July 7, 2008

Are plug-in's economically justified?

Yes. Plug-in's cost the equivalent of about $3/gallon with lithium-ion. As the price of gasoline rises above that level, plugins become more and more compelling.

First, let's simplify, and assume we simply add additional battery capacity to a Prius (and a plug, which is trivial). I would argue that a serial hybrid (like the Chevy Volt) is less complex than a parallel (and therefore less expensive in large, mature volumes), but that's not necessary to demonstrate the point.

OK, at 45MPG and $3/gallon, a Prius costs 6.7 cents/mile.

Now, good quality cobalt-based small-format batteries, as used in the Tesla, cost $400/KWH. Iron-phosphate is less expensive, and large formats are less expensive. The plug-in Prius is planned by Toyota for 2 years from now, which gives us another 2 years of the normal 8-10% annual cost reduction seen with li-ion's. Large scale PHEV battery production will instantly raise the volume of production for these 2nd generation li-ions to very large levels compared to conventional li-ion, reducing costs further. That gives us a reasonable forecast of $300/KWH (if this seems too aggressive, perhaps you'll grant that this is very likely several years later, when PHEV's have gone beyond early adopters, are ramping up to much higher production volumes, and batteries are that much more mature).

A123system's batteries can handle 5,000 discharges at 100% depth of discharge. If we assume 250 per year we have a battery that will last the life of the car. At a 10:1 capitalization rate (to account for interest, depreciation and obsolescence), we're paying $30/KWH per year, for 250 discharges, or $.12 per KWH discharged.

At .25kwh/mile, that's $.03 per mile, less than half the Prius cost. If we double the battery size to account for GM's conservative decision to only use 50% of the battery capacity (this is similar to the Prius, and almost certainly unnecessary, but GM's taking no chances at all), we're still at $.06/mile.

Now, charging will be done almost exclusively at night. Utilities are required to offer time-of-use power pricing by the 2005 energy statue, but many don't publicize it. OTOH, PG&E, SCE and Exelon are pushing it. PGE&E's night time pricing (like most CA electricity) is more expensive, starting at $.08/KWH, OTOH gas is also more expensive there.

So, add $.04/KWH for night time electricity (and 4 KWH/mile) for a cost of $.01/mile for power, and we're at $.07/mile, or rough parity.

Of course, taxi's and other fleet operators are likely to recharge more than 250 times per year, dramatically raising payback. For the average driver, add in CO2 costs, and other external intangibles like independence from the ME, and the ability to weather gas shortages and you have a compelling case.

And that assumes $3 gas, and a Prius as a benchmark - $4.10 gas, and a 22MPG vehicle (the US average) would make the case that much more compelling.

How about battery reliability?

Every report indicates that both batteries are doing extremely well. Could there be problems? Well, A123systems batteries have been in the field for years. It's competitor is an extremely large, competent company. Finally, we have redundancy in the two competititors. GM wants a very high level of assurance (as they should), but there's no question that these batteries come very close to their highly demanding specifications, and very little chance that one of them won't meet those specs entirely.

What about charging all these cars - do we have the power?

Pacific National Lab's study, showing that we don't need new power plants, is here.

Using a wide boundary analysis, including materials, employees, marketing via dealerships, and spending of profits, how much oil is used 'per GM-Vol' (not in driving it, but in making it)?

Not a lot.

First, an ErEV (extended range EV, aka plugin/PHEV) like the Volt won't cost any more than an ICE vehicle, or require more energy to manufacture. The high initial prices you hear about are a combination of R&D (which is very low energy - think high paid engineers in front of LCD displays - their biggest energy consumption is the junk food they eat as they work 18 hours per day) and GM exaggerating costs to justify an initial early-adopter premium, and lobbying for tax credits (or possibly they're just being very conservative - they're now saying that they're figuring in the cost of a replacement battery under warranty, which is pretty silly given the over-engineering already in the battery design - only 50% depth of discharge for a li-ion chemistry which can handle 100%, unlike, say, the NIMH being used by the Prius).

2nd most manufacturing (with the main exception of smelting, like PV silicon or aluminum) takes relatively little energy, and very little oil - what energy is consumed is primarily electricity, making irrelevant the claims one hears about BOE's (barrels of "oil equivalent") consumed by car manufacturing.

Employees don't take much oil: I suppose it would mostly be commuting gasoline. 1st, there aren't as many hours as one would expect in cars, as they're pretty high-wage jobs even now - perhaps 100 hours of assembly time, for instance, which is only 12.5 shifts of work. 2nd, they could drive a Volt...

Materials: Steel is the major material input. It's mostly recycled: more than 50% of inputs, and 95% of scrapped cars are recycled, so that energy isn't wasted. Even so, the energy input isn't enormous, and finally, it doesn't come from oil: it's a combo of electricity and coking coal (I have a steel mill a mile from my home: it operates at night when electricity is cheap).

Marketing is high paid labor and TV, which is powered electrically.

Profits? What profits?? Don't forget, this is GM we're talking about - the external costs of the spending of profits are the very least of their problems...

Will the Volt be too expensive?

No, not in the long-term.

GM says their latest price estimate of $40k for the first year model includes the cost of 2 batteries! They're including a warranty replacement of the battery, just to be ultraconservative (see http://gm-volt.com/2008/09/03/lutz-each-volt-factors-in-the-cost-of-a-battery-replacement/ ). Realistically, it's just a way to exaggerate the price in order to capture as much money as possible from early adopters, given that the first year demand will greatly exceed supply, yet GM doesn't want to appear to be gouging customers. Also, they want to encourage tax rebates and discourage increases in the CAFE regulations.

Lutz said the following: "We're being conservative on battery life. For our cost calculations we're assuming each car will need a replacement during the warranty period." original source: http://blogs.cars.com/kickingtires/2008/09/gm-exec-volt-ba.html
GM is being ultraconservative on design - they're using 50% depth of discharge, where Tesla is using 100%, even though GM's cell chemistry has about 10x the cycle life in bench tests (at any given depth of discharge). They're assuming 2 battery packs during the life of the warranty, where Tesla is assuming 1 (of course, the warranty is longer, but that's GM's (conservative) choice).

There's no way this car can cost $40k to produce, unless they're using very, very unusual ways of applying R&D overhead and warranty costs. Heck, the Prius also has 2 (more complex) power-trains, and it costs roughly $20k less to produce than the $40k figure. The battery, in volume, should cost far less than $10K, so where does this premium come from?? The answer: GM is front-loading R&D costs, and exaggerating warranty costs, for the reasons I gave above.

Is the Volt development still on track?

"the company is "happy" with the capacity and performance of the batteries. GM also knows what the cooling system will look like and has physically integrated the pack into the vehicle. What's more, the entire propulsion system, including the battery pack, the electric motor, and the generator, was incorporated into a test vehicle and delivered to the company's Milford, MI, testing grounds at the end of August, just two days behind the schedule set last year.

"I wouldn't say that the battery is ready," Cesiel says, "but we're right on track." source: http://www.technologyreview.com/Energy/21387/

What about lithium supplies?

Lithium is pretty abundant, and can be found in a lot of places, including China and Australia. Here's an article about the world's largest producer of one form of lithium ore:

Here's an article about li-ion battery costs - it's a bit outdated, but it provides a lot of detail.

What about hydrogen fuel cell vehicles instead?

A short answer: a hydrogen vehicle is an electric vehicle, like the Chevy Volt, which uses a smaller battery and a fuel cell to generate it's electricity. It will always be better to use a larger battery which is charged from the grid, combined with a small, cheap ICE engine for occasional backup. Here and here is the same information in much greater detail.

Why are some manufacturers, like Honda, still pursuing them?

Here's a good answer, posted by "Pangolin" as a comment on my first reference above: "I suspect that Honda's strategy was to develop electric car components and systems using hydrogen-vehicle research subsidies and have them on tap for fleet conversion to all-electric or plug-in vehicles. Toss the fuel cell and the hydrogen tanks and install larger batteries and you have an electric sedan. Throw in a small Honda generator and you have a plug-in hybrid. Off the shelf, every bit of it.

The nasty bit from Honda's point of view is that they will sell fewer vehicles. The only thing that could make a Honda more reliable would be to give them electric drive trains. That makes cars more of a long term investment as components would become swap-able. It was best to get all the bits right and wait until they were forced to make the shift. "

What's the future?

There are going to be a serious surge of PHEV/EVs by 2010, including GM's Volt, Toyota, Nissan, Chrysler, and other large car manufacturers. They're available now, in small but growing numbers from several small manufacturers, like Think and Tesla. Hybrid (the transitional form in the evolution to EVs) are now available from almost every manufacturer, including producers that would appear to be less vulnerable to customer demand for lower operating costs, such as BMW.

Electric vehicles (either PHEV's or EV's) faced serious barriers to entry in the form of very large investments (capital, emotional, career, etc, etc). This period of prolonged high oil prices will provide the impetus to push through this barrier. Once the barrier is crossed, costs will come down due to economy of scale, and PHEV/EV's will be forever entrenched. They are likely to follow ever falling cost curves, and largely replace fuel-based transportation.

How this will play out for the whole world (and the race against global depletion curves) is a tough question, as the US is the clear leader in adoption of hybrids, PHEV's and EV's (Japan sells them, and China is developing PHEVs and EVs), but I see fundamental change ahead for the US.

Here's a nice article about coming plug-ins. I'm also curious about retrofits - this appears to only cost about $4,000, and provide around 15 miles of electric driving. It isn't available yet (the promise fall 2008), and they haven't addressed regulatory issues, but the tech looks plausible. Hybrid taxi's are growing quickly, and Electric taxi's are coming.

EV technology, while more than adequate, will continue to improve. Regenerative braking eliminates one source of waste ( or finds a new energy source, depending on your perspective) by capturing vehicle kinetice energy: another source is the vertical kinetic energy now lost to shock absorption, which appears to have been solved.


Anonymous said...

Being an automotive industry professional, I am very sceptical about claims of converting existing vehicles into PHEV's for just $4000. Besides purely technological issues, I believe there are going to be significant and costly regulatory obstacles.

Having said that, I would like to touch upon another conversion technology that is quite mature as it had been with us for a long time - conversion to CNG.

Of course, CNG conversions is only an interim solution as NG is not a renewable source of energy, however its advantage is that it is that existing gasoline vehicles could very easily and cheaply be converted to CNG. The converted vehicles could be filled at home while the infrastructure of CNG filling stations is ramped up.

So why is it not being done? The obstacles here are not at all technological, but purely regulatory. At present time the only vehicles that could be legally converted to CNG in the US are some domestic vans and full-size cars. Others cannot be legally converted due to lack of necessary EPA approvals.

There is also Honda Civic GX model produced to run on CNG, but it is a pilot project with only about 1500 of these to be sold in the US market for 2009 model year.

Nevertheless, I feel that mass CNG conversions would be our best bet for quick migrating away from oil-based fuels in case of oil shortages or further manifold increases in crude prices. Of course, for speedy and affordable conversions, the EPA approval procedures would have to be streamlined.

Nick G said...

I agree: the retrofit plugin conversion I linked to clearly hasn't begun to deal with regulatory issues.

On CNG: it's certainly a good idea, given that NG is cheaper than oil. On the other hand, we're also dependent on imports for 15% of our NG (and for any additional consumption), so it's not a silver bullet.

We need to electrify ASAP.

Anonymous said...

Of course, not a silver bullet. Just an interim quick fix while we are replacing our vehicle fleet with EV's and PHEV's.

Allen Fuller said...

What about conversions of existing ICE cars (not hybrids like the Prius) to pure-electrics? Go to evalbum.com to see nearly two thousand examples of electric vehicles often converted by average people. A decent conversion can cost about $6000 and offer a range of 40 miles on good old lead-acid battery technology. Nothing vaporware here; it's all technology that has been around for years, mostly 30+ years.

Nick G said...

Allen, I like the evalbum conversions, but as best I can tell they typically don't include labor, of which there seems to be quite a lot!

So, it's not clear if these represent a cost-effective mass-market solution. Have you seen any general cost estimates for these kinds of conversions which include labor?