The Difference Between Wishing and Doing

The Obama Administration has a strong commitment to promoting electric vehicles and has made billions of tax payer dollars to achieve its policy objective.  And yet, electric vehicles remain mainly niche vehicles for the well to do who want to demonstrate their environmental values.

Although GM, Fiat, Nissan, Volkswagen, and the overhyped Tesla are pushing their electric vehicles (EV), Toyota, one of the world’s most innovative automotive companies doesn’t see much of a near term future for EVs.  Toyota, the first company to produce a hybrid, recently stated  “The reason why Toyota doesn’t introduce any major (all electric product) because we do not believe there is a market to accept it.”  Clearly, Toyota believes that cost and performance limitations define a limited market for EVs.  The chairman of Toyota also said, “electric vehicles require two breakthroughs on battery technology before they are viable as replacements for gasoline or hybrid-electric vehicles.

The government and private companies have been investing in battery R&D for decades without overcoming major technical limitations.  The National Academy of Sciences in an assessment concluded that the cost per kilowatt hour would have to be reduced about two-thirds (from $1000 to $300) for EVs to be cost-competitive.  Even at a much lower cost, these batteries—primarily lithium ion—suffer from the inability to retain a charge long enough for an EV to go more than 25-30 miles under normal driving conditions.  The duration is even less in cold and snowy climates.

Lithium batteries as we have seen with the Boeing Dreamliner and recently with a Tesla vehicle are vulnerable to catching on fire. None the less, they  appear to be the battery of choice for PHEVs, in spite of potential risks.  Rechargeable lithium batteries, like the ones in portable electronic devices, are a fire risk when they overheat.  In fact, the risk is so serious that the FAA has issued an advisory to airlines and created a website that includes the rules for traveling with lithium batteries.  While steps are being taken to reduce these fire risks, forcing technology before it is ready may mean that fire risks will be higher than they should be.Beyond the manufacture of electric cars and lower cost battery packs, investment will be needed to develop a recycling capability.  How this industry develops, and when, is still being sorted out.  The high price of current batteries creates a strong incentive for recycling.  It is less clear how strong that incentive will be if the cost of battery packs drop significantly.The chairman of Toyota observed that some say the hybrid is a bridge to the electric vehicle and that if it is, it is a very long bridge.  That view is consistent with that of Ford’s CEO who in an interview stated that the internal combustion engine still has a lot of room for improvement, mentioning direct-fuel injection, turbo-charging, integrated electronics, and lighter weight materials.

Whether looking at EVs or other attempts at industrial policy, the government’s track record with technology forcing is not encouraging.  Time and time experience has demonstrated that the government “picking winners” or identifying projects that will be winners has produced a clear, unequivocal record.  Unequivocally negative. One assessment concluded this way: “try(ing) to identify projects that will be winners in a commercial market competition, is always seductive, but the evidence, from our studies and others, suggests that such strategy is to be avoided.”

 

This article appeared on the FuelFix weblog at http://fuelfix.com/blog/2013/10/06/the-difference-between-wishing-and-doing/

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