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2009's Best Strategy/Analysis: Electrification Coalition's Roadmap
Jan 25, 2010 (From the CalCars-News archive)
CalCars-News
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To understand many of the most critical issues that face the auto industry, read the new report by the Electrification Coalition: "Electrification Roadmap: Revolutionizing Transportation and Achieving Energy Security." It summarizes and analyzes almost everything: the reasons we need to electrify transportation; the way the auto industry is now organized, and the impact of its reliance on petroleum; every aspect of the electrification solution, including technologies, manufacturers, suppliers; and national and international government policies. Most important of all, it outlines a way to accelerate a transition so that by 2040, 75% of light-duty (cars/SUVs, small trucks) vehicle miles travelled can be electric. (At the same time, though its focus was on new light-duty vehicles, CalCars believes it reinforces the case that if its strategy is paired with conversion of existing gas-guzzlers, we can get significant benefits far sooner.) Its authors and "blue-chip" corporate coalition members deserve all of our thanks. We invite you to request a PDF of the report or a printed copy at http://www.electrificationcoalition.org/­electrification-roadmap.php and mak sure it's on the radar screen of thought-leaders, elected officials, and the media.

If you get this report and at least scan every one of its 170 pages and more than 75 charts and tables, fully reading those where you realize you haven't thought about its points, you'll end up an expert -- and a far more effective advocate. Start at http://www.electrificationcoalition.org/­news.php with a punchy 30-second "Revolutionize" ad -- and a request for the URL to download the report.

BACKGROUND ABOUT SAFE: The organizing of the Electrification Coalition and the Roadmap are the most recent major accomplishment of Securing America's Future Energy http://www.secureenergy.org , the Washington-based policy group founded by Robbie Diamond. Way back in 2005, and again in 2007, SAFE sponsored a pioneering series of "Oil Shockwave" simulations with former and future government officials playing cabinet officers responding to crises. A transition to plug-in cars emerged as an urgent priority. Then SAFE formed the Energy Security Leadership Council, bringing together corporate leaders and retired military commanders. Its two reports on energy security helped advance policy discussions and legislation in 2007-2009. Now the Electrification Coalition's analysis and proposals can send their own shockwaves around the world.

TIME TO MAKE CHOICES: Until now, PHEVS and EVs were one of many recommendations from SAFE and ESLC. The new Electrification Coalition -- founding members include the leadership of Aerovironment, A123Systems, Bright, Coda, Coulomb, Fedex, Gridpoint, Johnson Controls, Kleiner Perkins, Nissan, NRG, PG&E, and Rockwood Holdings -- has taken a dramatic step beyond the traditional ecumenical approach. Every Member of Congress needs to hear why EC says it's time to make some choices: we no longer have the luxury to devote scarce attention, time, and resources to less promising solutions. They say it elegantly:

"Current federal policy provides support to a range of fuels designed to displace petroleum as the dominant fuel in the U.S. transportation system. Electrification offers the fuel diversity, price stability, and emissions benefits needed to meaningfully increase U.S. energy security. Instead of scattered, inconsistent federal support for a wide variety of alternatives, what is required is a coherent, focused strategy designed to radically drive down oil consumption in the light-duty fleet. Part of this strategy must be the acknowledgement that other alternatives, while having value, cannot ultimately revolutionize America's light-duty fleet and end oil dependence." (p.13 and 51)

COMPARE WITH EDTA'S JUST-RELEASED REPORT: This report can be looked at along with The Electric Drive Transportation Association's eight-page "Policy Action Plan 2010" http://www.electricdrive.org/­index.php?ht=d/­sp/­i/­15237/­pid/­15237 , released in time for its Green Car Summit policy session today on Capitol Hill and its conference Weds-Fri (see http://www.calcars.org/­events.html ).

EC ROADMAP: CLIFF NOTES VERSION: In an effort to motivate thousands of readers to spend time on this report, and equip you to use its information and proposals, we offer our considered selection of highlights. We have picked out what we see as the most important or said-nowhere else analytic points and given you the page citations for each. We don't focus as much on the recommendations, which are presented throughout the report and at http://www.electrificationcoalition.org/­news-launch.php . We highlight some items where we see things differently as well, and where we think the strategy can expand to gas-guzzler conversions.

SUMMARY: & I. THE CASE FOR ELECTRIFICATION:

  • VEHICLE CATEGORIES: Cars and light duty trucks (the focus of the report) together account for 46% of U.S. oil use. On the other hand, combined differently, light, medium, and heavy trucks -- the vehicles best suited for conversions -- are 33%. (10 -- figure EC):
  • NOMENCLATURE: "GEV" -- Grid-Enabled Vehicles -- is how the EC adopts to refer to PHEVs and EVs. And an "Electric Miles" concept bridges the gap between PHEVs and EVs and enables apple-to-apple comparisons. Though GEVs says more, it's up against "plug-in vehicles." Electric Miles could be widely adopted. (13)
  • VOLUME CUTS COSTS: Battery prices will fall as manufacturers scale to production volumes over 100,000/year. This can happen if car makers get the incentives to change their vehicle types faster than on the usual 5-7 year cycle -- and even sooner if gas-guzzler conversions become popular quickly. (14)
  • COMPETITIVE TOTAL COST OF OWNERSHIP: With the $7,500 incentive, PHEVs already have a lower lifetime TCO than ICEs (internal combustion engine vehicles) (15)
  • LOW VEHICLE MILES TRAVELLED/PETROLEM REDUCTIONS UNTIL ABOUT 2025: We discuss this several times later in the detailed sections. (17)
  • ECOSYSTEM STRATEGY: a "phased ecosystem" approach, focusing incentives on these areas, optimizes the adoption process. (18)
  • HIGH AND VOLATILE OIL PRICES are no longer "transitory" -- multiple factors make them "structural," (25), especially demand from developing nations (27).
  • EVEN AT CURRENT OIL PRICES: the costs of dependence can't be sustained, and the external costs aren't reflected in the market prices. (29)
  • 12-15% OF DEFENSE BUDGET FOR OIL: A 2009 RAND Corp study pegged the cost at $60-$90B/year. (30)
  • ECONOMIC CAUSE & EFFECT? A provocative chart shows oil prices spiked before every recession over the last 35 years. (33)
  • $600 BILLION/YEAR DAMAGE: oil dependency's impact on US economy, as estimated by Oak Ridge National Lab. (33)
  • TRANSPORTATION & CLIMATE CHANGE: greatest opportunities for emissions reductions. (The report points out that the stock of cars "turns over" faster than power plants or buildings, but pegs their lifetimes at 10 years, which is too low. This leads the analysts to have reduced interest in ICE conversions. U.S. DOT data show lifetimes closer to 17 years after multiple owners. (35--see more at 45 and 125-126)
  • PRIORITY TO LIGHT-DUTY VEHICLES: emphasizes this doesn't preclude steps for medium- and heavy-duty vehicles (which have longer lifetimes), but doesn't focus on them (as does CalCars). (36)
  • "GIVE US BACK THE REINS:" We like this turn of phrase for how to diversify and regain control over fuels for transportation. (37)
  • ELECTRICITY HAS BEEN GETTING CHEAPER: Surprisingly, its price in real terms has declined since 1983. Importantly for future projections, the fuel for electricity is a lower percentage of the fuel's retail cost than is crude oil compared to retail gasoline! (39)
  • $10,000 LESS LIFETIME TOTAL COST OF OWNERSHIP: Cites URL for an EPRI 2008 briefing showing the numbers. (40)
  • "IMPORT ELECTRICITY'S BENEFITS INTO CARS" is a way of looking at converting power generation and transportation . (41)
  • MEDIAN AGE OF CARS IS 9.7 YEARS: Here we draw different conclusions. The "median" is the mid-point (same number of cars younger and older; the longer "mean" average is more important), and both need to take into account how much fuel short- and long-lived vehicles use. The paragraph goes on to say that ONE-THIRD OF CARS are still on the road after 33 years. The authors acknowledge "the challenge: deploying GEVs in quantities sufficient to displace a large fraction of U.S. oil consumption will take decades." Here's where we believe the logic points to gas-guzzler retrofits. (45; see also p. 125)
  • MARKET PENETRATION SCENARIOS: Even if the report's first milestones (25% of new vehicles by 2020) are reached, GEVs will then amount to only 5.3% of the total fleet. (46)
  • IT WILL TAKE THE END OF BUSINESS AS USUAL TO GET THERE: The EC distinguishes between goals and forecasts. (48)
  • WE NEED A GAS TAX, BUT... Because gasoline is so cheap in the U.S., a tax would have the biggest impact, but short of that, the nation and the government need to choose electrification "as a dominant national strategy." (49).
  • THREE REASONS TO CHOOSE ELECTRICITY: first, a sound way to transform transportation; along the way, second, we fix the power generation sector; third, we create the next global manufacturing industry and create jobs in the U.S. (50)
  • NATURAL GAS ALTERNATIVE? Use it in power plants for GEVs instead of fuel for engines and you get TWICE the miles. (52)
  • HYDROGEN "is much more expensive than electricity, and likely always will be." (52)
  • US COULD BE LEFT BEHIND if we don't commit to electrify our vehicles. (54)
  • HISTORY LESSON: Five concise pages recap the Clinton-Era Partnership for a New Generation of Vehicles, the Zero Emissions Mandate and EVs of the late 90s in California., (55-60), then the incentive and loan programs of 2007-2009 (61-63).
  • CLIMATE CHANGE LEGISLATION: Reviews the many positive provisions in the American Clean Energy & Security Act (Waxman-Markey) passed by the House in 2009, noting that it stops short of committing to electrification as a dominant strategy. (63)

II. CHALLENGES & OPPORTUNITIES:

  • PRIMER ON HYBRID TECHNOLOGIES & BATTERIES from Japan and the U.S. (68-78)
  • NO SHORTAGE OF LITHIUM: explanation and sources, including the pithy explanation of why lithium dependence is unlike oil dependence: "we do not deplete batteries as we drive, we deplete the energy stored within them." (79-84)
  • OTHER METALS AND RARE EARTH METALS briefly explored. (85)
  • DECLINING BATTERY COSTS AS VOLUME RISES: Citations of multiple studies showing price trends, some of which we highlighted in our last posting to CalCars-News, "Rebuttals to Flawed National NAS Report -- and Challenge to Battery Industry," http://www.calcars.org/­calcars-news/­1087.html . (86)
  • SCALING ISSUES APPLY TO OTHER COMPONENTS & MANUFACTURING FACILITIES: The right way to do this is to address every part of the supply chain. (88)
  • PRIMER ON CHARGING & INFRASTRUCTURE: Of course, far less critical for PHEVs than EVs. (90-98) Retells the important Tokyo Electric story showing consumers may need reassurance more than chargers everywhere. (97)
  • SMART METERS ON THE WAY: 40 million will be deployed in the U.S. by 2015 (California requires full retrofit by 2012). (103)
  • GEVS: ICONIC SYMBOL OF THE SMART GRID and its leading edge. (104)
  • VEHICLE-TO-GRID IN 4TH GENERATION GEVS: other than demonstration programs, V2G is many years away. (106)
  • CONSUMERS WANT 3-YEAR PAYBACKS: The writers may over-emphasize (as do many journalists and industry analysts) how many consumers do the math on vehicle economics. (Better Place, and Nissan with battery leasing, as well as declining battery costs in general, may change the paradigms). (108-109)
  • NEWER, BETTER INFO ON AVERAGE DAILY VEHICLE TRIP LENGTHS: Most previous reports have been based on 2001 data (shown on page 123). Very informative charts based on 2009 data. (111)
  • 40 MILLION USED CARS SOLD ANNUALLY: These present a great opportunity to "fix" cars that have lost much of their value -- especially those with low MPG. (113)
  • CHART ON VEHICLE MIX: graphically shows how the percentages of cars, wagons, pickups, vans and SUVs have changed 1975-2008. (114)

III. ANALYSIS OF THE GOAL

  • 13 MILLION GEVS/YEAR MANUFACTURING CAPACITY BY 2020 is one goal of the EC's strategy.(116)
  • GEVS WILL HAVE LITTLE IMPACT FOR 15 YEARS: Looking at vehicle miles travelled, the ramp-up will be slow. (124)
  • CARS AND TRUCKS STAY ON THE ROAD FOR MANY YEARS: Returning to the topic on p. 45, the authors show that more durable light trucks last longer than cars: 40% are on the road after 15 years. (text and charts 125-126)
  • BY 2030, GEVS CAN BE 40% OF THE FLEET: cumulatively saving $3.7 trillion -- far more than the cost of any conceivable incentive programs. (127)
  • GEV COMPONENT COST BREAKOUTS: Descriptions and projections from the EC's technical advisors, PRTM Management Consultants. (130)
  • UPFRONT COSTS DECLINE SHARPLY for PHEVs, including the tax credit; cheaper than ICEs starting in 2014. (131)
  • OPERATING COST ADVANTAGES OF GEVS: And the assumptions behind TCO calculations. (132)
  • WHY A GAS TAX MAKES SENSE: Returning to the topic from p. 49, a full page on the reasons. The United Kingdom's tax of $3.28/gallon is almost 20x that of our federal tax of 18.4 cents (133)

IV. STRATEGIC DEPLOYMENT:

  • 120 MILLION GEVS ON THE ROAD IN 2030: The EC's plan is an order of magnitude larger than the US Energy Information Administration's April 2009 projection of 4.3 million. (139)
  • DEMONSTRATION PROJECTS: PROVEN MODEL: Successful government boosts to commercialize technologies go all the way back to Samuel Morse's telegraph system in 1834. (140)
  • FEDERAL FLEETS CAN LEAD THE WAY: Executive Orders to date have not been effective. (145)
  • HIGHER TAX CREDITS IN ELECTRIFICATION EOSYSTEMS: A strategy to maximize impact. (148)
  • REBATES AT TIME OF PURCHASE will be far more effective than tax credits. (149)
  • 70% LESS CO2 IN TRANSPORTATION: The program outlined would have a large impact by 2040 even with today's electric generation mix. (153)
  • PAY FOR ENTIRE PROGRAM FROM ONE YEAR OF OIL SAVINGS: The full cost of all proposals is less than the $600B of oil dependence costs to our economy in 2008. (153)

APPENDIX I: INTERNATIONAL SUPPORT FOR ELECTRIFICATION:

  • INVALUABLE COUNTRY-BY-COUNTRY SUMMARIES: Israel, Denmark, UK, Germany, France, Spain, Austria, Netherlands, Portugal, Italy, Japan. (154-157)
  • CHINA IMPLEMENTING ECOSYSTEM STRATEGY IN 13 LARGEST CITIES: an extended discussion of its strategies to maintain global manufacturing dominance. (158-159)

APPENDIX II; STATE OF THE GLOBAL EV INDUSTRY

  • COMPANY-BY-COMPANY SUMMARIES: AUTOMAKERS: GM, Ford, Chrysler, Nissan-Renault, Toyota, Honda, Mitsubishi, Subaru, Hyundai, BYD, China's T10 Daimler, BMW, Volkwagen, Volvo, Tesla, Th!nk, Fisker, Coda, Bright. BATTETRY MANUFACTURERS: Johnson Controls, A123, Dow Kokam, Panasonic, Samsung, NEC, BYD, Evonik. INFRASTRUCTURE: Better Place, ECOtality, Coulomb, Clipper Creek, Shore Power, Elektromotive. POWER SECTOR INTERFACE: Gridpoint and others. (160-170)

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