Plug-in hybrid electric vehicles or PHEVs and plug-in electric vehicles or PEVs go into mass production later this year. The Nissan Leaf will lead the PEV way and the Chevrolet Volt will usher in the Age of PHEV. Five thousand years from now, if civilization survives, will historians look back at 2010 and declare the dawn of the Age of Electricity and the death of the internal combustion engine? Perhaps, but doubtful. More likely they will lament America’s addiction to gasoline draining away our treasure and sapping our vitality. The United States is so hopelessly addicted to gasoline – we burn 9,000,000 barrels of the stuff each day or 378,000,000 gallons or the equivalent of 756 Olympic sized pools.
Looking at the magnitude of our oil addiction, Al Gore’s global warming crusade looks quixotic. If you want to cut our carbon footprint, raise tariffs on imported oil and its derivatives to $250 per barrel. Of course, $250 crude would either start a revolution or a world war, so that won’t happen any time soon.
The Obama administration is trying gallantly to change the energy mix. It is giving away $25 billion in grants to companies large and small to jump start electric cars
Nissan is getting $1.4 billion for the Leaf assembly
Ecotality (NASDAQ: ETLE) through its ETEC subsidiary, is getting $98 million to build 2,500 fast charging stations in five states: Arizona, California, Oregon, Tennessee and Washington,and
Aerovironment (NASDAQ: AVAV) which is already subsidized by the Department of Defense, will supply the home charging units.
I am betting on the fast charging units from ETEC because they add 31 miles of range in five minutes versus a full 100-mile charge in 8-hours with the home 220V unit. The problem with the fast charging stations is that they cost $45,000 a piece, so sans government subsidies no one will be able to afford the contraptions.
Nissan hopes to build and sell 60,000 PEV’s in 2011. Chevrolet is talking a meager 10,000 Volts. In comparison to the gasoline-powered fleet of 245 million vehicles, these production levels won’t change the energy mix – in fact, 70,000 PHEV or PEV’s will only save about 2,666 barrels of gasoline per day. In comparison, a 1% drop in the unemployment rate will increase US consumption by 57,000 barrels per day.
PHEV and PEV will offer consumers lower fuel costs that traditional gas powered vehicles. Plug-in all-electric vehicles can go up to 100 miles between charges and only cost $0.03 per mile to power (assuming that electricity costs $0.10 per KwH) versus about $0.12 cents per mile for a gasoline engine in a comparable car (assuming that gas costs $3.00 per gallon). Over the average life of an engine – 175,000 miles according to a random sample of a typical junkyard – a plug-in will save its owner $15,750.
It is also likely that electric engines will last much longer than gasoline engines and the era of the 1,000,000 mile engine is upon us. [Changing batteries, tires, brakes and suspension parts will be the bane of the electric car owners, not changing engines, spark plugs and oil.] But an electric car’s fuel savings will be offset by the higher cost of an electric powertrain. Although pricing information is hard to come by, it is safe to assume that the Leaf’s 24 KwH battery pack alone will cost more than $15,000. Price estimates for the vehicle are between $38,000 and $45,000, so PEVs and PHEVs will be reserved for the wealthy. But battery prices are likely to come down like all things electronic, so fifty years from now everyone will be driving a PHEV or PEV.
On a final note, it is disappointing that the New York area doesn’t appear to have any interest in electric cars except as an IPO or initial public offering for Wall Street investment bankers and traders.
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