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Current Developments: Innovative Ideas on How to Make Electric Cars Cost-Efficient Take Shape

Expensive batteries and limited recharging stations are the big impediments to making EVs cost-competitive with non-hybrid internal combustion vehicles, but new electricity pricing and distribution models may help break the logjam
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Courtesy of Frankh, via Flickr

It's easy to knock electric vehicles (EVs): It takes too long to recharge the batteries and there are too few places to do it. And besides, who will pay for all the new recharging stations that would be needed if the cars catch on? The International Energy Agency’s most optimistic scenario puts (pdf) plug-in hybrids or EVs at 15 percent of all cars on the road by 2020; other projections predict a mere 3 percent.

The dubious outlook for EVs has much do to with uncertainty over what role utility companies should play in providing the electricity needed for large fleets of these vehicles. At a recent conference, however, industry analysts put several options on the table.

Utilizing utilities
One idea is for private companies to install and own individual battery recharging stations and charge drivers on a per-use basis, said Brett Perlman, president of utility industry management consulting firm Vector Solutions. Perlman, who served as commissioner of the Public Utility Commission of Texas from 1999 to 2003, was one of several speakers November 15 at the "Electric Vehicles, Fact or Fiction?" forum in New York City, hosted by PA Consulting Group. Another approach would be for these vendors to create a network of recharging stations and charge drivers a monthly service fee for access (much like the mobile phone industry).

Perlman thinks utility companies should play a more active role, however. "We need a private utility infrastructure and a public charging infrastructure, something that regulators are starting to look at, starting with those in California," he said.

Texas is also experimenting with this model. NRG Energy's eVgo Complete charging program in Houston includes unlimited fueling services both from a home charging dock and across the NRG-owned eVgo public network for a fixed monthly price of $89. A progressive move on NRG's part, but one that could backfire if regulators decide down the road to limit the role of utilities in establishing a universal recharging scheme. "One of the greatest impediments to EVs is that much of the legislation defining how drivers and their vehicles interact with the grid will be decided on a state level," Perlman said. This means each state could develop its own approach to recharging, which could make life difficult for interstate drivers.

Better battery
The battery is at the heart of the issue, Hugh McDermott, global vice president of Better Place, said during the forum. The firm is building drive-through battery exchange stations that use robots to swap out depleted batteries for newly charged ones within minutes. The stations are not meant to serve as the primary source of recharging—that should be done at home overnight, McDermott said. Instead, these stations provide a way to recharge when a driver is unable to charge at home. Whereas today's high cost for batteries will come down over time, the price of oil will only grow more expensive, he added.

McDermott said that Better Place has gotten traction for its model in several countries, including China, Denmark and Israel. The firm will have 40 stations installed in Israel by the end of 2012, carrying a total inventory of 500 batteries. "In Israel a policy of oil independence is a national security imperative providing incentive to seek out alternatives to combustion automobiles," McDermott said. "The challenge in the U.S. is, it's like dealing with 50 different countries."

Comparing cost
The costs of owning an EV cannot yet compete with non-hybrid combustion-powered cars. Earlier this year a team of researchers led by Wally Tyner, a Purdue University agricultural economics professor, compared the economics of driving a Chevrolet Volt, a Toyota Prius and a Chevy Cobalt. The researchers determined that the Volt, a plug-in hybrid, would be less economical than the Toyota Prius, a hybrid that does not charge its battery through a plug, or the Chevrolet Cobalt, which has only an internal combustion engine.

When oil prices are high, the Prius would be the most economical, with the advantage going to the Cobalt when oil prices are low. Tyner said to make the Volt more economical than either the Prius or the Cobalt, oil prices would have to rise to between $171 and $254 per barrel, depending on the electricity pricing system used. This disparity is because the Volt has a higher purchase price and will cost more in electricity than gasoline over the life of the vehicle.

There was a bit of encouraging news for EVs at PA Consulting's forum. During the question-and-answer session, Michael Niggli, president and chief operating officer of San Diego Gas & Electric (SDG&E), reported that San Diego's EV and plug-in hybrid pilot program was progressing well. In fact, of the 850 cars involved, pure plug-in EVs like the Nissan Leaf outnumbered plug-in hybrids by a ratio of six to one, he said. This was likely due in part because San Diego was also one of the pilot cities where Nissan first released its all-electric Leaf. Niggli also pointed out that 85 percent of his SDG&E's EV and plug-in customers were recharging their vehicles during "super off-peak" hours (midnight to 6 A.M.), when rates are lowest.

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