By Josh Landess
On September 4, I attended the Clean Mobility Symposium at the University of California, Riverside. I had the chance to meet with Stephen Ellis who is American Honda Manager of Alternative Fuel Vehicle Sales and Marketing.
A lot of us who are fans of alternative fuel vehicles, particularly pure Battery Electric Vehicles, have been disappointed over the last couple of years as we have realized that it's very unlikely we'll soon see our ideal vehicles readily and affordably available. Some of our articles and thoughts have gotten pretty critical of the Auto Manufacturers. I discussed with Mr. Ellis not only the two very low-emission hydrocarbon-burners that were there for test-drive, but also Honda's Electric Vehicle experience with the discontinued EV Plus.
This was a chance to fulfill some of the goals of the CARB ZEV mandate... to learn, to glean some lessons from one manufacturer's early efforts. If I didn't like hearing some of the hard lessons in EV Economics and Marketing that Honda had apparently learned, if they didn't go completely with some of what I've been thinking and wanted to believe, that didn't matter because I was glad to have the opportunity to hear some straight answers and pass them on to readers for their criticisms and discussions.
As to the two test drives, what's not to like? It was great to drive two new higher-mileage super-low-emission high-tech Hondas.
EVW: I wondered if you could go over lessons that were learned with the Honda EV Plus.
SE: Honda went all out with the EV Plus. They built a ground-up electric vehicle, not a conversion, not based on an existing platform, so it was designed to kind of take advantage of the best capabilities of electric vehicles. From the marketing question side of things, what is the market for EVs?
Simply put, it took two and a half years to place 300 electric vehicles onto the market.
Now people ask questions:
Well, what did you do to market the vehicle? How did you sell the vehicles?
We introduced it in a market where they had the best possible conditions for success: Southern California. We then moved it to San Diego and the Bay Area, within a few months. One, partly because of demand of those markets and two, because we wanted to expand beyond just L.A.
Despite that, we could count on on maybe two hands how much response we got from a half page ad in the L.A. Times. We would stay in close touch with the dealers and find out: Okay, we ran this ad on Saturday or Sunday’s newspaper, be it the San Diego Union Tribune or San Francisco Chronicle. Regardless we would run that ad and we could see what the response was.
From a cost effective standpoint it was fairly poor, but I bring that up only to make sure that I say that, again, we marketed the cars specifically to retail consumers. We did a lot of different things and there’s almost not enough time to go through all the different things we did to market the car.
Given that, this [300 in 2 ½ years] is the sustainable rate of sales. So you made a point earlier: Well, what if they were marketed nationwide? And my response was: Okay, so what if we did? Maybe the market would be a thousand cars. I think today that would be challenging but still to consumers, if it was a thousand, it still begs the question; to what end?
Because - now that we have the experience of these early buyers or consumers that lease the vehicle, we saw a battery deterioration that was significant. The range was significantly hindered and it leads to a path of battery replacement. And so with that time period, whether it’s four years or whether it is six years, it’s an extremely expensive proposition regardless of the time. So it’s like you have to just build that in to the cost of the vehicle.
The public votes with their actions. They vote with their wallet. The public tends to vote by saying don’t inconvenience me. Don’t make me do things differently just so that I can get through my commute or get through my day. If you add value to a vehicle, I think that’s the key point. Like the hybrids and even for example the Natural Gas Civic, there are certain values that that brings.
One value that electric vehicles did bring to the operator was charging at home, right? Their ability to fuel from home. And that’s a positive thing. And I think we can all point to that as a prospect for the future that could pan out very well. But it’s those same types of values that customers appreciate.
[The Civic Natural Gas vehicle can refuel at home, it was pointed out.] So the Civic Hybrid brings values of fuel economy and SULEV emission levels. It brings values of smoothness and quietness as a result of the IMA system and the continuously variable transmission, but those were not necessarily exclusive to a hybrid vehicle or that vehicle.
EVW: You made a point to me before that I thought was something we EV advocates should really think about. You said that when you looked at the economics that you were looking at back then, at the cost per vehicle of the EV Plus and the question of whether you decide to multiply that out over many dozens of thousands of vehicles, the risk goes up so much that it could become a business-threatening debacle. Not just a few millions might be lost, but a serious risk could occur to the company and shareholders' investment. I thought this was a good point, although I think the cost-per-vehicle calculation would have to come down somewhat with economies of scale.
SE: At three hundred cars and the significant cost per vehicle, we called it the tuition or the dues we pay to learn about the vehicles and the technology and of course we’re glad to say that we’ve applied that to the hybrid vehicles. And even the Civic Hybrid is a second generation of that IMA system. So we’ve already achieved the economy of scale with increased volume. We’ve downsized some of the components, made them more compact, and reduced cost. So we’ve benefited from that, there’s no question, but they’re still at a loss. A loss that’s where a model would say: we can achieve break-even and we can achieve profit.
With the pure Battery Electric Vehicle, there is no model that says you can achieve break-even or profit. Again it comes back to the Battery Cost. You said, "I think there’s a larger market for Battery Electric Vehicles". Okay. That’s fair. We could move to higher volumes, but to what end? So if we truly achieve ten thousand unit sales, how many millions of dollars more would we be losing? And then is that a model that you know, the investment community and the shareholders of Honda stock, including many people's 401k's are going to accept?
EVW: I think you estimated in a very general way that the EV Plus program cost a quarter million to half a million per vehicle. You also used the figure of estimating something like forty thousand dollars for a battery pack and I think one question I’d like to ask is: Would that be at all changed now in the battery pack price given that we’re a little further down the road and more research has occurred? Some of the batteries are being made in some form for hybrids so more of them are being produced. Is it unrealistic to expect some lowering of that price as we go forward?
SE: There’s merit to comparison with hybrid in one respect but not in a very significant one and that is "how much?". And let’s just use weight. How much battery do we need in weight per vehicle? The EV Plus battery was about a thousand pound battery. So simply put, it took about a thousand pounds worth of batteries to propel the vehicle for that 100-mile range. The hybrid battery pack is 50 pounds. The other big difference is that the hybrid vehicle battery’s configuration is essentially D cells so you don’t have a proprietary battery approach, you see?
So it’s easier to do with that D cell approach with hybrids than more of a proprietary battery pack of the EV Plus, but you really then are challenged still whereas if you tried to apply the D cell approach to the thousand pound battery pack. So it almost forces the need for a proprietary battery pack.
EVW: Even then, the battery question seems to be the question that stops a lot of talk of EVs. The cost of the vehicle itself could be lowered, but the battery....
SE: So let’s be fair. I threw out a number of forty thousand dollars per battery pack. So let’s say it was cut in half. Let’s say with higher productions it was cut in half. We’re still at twenty thousand dollars. That’s the same price the entire Civic Hybrid sells for today. That’s the cost of the Natural Gas Civic. Both of those vehicles, if they’re at SULEV (and hence the purpose for being here today) are at this near zero level, which is truly now splitting hairs and you’re in the noise of what is the benefit of an EV.
So when we talk about equivalent to a battery powered EV that assumes emissions in the L.A. Basin, if you’re charging an EV from less clean power sources, it’s fair to say, and the environmental community and scientific community agree, that these lower level vehicles could be cleaner than an electric vehicle.
Coming back to the battery point, let’s take it even further: what if it was ten thousand dollars? If it was you still face that five-year battery life-span, or again, let’s be fair, let’s push it out there. Let’s say it’s ten years. If you could get there at ten thousand dollars, ten years battery life-span, it’s building in a thousand dollar per year added cost. Would the market accept that in the volumes that [would justify mass production]?
EVW: Seems like a good question.....
SE: The key point is that the promise of breakthroughs in technology really never came to be. Nor the promise of reduced cost although, again, that was (inaudible). The point here is that this is a technology that’s fairly well understood.
EV Performance In Different Climates:
EVW: You placed some of the EV Plus vehicles in other climates?
SE: Yes. We faced challenges at both ends of the spectrum. On the cold weather side of it we faced reduced vehicle range, and those vehicles came equipped with the auxiliary fuel fired heater, which worked well, but again, certainly there was the challenge of reduced range.
On the other side of that was heat, moreso in Sacramento than I think any other market. They had extremely high temperatures and we faced battery failures even, and battery challenges from there. So I think it’s probably fair to say, if you move these vehicles to a market like Phoenix, Las Vegas, even Palm Springs, where there are these extremely high temperatures, you’re still faced with these challenges.
EVW: What about overall battery life?
SE: We have customers that saw the degradation of the battery around three years and it was still reasonable for them to deal with, based on their commute patterns and stuff. Yet we also had customers that the degradation kind of forced the replacement of the battery. So we have both examples of that and it depends on that customer’s commute and use of the vehicle. But, it again shows that you have these variations that you have to plan for. In this particular situation the prospect of having a five-year battery life fell short for some people, where for other people that was okay.
Then we also just ended up having generally the range so severely diminished that we just had to swap out batteries. So we are in that mode where we still have EVs out on the market that are experiencing the battery degradation and reduced range and some requiring battery replacement.
EVW: You had a fair number of cases where the batteries have lasted longer in good health than other cases where they’ve degraded? Has it been inconsistent?
SE: That’s a good question. We told the people, "drive your car", you know? We’re not asking people to do special things just to try to determine or to kind of predispose the life of the battery or stuff like that. Then it’s not real road testing, right? So we’re trying to get real road testing. So we tell people go drive your cars. Just do it as you normally would. At the end of the day, plug it in, charge it, or skip a day if that’s what you are predisposed to do, but we’re interested in determining how you do it as we go through the program.
So there are variations in battery life that we saw based on how deep people were cycling them, how far they were driving in the commute each day and their charging habits and charging patterns. We actually had people that had charging at their place of employment so they were topping all the time.
We have other people that, I cited myself as an example, with a forty-mile each-way commute, I pushed the limits of the capability of our own EV. It’s possible in the first two years, but as the battery would degrade I would have to have the battery replaced or give up the vehicle. And so that would be cycling it very significantly. So yes, we saw differences.
EVW: Some people’s batteries seemed to do okay for a longer time?
SE: Some were better than others, absolutely.
EVW: And was there a correlation between those differences in habits and the differences in results?
SE: That’s a fair statement.
EVW: What types of recharging habits led to degradation?
SE: If you were topping it off more. You’re not cycling... What we’re seeing is no different than people see with a nickel metal hydride flashlight battery or for their own camera or something like that. They can influence its life, you see?
Continued Next Week....
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