Story from AsiaOne Motoring
FRITZ Henderson, the new chief executive of General Motors (GM), says his company has to reinvent itself very quickly. US President Barack Obama exhorts American car makers to regain the lead and make fuel-efficient vehicles. Washington provides US$2.4 billion to develop advanced electric-powered vehicles and a better battery. And Michigan gives tax incentives of half a billion dollars, including US$200 million for advanced batteries, to invigorate the auto capital.
Will all this spark an auto revolution in the United States? For GM, the situation has to be bittersweet, after stopping production of its famous electric sports car EV1 in 2000. It is now betting on its hybrid Chevy Volt, due in showrooms late next year, with fuel economy matching 100 miles per gallon (42 kilometre per litre) of gasoline to refurbish its image.
Dumping EV1, which was developed from the ground up, caused much environmental ire and yielded the film Who Killed the Electric Car? It coincided with California's thrust for zero emission-vehicles mandate, which sought to have 2 per cent of emission-free vehicles by 1998 and 10 per cent by 2003, a law that was weakened subsequently. Chrysler, Ford, Honda, Toyota and Nissan all produced vehicles for lease.
In fact, the electric vehicle (EV) is a 19th-century Scottish invention. France and Britain promoted EVs in the late 1800s. Americans followed, and as the nation prospered, steam, electric and gasoline cars appeared. But electric starters, need for superior range as road networks developed and oil discovery in Texas combined to push EVs off the road.
Subsequent attempts to revive electric vehicles never really caught on. GM and others tinkered with electric car after the big increase in oil prices in the 1970s. In 1975, the United States Postal Service bought 350 electric delivery Jeeps from American Motor Company for testing. They had a top speed of 50 miles per hour (mph) and a top range of 40 miles at a speed of 40mph. Recharging took 10 hours. But in dusting off a century-old idea, Americans will find dozens of start-ups as well as old rivals on the same electric track.
Will the Volt vault GM back to its pre-eminence? GM has committed a billion dollars to develop the plug-in hybrid, charged externally, in the hope of beating the industry's best-selling hybrid, Toyota's Prius. The Volt seats four and can go 40 miles on a single charge from a home outlet with a gasoline engine to extend range. GM expects to sell 60,000 cars annually from the second year.
Similarly, Ford will introduce an all-electric van next year and a car with a 100-mile range on single charge in 2011 followed by a plug-in hybrid with fuel efficiency equivalent to 170 miles per gallon in 2012. Chrysler is also working on an electric car.
Impressive, yet it is hardly going to be easy for American car firms. They will find dozens of start-ups as well as old rivals on the same electric track. Every major manufacturer - Toyota, Audi, Hyundai, Volkswagen, BMW, Nissan, Mitsubishi, Daimler and Vauxhaull - is developing electric or plug-in hybrids. And all are due in showrooms within three years.
Meanwhile, Mitsubishi's president Osamu Masuko goes to work in the i-MiEV prototype. The company intends to market the car to Japanese corporations in July.
In fact, Renault and Nissan Motor, the French-Japanese alliance, is reportedly racing to enter the EV mass market soon. Renault wants to sell 20,000 to 40,000 electric cars in 2011 and has bagged a deal from Ireland aiming at a 10 per cent share of its market for electric cars by 2020.
And vying with them for driver attention will be numerous start-ups, such as Think of Norway and Tesla of the US. Dutch firm Detroit Electric has signed up with Proton of Malaysia to make electric cars for sale by early next year. Tesla, a niche player, has begun taking orders for its Model S five-seat sedan, set to hit highways in 2011. The cars' range varies between 160 and 300 miles (257 and 482km) and lithium-ion batteries could be recharged in just 45 minutes. Tesla is seeking a US$350 million loan from Washington to build an assembly plant in California.
Think of Norway is surveying a site to build a US plant for 16,000 cars annually. Its City car has a range of 112 miles. Tesla already assembles a two-seat Roadster, costing about US$100,000. Fisker Karma of California has plans to sell its plug-in for about US$88,000. But more serious competition for the mass market is coming from China, which aims to be a leader in hybrid vehicles. Several manufacturers are working on them. BYD, a battery-maker, and a car manufacturer since 2005, has begun selling F3DM (duel-mode) plug-in cars and wants to sell all-electric e6 to consumers later this year. It counts Warren Buffett among its investors. China is targeting 500,000 hybrid or electric cars by the end of 2011, almost twice as many as in the US.
President Obama wants a million hybrids on roads by 2015.
What makes this rush by so many possible? Electric vehicles short cut the complex universe that is the ICE car. The electric car has no engine, no gas tank and no transmission and produces no smoke. It needs no oil change or tune-up.
Yet, electric-powered vehicles have considerable hurdles to cross, associated with range and with battery size, charge speed and battery life. They have indirect environmental implications since electricity for the battery will come from fossil fuels.
The cars will be more expensive than their gasoline-fed peers. The Volt will cost somewhere between US$30,000 and US$40,000 apiece, about 50 per cent more than the Prius, in the US. The US auto task force, entrusted to beef up the car industry, reckons electric vehicles may be too expensive to be commercially successful in the short term, though it believes the Volt technology holds promise.
Boston Consulting says the price of gasoline, government help to industry and cash incentives to the consumer - all will be required to push electric vehicles. The battery will cost about US$14,000 in 2020 for an electric car with a range of 80 miles, even if costs come down.
So doubts will linger whether EVs will become practical and functional for the mass market.
Technology and innovative ways will hopefully overcome the daunting challenges.
For instance, battery and range are closely linked and more batteries means bigger range and higher cost.
So Toyota's plug-in version will have a 12-mile range on single charge and will cost a lot less than the Volt. Charging infrastructure is beginning to appear in key markets.
Better Place, a US-based company, is planning a battery leasing network using renewable energy for recharging batteries. It will own the batteries and charge per mile.
Its first projects will come up in Israel in 2011 followed by Denmark and several other countries.
And China's BYD claims it has already solved the problems of cost and safety associated with lithium-ion batteries. It has the advantage of cheap labour to boot.
Yet Boston Consulting's "most likely scenario" suggests that conventional hybrid cars will take about 28 per cent of cars sold globally in 2020, with 11 million hybrids and three million electric cars. It sees oil prices at US$150 and strict enforcement of existing CO2 regulations as a pre-requisite.
Consultancy AT Kearney sees hybrid and electric vehicles taking half the market share in 2020, provided oil price rises to US$200.
Still, companies seem to be undaunted. Renault foresees 10 per cent of all global car sales to be EVs in five years even on current battery technology. Mitsubishi is reportedly planning to double its electric car output to 20,000 by 2011, raising to 50,000 cars by the middle of the decade. Tesla says it has received more than 500 orders just in a week for its Model S despite its hefty price tag of US$57,400. Tesla insists that tax incentives, low maintenance and the lack of fuelling costs will make up for the steep price tag.
A Volt will cost two cents per mile to operate, one-sixth of what a conventional car. Then there is the subsidy. The US is offering up to US$7,500 tax rebate to consumers and China is throwing in US$8,800 for taxis and government departments. Britain is giving £2,000 (S$4,450) grant to electric car buyers.
Fresh impetus will come when nations agree on the second climate treaty later this year. An accord will align the interests of power generators and car companies as well as governments for intense reductions in CO2 emissions.
If it's not yet another false dawn, it certainly will be game-changing.