Electrifying Vehicles: A Car and Its Drama

Who will play the lead character in Who Revived the Electric Car?, the sequel that is bound to be made to the famous documentary, Who Killed the Electric Car? Many are vying for the role: car manufacturers, battery producers, scientists and now the Obama Administration.

The White House issued a report on July 14th that credits federal stimulus money for the rapid drop in costs for electric cars. Once written off as a technological mishap, the electric car now appears nearly road ready for American consumers. The price tag is dropping rapidly, in part because of the $12 billion the federal government has pumped into alternative vehicles, according to the report. Of that $5 billion went to electrifying the US transportation fleet.

Electric cars will cost between $25,000 and $35,000, after tax credits, by the end of this year, says the White House. That’s down from $100,000 before passage of the 2009 American Recovery and Reinvestment Act. Electric cars are dropping in price because stimulus-funded manufacturers are producing batteries more cheaply.

Not long ago, it cost $33,000 for the battery of an electric vehicle with a 100-mile range. The Department of Energy expects the cost to drop by half between 2009 and 2013. By the end of 2015 some batteries should cost $10,000. The price of batteries for plug-in hybrid vehicles, or PHEVs, is falling quickly too. PHEVs can travel 40 miles on electricity and then automatically shift to gasoline. Priced at about $13,000 in 2009, the PHEV batteries are expected to cost only $6,700 in 2013 and $4,000 in 2015, according to the DOE.

The new electric car is seen as a way to reduce reliance on oil, which now supplies 95% of our transportation fuel. But the electric car has several interesting side stories as well.

Electricity is cheaper than gasoline. So, consumers should find themselves paying the equivalent of only $1/gallon to fuel electric cars, according to the National Renewable Energy Laboratory. In coming up with that figure, NREL assumed it will take 9-10 kWh per gallon to operate a typical mid-size car, with vehicle efficiency of 2.9 mile/kWh. Researchers also assumed an electricity cost of 9.4 cents/kWh as the cost of electricity. While that is a fair average, the truth is that the price of electricity varies significantly nationally, and the cost of driving an electric car will vary accordingly. For example, in North Dakota electric rates run about 7 cents/kWh, while in Connecticut they are 19 cents/kWh.

Keeping operating costs low will depend on wide-spread implementation by utilities of time-of-use pricing, and of consumer willingness to take advantage of electricity at bargain times. Prices for electricity fall at night when demand diminishes. Electric grid planners are hoping consumers will charge their cars at night. Otherwise we may have to build more power plants to accommodate the cars, and that will negate some of their environmental and cost savings. Time-of-use pricing, which reflects lower night-time costs, should help encourage consumers to plug in at night. But consumer behavior is hard to predict.

Another side story is that the electric vehicle gives consumers a chance to act as power producers. The car batteries can store power which consumers can sell back to their local utility, possibly at high prices if done when the grid is in short supply.

And finally, it looks like the electric car will help the US create manufacturing jobs. The White House report says that in 2009, we had only two factories manufacturing advanced vehicle batteries. Those factories produced less than two percent of the world’s advanced vehicle batteries. By 2012, the US should have 30 factories with a 20 percent market share and by 2015 a 40 percent market share.

Should all this come to be, it is hard to say who will get the credit. What’s clear is that the story offers lots of happy endings to today’s energy woes. Here’s hoping it is a tale told true.

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

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