Road Trip

It is January; so that means it must be time to think about where I go on vacation this year. Given the presence of a toddler in the house, this will almost definitely be somewhere I can drive to. Conveniently, my issue of AAA World showed up with its usual array of great trip ideas. Amongst the trip ideas was a story about efficiency in general and electric vehicles in particular. I must confess I have never put AAA and using less gasoline in the same thought before, so I read this with great interest.

Not only was there a great write-up on how seriously the auto industry is taking efficiency (for both economic and regulatory reasons), there was also an announcement of an upcoming series about trends the magazine believes “to be pushing the envelope of efficiency”. Sample features will include Tesla and the West Philly Hybird X Team. Tesla is a pioneer of battery technology, while the West Philly Hybrid X Team has won all kinds of citations for their entry in a national competition to design a car that can get 80-100 miles per gallon.

The article had a really nice write up on how seriously the automobile industry is taking (mileage) efficiency. This comes from a regulatory basis (the corporate average fuel economy—CAFÉ standards) and a market basis due to how consumer preferences tends to shift when gas hits $3.75/gallon toward higher mile-per-gallon cars. (I’ve seen other sources which say the $4/gallon is the tipping point. Whatever the reasons, I am thrilled to see more investment in developing more efficient cars.

There was a portion of this article that raised some questions about electric vehicles. Some of these concerned an infrastructure for electrics (charging stations), what might happen when batteries are depleted, etc. I think the question of disposing electric batteries is only fair if disposing of regular car batteries is considered as well. As for infrastructure, I have seen an increasing number of announcements of this location or that location being outfitted as a recharging station. Maybe this is part of the reason that, in spite of these questions, the article included a statement saying how AAA is “embracing the role of the EV (electric vehicle) in the future of the automobile”.

That does not mean that electric cars will become the dominant player in the industry any time soon. But it certainly underlines the potential for electric cars to become a noticeable segment in the industry. For example, I noticed that 700 units of BMWs current electric car (the Active-E) are now available for testing in the United States. (I happen to love BMWs, so I really paid attention to this item—too bad I live in the wrong market to qualify for the test.) If companies like BMW, Nissan, Ford, Honda and others gain acceptance over the next few years for their electric vehicle offerings, they will combine with the Toyota Prius to make a very noticeable market segment indeed.

BMW’s new electric vehicle ready for testing
http://ht.ly/8xRB1/

On the Road Again

The automobile, with its gas engine, is perhaps the strongest symbol of an economy powered (and driven) by fossil fuels. It may surprise the reader to learn that at one time, the gasoline engine was only one of numerous competing technologies. In the early 20th Century, the gasoline engine won. In the early 21st Century, there is another competition for engine technology. The incumbent is the standard gas engine, while some of the challengers are gas-electric hybrid, electric only, diesel, diesel-electric hybrids, etc. From a sustainability perspective, none of the challengers have to dethrone the incumbent; they just need enough people to buy them to keep them in business. If these technologies are commercially successful at all, then the amount of petroleum needed for transportation will go down, even if only incrementally.

Model years 2010 and 2011 (and to a lesser extent, 2012) are shaping up to be critical years for automobile engine technology. The most well known challengers are gas-electric hybrids like the Toyota Prius, Honda Insight, Ford Escape, etc. In 2010, for the first time in recent memory, a primarily electric car will be on the market, courtesy of the GM Chevy Volt—40 mile range, around $40,000. Nissan is promising a 100- mile range vehicle (the Leaf), available in the US by the end of 2010. Renault’s all electric entry, announced at the recent Frankfurt Auto Show, will follow in 2011. (If you are a lucky New Yorker, you are road testing an all-electric BMW Mini Cooper slated for launch in 2012). All of these electric cars feature rechargeable batteries.

At the same time, other “greener car” technologies are in various stages of development. Companies like Toyota and Ford are expanding and improving their hybrid product line. Volkswagen is testing diesel-electric models. Diesel is also gaining more attention as a fuel-efficient alternative to the conventional gas engine. Subaru is one company (along with Volkswagen) working on this kind of technology. And, other companies are trying to make the conventional gas engine more efficient with better gas mileage.

All of this activity implies that the manufacturers feel that a market exists to buy some kind of electric or hybrid car. Does it? That is open question. Some elements of the auto industry are rather dubious. The head of Audi North America has been quoted as saying that no one will pay $40,000 for a Chevy Volt (electric) when there are numerous competitive gas engine options for $25,000. And there have many comments to the effect that buying a Toyota Prius does not make sense because you cannot save enough in gas money to make up for the hybrid price differential. So therefore, the argument goes, only a few people will buy these cars. This flies in the face of the success of the Prius and other hybrids, especially during last year’s spike in gas prices.

Even if the “green car” buyers are only a segment—so what? There are many segments of the auto market. There are SUV buyers, truck buyers, muscle car aficionados, family minivans, cruisers, etc. Those segments thrive. The evidence is anecdotal, but I do think that there are enough people to make a segment of buyers for some version of electric or hybrid cars. After all, almost all of the world’s carmakers are developing some sort of non-gas engine technology.

The skeptics are also forgetting that new technologies in many fields tend to come down in price as they get introduced into the market place. Also, if something becomes fashionable, cost becomes a whole lot less important if it is even remotely competitive. If enough people buy these cars, then “electrics” or “hybrids” will become a sustainable segment in the auto market. When it comes time for me to buy another car, hopefully I can join one of these segments.

http://www.businessweek.com/globalbiz/content/sep2009/gb20090917_962378.htm