months, i.e., the extremely inelasticity of demand, will work in reverse. And those forces will be greatly bolstered by the burgeoning populations in developing countries that will present a dramatic increase in the world demand for automotive transportation -- in an environment of peak oil and largely depleted oil fields. The price will skyrocket to unprecedented levels, and so will the level of desperation of the world's governments -- and the acts of hostility they will wage on one another. If that doesn't suggest enough suffering, let's not forget about the increasingly terrible effects that global climate change will wreak upon our world each year.
So when will EVs provide some relief? Let's hope the start-ups don't lose their motivation and financial backing, because here's the sad news: don't look to the traditional OEMs. The American car companies, as everyone knows, are circling the drain, ruined by several decades of a spectacular blend of arrogance, greed, and stupidity -- resulting in the wanton neglect of their customers' true automotive needs. Even the reasonably healthy Japanese manufacturers are in a desperate struggle to hoard cash, slash R&D investment (as well as production), and are certainly in no hurry to develop or usher in a new automotive paradigm.
I was amused by what I heard at the L.A. Auto Show this year. I spoke with as many people whose companies have promised pure EVs as I could possibly find. I asked them about their plans for product launch, and to be frank with me as to any impediments they see to those launches. And what a list of impediments there was! One, a key executive in one of the world's largest conglomerates told me, “Oh, just now we're taking our first, critically important step to our product introduction. Soon we'll be delivering a few EVs to the local power companies so they can test them.”
Test what, exactly? I thought, not wishing to appear rude by voicing such an obvious question. Do power companies really they need to conduct tests to confirm that electric cars will draw energy -- say 20 or 30 kWhs or so daily -- usually at night? Then, if the cars and trucks happen to be V2G capable, can't they predict that some of them will be plugged in during the day and add some value in terms of grid stability? I tried not to show it, but I was deeply suspicious. Was this really a “critically important first step,” or was it simply what he had been told to tell people like me, while his company essentially stalls for time?
Another OEM representative -- perhaps a bit more candid, said, “It doesn't matter what we have ready; we're not launching anything right now. In fact, we're canceling launches of cars regardless of what's inside them, since people aren't buying cars.”
Now that made sense to me. Let's be honest: regardless of the state of the economy, the last thing the OEMs want is the transition to electrics -- now or ever. EVs represent identically zero upside to the OEM business model, since they represent a future in which:
Far few units will be sold in the lifetime of the almost every consumer; very few customers will routinely buy a new car every two or three years.
OEMs face huge new capital costs in retooling, and will need to develop new supply chains for batteries, controllers, motors, etc., while eliminating or completely overhauling dozens of systems, e.g., fuel delivery, exhaust, cooling, braking, etc.
New risks and liabilities present themselves, associated with battery failure and personal injury.
OEMs and their dealers will realize greatly decreased revenues from parts and maintenance over the life of each vehicle sold.
And again, many of the OEMs are in the process of bleeding cash and going out of business -- even if all this weren't happening. They will introduce EVs when -- and only when -- they absolutely have to. And now, with the economy in its current condition, they have the excuse for which they've anxiously been waiting.
Right now -- it's true -- most people aren't buying cars -- regardless of what's under the hood (2008 sales are down 40% over 2007), and they're absolutely not willing to spend any significant premium for an EV over an ICE. Most of the remaining few people who would have spent a bit extra in order to do the right thing as a citizen of the world are cash-strapped, and fairly unconcerned about the possible increase in the total cost of ownership that will be driven by higher gas prices in an uncertain future.
I think we should expect a trickle of EVs from the OEMs as they perceive it to be necessary to keep their promises, and attempt to convince gullible consumers that the car manufacturers are true stewards of the environment. Even if you are one of the few who imputes any moral goodness to the OEMs (I'm not) and has turned a blind eye to what happened to the Los Angeles trolley system in the 1930s and the CARB ZEV mandates in the 1990s, market forces have conspired to create a world in which you'll be very unlikely to see any real incursion on the OEMs' internal combustion engine businesses by the introduction of EVs any time in the foreseeable future.
The monthly lease on the new BMW MINI E is $850. Yes, that's almost three times the ICE version. If I were a cynic, I say they're not trying very hard to usher in the new world of EVs.
Carlos Ghosn, CEO of Nissan and Renault, delivered the keynote address at the Auto Show, and he did an absolutely superb job. It's hard to name anyone in the industry with a level of credibility superior to his, and he most was certainly on his game in the 40-minute talk he gave to an overflow crowd of enthusiastic supporters. And by my watch, he devoted two-thirds of his time to the world's inexorable migration EVs and the huge societal benefits that appertain to it. He promised a pure electric car on the market in 2010, with production volume sufficient for mass consumption by 2012. Yet I still can't imagine this all unfolding at a pace even vaguely resembling what he promised. I'm watching for the next twist in the plot -- the deus ex machina that explains to us all in late 2012 why Nissan couldn't possibly have been expected come through, and causes us to forget all about the 2008 LA Auto Show.
I don't wish to appear paranoid, but I'm completely convinced we're being lied to on a great number of subjects by the world's most powerful people -- and most certainly about energy. I believe that the world truly is running out of oil, and that the oil companies and the oil producing nations are busily -- and successfully -- concealing this. I believe that powerful interests are working hard to convince us of utter nonsense. All around us we hear that nuclear energy is safe, and that disposal of nuclear waste is not a serious issue. We read that clean and safe renewable energy is not ready for prime time and that it will require several decades before it can be developed to the point that it will supply more than a few percent of our energy needs.
I believe that the scarcity of energy and the dangers that are posed from producing it by burning fossil fuels represent the largest single danger to mankind over the coming 50 years.
And strangely, we as a civilization have the potential to solve these problems quickly and easily. A solar thermal farm in the shape of a square measuring 105 miles on a side in the desert in the southwestern US would provide enough electrical power for the entire continent of North America. Solar thermal uses common and extremely inexpensive materials -- almost exclusively concrete, aluminum, and glass. If you know of something else that's standing in the way of a mass migration to renewable energy (other than the lobbyists and the politicians that work for the coal, oil, nuclear and auto industries) please comment on this article and enlightenment me.
Of course, we're all hoping that an Obama administration will live up to everyone's dreams. We'd like to think that our new president is a man of integrity who will tell these special interests to take a hike, and lead the way with tariffs on oil, mandates, incentives, and the other tools so vital to changing what is otherwise our tragic fate. Otherwise, I'm afraid we'll go right on destroying our oceans and skies -- far past the point of no return.
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