Green Update–>Economic Roadblocks to Going Electric

Nissan Leaf barrery (from the New York Times)

Nissan Leaf battery (NY Times)

We are seeing more than a few articles in the major media and the car press about the economics of creating a viable electric-car industry. My take in brief is that it’s going to happen in fits and starts, but also more slowly than some would like.

You already know some of the problems and roadblocks to be overcome: battery cost and disposal, other material costs, creating an infrastructure of charging stations, and making products, finally, that people will buy. The Smart ForTwo Electric (above) may or may not be one of these.

Most daunting is the chicken-egg problem of how to build an infrastructure for cars that may have at best a 2 percent market share over the next decade. Charging stations are coming to California, however, and a few other places. EVs as short-distance commuter cars will aggregate in bigger cities.

Dealing with fluctuating demand for “juice” is another tricky problem, as is the disposal of worn-out lithium batteries. We have all seen the mounds of bald tires in landfills, now mostly banned, thankfully. Some organizations are working on battery recycling, among them the electric utilities, which may use still-viable batteries to help them store juice and buffer demand.

Autoweek ran an interesting piece on material costs for green cars. Knowledgeable opinion seemed to be all over the lot as to whether costs of lithium (cheap and abundant) and rare-earth elements (mostly from China) would rise or fall over the next decade. Will things develop as they did in IT, where volume drove prices down? Or will raw material costs just accelerate with increasing demand?

And who’s going to make the cars? Big automakers like Nissan and Chevrolet—with clear advantages of scale, supply, and money—or smaller entrepreneurial startups that can be flexible and innovate more easily?

We bet there will be more investments by the big players in the small ones, e.g., Toyota and Daimler in Tesla. And don’t discount the fervor and zeal of the little guys.

So we have to bet on fits and starts, even though the Feds are putting money into some of these efforts. It will take a lot more money and concerted planning to bring these elements into focus and produce what is essentially a new industry.

Most everyone knows this, but not many in Congress want to face these needs, given the anti-government fervor afoot in the land.

Should the government do more to promote EVs? Can we build a viable electric-car industry in a reasonable timeframe?

—jgoods

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4 Comments

  1. Well said! Private investors will flood the market for any promising profit-making idea. The problem is that EVs aren’t yet showing any potential for the profit motive to be exploited. This is yet another untested but much hyped idea that I believe will be difficult to motivate buyers and investors to do what they will end up doing………gambling on hope and profit. Until the infrastructure for charging stations is in place other than New York, LA, etc, consumers will be loathe to bet on hope and promise. You previously mentioned the battery issue, which is no small issue. I mentioned that these are the only 2 big issues which have been identified. We simply have to have more research devoted to this very promising technology.

    As to government subsidizing ventures such as this, I feel that the American people have pretty much had it with the government trying to be all things to all people. Government always “sells” the favored project that they want to subsidize. Being good Americans, we generally buy into what they’re selling. Not any more! Think Moon missions, Mars colonies, ethanol, Atlantis, and energy independence. All hype and hope, no substance. Well, there’s Kevlar!!

    Your points are well said and well thought out, but reality is difficult to deal with. How does one prioritize the myriad of problems that just simply must be addressed before we start thinking seriously about alternative energy. I tire of hearing about wind and solar as solutions to our energy needs. Wind and solar for cars, machines, bearings, planes, tanks, etc?? I don’t think so. For electricity generation, a resounding “yes”. But, you can’t yet make the quantum leap that Greenies believe is the instant solution to our energy needs. The problem in this case is politics and the President did that tonight. Here we have millions of barrels of oil killing industries and a way of life in the Gulf and he spends 60% of his speech tring to “sell” cap ‘n trade and even invoked “God” as a positive force to free us from dependence on those dreaded Arabs.

    Like you, I favor the implementation and research on every viable alternative fuel out there. There are simply very few downsides to trying everything that works and is cheap. Ooops! There is the problem that you address above. Who will do it?? Lets you and me figure that out!!
    Oh, by the way, there are 12 million gas powered vehicles in the world.
    The USA has 30,000. Why is natural gas never, ever mentioned as an alternative fuel?? Oh, by the way, it is dirt cheap. So my dear jgoods, what is your idea?? Keep up the good work!!

  2. @ panayoti
    You know, it’s nice when we can agree on something. The government has involved itself—certainly in my lifetime and, I’ll assume, yours—in areas where traditionally it had absolutely no business. And it has done this not really as a power grab but to fill the vacuum created in funding what many (certainly not all) considered desirable goals: I mean the things you mention in your first paragraph.

    The bottom line is both money and need. Some think our reach has exceeded our grasp and that we can’t afford any more expenditures. Others believe if we don’t revitalize the economy with jobs and a new industrial policy, there won’t be any more money generated and the US will be on the skids. We do seem to be teetering. The oil spill is a good example of government’s inadequacy to control big business.

    I think two things are inescapable if the US is to avoid fairly rapid decline:

    1. Some kind of clear priority-setting so the government quits trying to do everything for everybody. For me, that would mean stopping subsidies for agriculture, ethanol and so on, getting the hell out of Afghanistan and Iraq, and putting money into a new energy future, to include transportation and cars.

    2. Yes, developing EVs and oil independence will take decades. The DOE is trying to generate private investment, but that is a drop in the bucket. As others have said, we need a Manhattan Project to make this work, and that means planning and policy to get investment involved in a massive way. I did touch only on one or two problems with developing EVs. But we all know the broad outlines of what has to get done.

    If you want to wait for traditional investment to come in and do the job, I think that will simply be too late. Where was Wall Street in the auto bankruptcy crisis? How have they resolved the banking crisis that we are still in, and that they are part of? Much private money in the US is sitting on the sidelines, scared, hanging out in gold futures or oil stocks.

    Looking to the government to resolve these kinds of problems is a little like looking to a demented older brother to help you in a fight. Nobody seems willing to enter the fight, but how long can you put off that decision?

  3. How much can we ask the government to do?? They’re into finance mortgage companies, union pensions, ethanol and switch grass, even into auto industry ownership. Not to mention banking, Afghanistan, Iraq, strings of military bases, social engineering with Healthcare, Social Security, and Medicare. Give them your own grade on how well you think their doing. Our budgets are deep into the red with little hope of ever resolving the little crisis no one ever talks about. Oh, yeah, there’s this oil spill.

    My belief is that if EVs even get off the launching pad, it has to be by private investment not the carrot and stick offered by governments. Sure they’re viable, but at what cost? It’s like trying to wean ourselves off oil. The Greenies think that we can do this now while sensible people know that it will take decades to achieve the economies of scale necessary to pull this off. There are a myriad of problems that have yet to be addressed. You address infrastructure and battery graveyards. These are only the most obvious. What other problems haven’t we addressed yet? Let’s see how the Leaf and others do before we start projecting too far down the road.

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