Dreaming and Planning for Electro-Tech

Battery-Powered New Beetle

It’s Monday, so let’s get serious. Despite tgriffith’s recent slam at old people (in his Buick post, to be answered in due course), we will put on our left-turn signals, leave them on as a sign of defiance, and look toward the future—which surely does not include Buick Enclaves, God forbid, the most egregious and ugly beast yet produced by GM. On a road trip last weekend, I passed one, towering above me and driven badly by some 30-something female, talking on a cell phone of course.

In the future, we are going to have far fewer Buicks and lots more electrics of all stripes on the road. With the Obama administration recently giving grants of $2 billion to foster and enable electric-car technology, perhaps it’s time to contemplate some of the issues involved in going electric. The open question is when and how the transformation will happen.

The President and four cabinet members went to the Midwest to announce these grants, and in fact it was a big-deal commitment to a technology, such as this country rarely makes. GM was the big winner, but other companies, mostly battery makers, won out, too.

General Motors Co. will receive about $241 million in grants, including $106 million for its planned battery pack assembly factory in Brownstown Township [Michigan]. Ford will get nearly $93 million, while Chrysler Group LLC will get $70 million for plug-in pickups and minivans. Four battery companies, most of them partnered with a Big Three automaker, received almost $862 million to build batteries in the U.S.

Michigan stands to gain “about 6,800 jobs immediately, and the new sector could employ as many as 40,000 by 2020, said Doug Parks, senior vice president with the Michigan Economic Development Corp.” But this is hardly a local story.

McKinsey, the eminent consulting firm, took a broad perspective in the June issue of its Quarterly, examining the outlook for electrics as it affects three industries: battery makers, automakers, and utilities. The report is fascinating reading, though some of you will challenge the assumptions.

No one can predict how may electric vehicles will be on the road at some future date, because there are simply too many variables.

But here’s a number to contemplate: electrified vehicles would enter the mainstream if about 10 percent of all cars on the roads were battery-electric or plug-in vehicles, running solely on electric power. That would mean sales of six million to eight million electrified vehicles a year by 2020, which would change whole sectors dramatically.

How we reach that tipping point is anybody’s guess: Some think that kind of penetration will take decades; others think governments can and should push this along. The interrelationship of the three industries and how it evolves are key. Some of many interesting twists and turns ahead will involve: the price of gasoline and the government’s influence on it; the ability and willingness of “incumbent automakers” to convert; whether batteries are outsourced, insourced, or produced after-market.

I think we’ll get to electrics—the 10-percent tipping point—sooner rather than later. What do you think?

—jgoods

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