Electric Cars

The Return Of Electric Cars  

The news that Chinese car firm BYD boss, Wang Chuanfu, has become China's richest man, with wealth of $5.1bn thanks to Warren Buffet's investments, led to this review of some of the more problematic issues surrounding the return of electric cars in the US and worldwide, and comparing them to next-generation hybrids like GM's Volt. We've also provided lots of links to sources to give a short-cut to what some other people are saying. Buffet has used his foresight to amass a fortune of over $37bn, so presumably he must have thought about all these issues already...

 

Home In On The Range 

Traditionally the Achilles Heel of electric cars, the aim of 100 miles in range from current Li-Ion batteries, although enough for town and city use, makes longer distance commutes more complicated, especially in power-sapping weather conditions like heat or snow. Range assessments like EPA City Cycles don't factor in A/C, lights, hills, cooling the power transistors and so on.

 

Location, Location, Location 

As well as being located in a place with a suitable climate range for EV's anyway, with a responsible power company providing fairly priced reliable electricity, buyers of rechargeable cars also have to have a house with a drive or live in a ground floor apartment with an allocated parking space within reach of an outdoor power point, in a neighbourhood where no-one's going to steal your valuable cable or voltage switcher (from 110V to 220V in the US). That's quite a specific market, both for new cars and for when you need a buyer for your car when you want to sell it on. The profile of suitable buyers may affect the resale value in a different way to what the market has experienced before. And if Cap and Trade comes down hard on coal-fired power stations, their electricity could become much more expensive, again affecting the market for EV's, which is tough if you're located near one and have no choice of supplier.
 

On The Road Again (Eventually) 

It is of course possible to extend the range of an electric car by installing recharging stations, although whether conventional car owners might object to the extra taxes on them to pay for them all, meaning they are effectively subsidising the electric car industry, is another matter, especially if many of those cars are imported. Now, the minimum estimated charge time, with a high amp cable, seems to be around an hour for a moderate charge through the J1772 standard 220v plug (Renault-Nissan are looking at a faster 480v additional plug for their new Leaf). So you have to factor in to your journey times an extra hour for every 80-100 miles you want to travel (in ideal conditions). You had better be real good at entertaining the kids. For an hour. Many parents spend less than that talking to their kids a week.

 

What if people are in a hurry? Or have a real need to go some place sooner? Or are just impatient? Remember, waiting an hour is if there's no-one at the power point. For every car in front of you, you're waiting an extra hour.
 

 

Battery Swapping Blues 

The alternative to recharging stations to extend the range of electric-only cars, Battery Swap centres, have been proposed by companies like Better Place. Unfortunately no standard battery format exists, and neither do heavy duty battery terminals or standardised changover procedures, equipment, weather-sealing standards or crash-test experience with cars with replaceable batteries. Each manufacturer has to optimise vehicle weight and structural integrity with its own battery design, and most batteries are built in to the vehicle, implying only occasional changes are designed in. Coda Automotive's sedan, due in 2010 (imported from China) has a battery sealed in underneath the car, for example. The Volt's are in an unusual T-formation, weigh 375 pounds and are also sealed in (ie: 'don't try this at home').

 

Even if all this was ironed out, that would still leave the problem of not all batteries being equal. How would the Battery Swap manager value an incoming battery? He would have to have a computerised read-out of all its charges through the J1772 link from a chip somewhere- but it can't just be the car because the batteries are swapped... so now it looks like each swappable battery has to have a secure chip to record cycles, history of charge holding and any other procedures to preserve battery life.

 

If the Battery Swap manager thinks your old battery isn't equal to his new one (or even more contentiously, the other way round), you're going to have a big discussion about valuation, almost as difficult as valuing a used car, and without a chip system, almost impossible, at least until it's been fully charged, and everyone can see the charge it can actually hold. Remember, these batteries will be worth from $8k new down to scrap value, and that's a big discussion for a quick visit.

 

And lastly, you might want to book that battery swap first. Especially in holiday seasons.

 

 

If you have the bad luck to buy a normal car with a three year warranty, and its engine blows up on day one of year four, you know roughly what it will cost to replace it. But with an electric car, you know that you will have to buy another battery at some point (after the third year at the earliest, hopefully,) but you have no idea how much it will cost.

You don't know if after-market batteries will exist or be cheaper than the manufacturer's OEM battery. You can't know how the current Great Global Game to find and exploit Lithium reserves will play out (with Japan and China vying for place in Bolivia, and new sizeable deposits closer to home located in King's Valley, Nevada and in the potentially huge Moblan Lithium Project in Quebec or how you'll be affected by Chinese restrictions on the export of most Rare Earth minerals, and its domination of 95% of the world supply of strategically vital green lanthanides (the US imports 87% of its needs from PRC), or by the availability of cobalt supplies from places like the DR Congo. So you can't presume that batteries will follow a kind of Moore's Law and just keep getting cheaper. It's the same for the gas price in general of course, but there's a lot of customers for that and a lot of choice of supplier. You'll be desperate for a battery, and we all know how salesmen can sense desperation as soon as you enter the showroom. They'll also be trying to get extra cash to compensate for the shortfall from servicing normal engines. You'll be a captive customer, the sales equivalent of a sitting duck. Worse, if you've read the game wrong and battery costs go up, the value of your car could plummet just when you want to sell it. 

 

One last thing. The exchange rate of the Chinese Yuan will affect most hybrid and battery cars in the US. Because lots of batteries will be coming from China anyway, until ventures like EnerDel's manufacturing facilities in Indianapolis or Electovaya's in Ontario can supply large scale commercial demands. Currently the US can only provide just over 1% of global Li-Ion battery production. That past short-term focus on SUV's and trucks is going to have lasting consequences. Altair Nanotechnologies' nano-phosphate batteries may offer a leap forward,  MIT has produced other prototype li-on phosphate batteries with interesting potential for the future, but the US is rather behind now in mass production, and some commentators think even the $2.4bn stimulus package for the industry, when divided up between all the applicants, may be a case of too little, too late. For the record, the Volt's batteries will be assembled near Detroit from cells made in South Korea. 

 

Of course this all presumes that everything will go well with the battery and everyone will read the manual and observe use restrictions and obligations, like not leaving batteries unused for more than a few weeks, or the need for complete flattening and deep cycling periodically, sensor recalibration and so on. But what if the figures about the number of cycles are wrong- especially for imported batteries where oversight of assembly isn't possible, or which may be subject to 'quality fade'?

Take the battery for the Volt as an example. A GM release says it will guarantee it for 8 years or 100,000 miles. The Volt only has a 40 mile electric-only range, so it will need recharging every day it's used. That works out, on an everyday basis, as 2,500 charges before you get to the 100k mark, or at about 6 and a half years, not 8. The battery needs to hold an 80% charge to be serviceable in the Volt. For every battery that can't hold that level of charge below 2,500 cycles, GM will be liable for the replacement cost, whatever that may be. There are 288 cells, and the failure of any one of them can disable the whole array. But GM's original specification called for 4000 charging cycles, which would easily clear both warranty goals. Let's hope all the cells can cope with that- or at least with 2,500, on a once a day charge. GM will need to go easy on suggesting twice a day though. (Interestingly, most of the remaining Toyota RAV4 EV's that weren't crushed have passed 100k on their original batteries, but these were NiMH, not Li-Ion.)

 

Until you have a clearer idea of the cost of replacement batteries, it's very difficult to see how you can make real calculations on comparative costs against running an ICE car, especially a 70mpg diesel, for example, and in any case those comparisons also need assumptions about long term oil versus electricity costs, and more guesswork about the interest rates on the larger loan for the higher initial costs of an electric or hybrid car, so I'm not going to explore them here.

  

 

 

The Chinese Are Coming, And Warren Buffet's Leadin' 'Em! 

The Chinese-built BYD E6, backed by Warren Buffet's initial $230m (that allegedly he would like to triple), is coming to the US next year, a year before US models like the Volt hit the market, and before new models from countries like India, from Reva for instance, could be available in other markets. If it works, it could change the whole game, and help reduce US car manufacturing still further by short-circuiting the Volt and all the other hybrid and electric sedans in the pipeline. In terms of basic economics, each E6 sold will also add another $30k to the trade deficit, take a $7,500 government tax subsidy and cost the country another $5k in the gas taxes a normal car would have paid over its early years. Throw in, say, another $8k for the other battery it will need eventually, and you have quite a negative impact on the economy per car, and that's without mentioning any resultant job losses at GM on Volt production lines at Detroit-Hamtramck or the new $43m battery facilities in Brownstown Township.

But there's one other thing here. The artificially low Yuan has been devastating successful as an export policy for China. Lots of other people would like to see it set free and to rise in accordance with a country with several trillion in the bank in cash. But a big rise could mean an E6 would cost more than the Volt. Warren Buffet has gambled a lot of money that this isn't going to happen. Now the big question is this. How is he so sure? Have any top level Chinese contacts told him there'll be no revaluation of the Yuan for the next few years? That would be interesting news for the new Manufacturing Czar. Perhaps Ron Bloom should ask Mr Buffet if he's heard any whispers.

 

Global Crises, CO2 Reduction And A Hill Of Beans 

China's current plan to build 550 new coal-fired power stations, to exploit its estimated reserves of ten trillion tonnes, seems rather at odds with a real environmental commitment to renewable energy. It will guarantee a long-term dominance of coal to produce energy no matter how many solar panels get installed in Mongolia, for example. As with all strategic resources, China is busily developing oil supplies globally from countries like Burma, Sudan, and Iran (15% and rising), amongst others. It has also helped equip Iran with lots of anti-ship cruise missiles, in case anyone with a large navy fancies 'bringing it on.' (Iran has some of the world's most advanced anti-ship missiles, like the Sunburn, which can already carry a nuclear warhead...) But an electric car future would help mitigate other global confrontations (perhaps with Japan or India), the threat of blocked shipping routes or even 'just' Peak Oil. And for that, you'd need an awful lot of power stations using coal. Now the figure of 550 makes a lot more sense...

 

But this means that in terms of global CO2 production, no reduction will be possible overall- in fact quite the contrary, especially if China also becomes a large scale exporter of vehicles using ships burning hundreds of extra tons of highly-polluting bunker fuel a day. Factor in similarly India's booming car industry, with Ford for example planning to make the new Figo there in Chennai, and the CO2 advantages of swapping some gas vehicles for some electric ones in the US and Europe looks less of a convincing contribution to CO2 reduction. Obama's plan for a million electric cars by 2015 would be just over 1% of the US market over the five year period. So it all may not amount to a hill of beans in terms of CO2 reduction. Which was exactly the conclusion of Dr. Richard Pike, head of the UK's Royal Chemistry Society, in a recent article called 'The electric cart before the low-carbon horse?'.

 

Greening the equation by bringing enough renewable energy sources on stream in time for a bigger growth in the market, if it should happen, will not be easy in some countries. The UK's predicted shortfall from 2017 for example is without allowing for any extra demand from electric cars, which would bring forward the lack of capacity as older power stations are phased out before others can be built and brought on line. Extending the life of the coal-powered ones would have to be an option.

 

 

When Known Unknowns Become Known 

So to sum this all up, by 2015 we'll know if the target of a million electric cars on US roads was reached, despite the practical problems outlined above to overcome, including the impact of Cap and Trade on utility bills. We'll see whether China managed to pull off a leap forward in technology to begin to dominate world car markets from scratch, and whether Wang Chuanfu became even richer. We'll know whether Buffet's investment was a good idea financially, and whether the Yuan indeed remained at the low level to make it all happen, with enormous consequences for world trade and the US deficit. And we'll also get to see if any 5 year-old Volts need replacement batteries. It's going to be an interesting road to be driven down.

 

 

 

There's more information on a whole range of electric vehicles in the Showcase section of this site.