By Tripp Hyde
(Published in SPEC March 30, 2010)
We know that electric vehicles will offer many benefits, such as helping eliminate dependence on foreign oil, greenhouse gas emissions, and pollutants.
But is the United States ready for large-scale EV adoption? Recent data on EV costs and payback to consumers raises some important questions.
The National Renewable Energy Lab recently released a study titled “Technology Improvement Pathways to Cost-effective Vehicle Electrification.” The study researches the cost effectiveness of several different scenarios of vehicle electrification: batteries sized for the life of the vehicle, batteries designed to be replaced during the life of the vehicle, opportunity charging (the battery can be recharged at the end of every trip, not just the end of the day), and both battery replacement and opportunity charging together.
Here’s a chart from NREL that addresses the cost-effectiveness of vehicle electrification using today’s assumptions (right-click image to enlarge):
NREL discovered over the four scenarios that both plug-in hybrid EVs and pure, battery EVs are not yet cost effective compared to a mid-level, conventional vehicle. No matter how they setup the EV (by varying things like battery size, driving distance, battery range, charge cycles, etc), EVs are just not cost effective.
Even though a consumer may no longer have to spend money on gasoline, the price premium of EVs is not paid back by saved gas costs in any reasonable amount of time. NREL assumed a 15-year vehicle life, but the average consumer owns a vehicle for only about six years, so cost effectiveness would be even worse in the average case.
The one scenario, however, that came to about the same cost as the conventional vehicle was “dynamic” plugging-in. This scenario allows plug-in EVs with comparatively small batteries to charge or be driven by an electrical connection along the roadway while driving (much like an electric street car). No OEMS are pursuing this technology, but some academic research is being performed.
Either way, the limiting factor to the cost effectiveness of EVs is the price of batteries. Today batteries are around $700 per kW, but they need to come down to $300 per kW to be able to compete with conventional vehicles (according to the study).
This brings us back to the original question – is it still too early for EVs? We want EVs to succeed because of their obvious benefits, but if they’re too expensive they will end up being a niche product for the wealthy. The Boston Consulting Group expects battery prices to come down to around $400 per kW but not until 2020, and the National Research Council’s outlook is even worse. Of course, battery industry groups do not agree.
Another significant issue is the effect on the grid. The DOE predicts that over 70 percent of the light duty vehicle fleet could be switched over to battery power today without affecting the grid at all – as long as they’re plugged in at night. However, if generation isn’t cleaned up, certain areas will be burning a lot more coal and releasing a lot more CO2, especially at night. Unfortunately, we have not yet seen a good study on the effects of EVs in U.S. areas that primarily use coal for electricity generation.
This said, EVs still release less CO2 well-to-wheels than conventional vehicles. The Natural Resources Defense Council and the Electric Power Research Institute released a report that investigates the effects of the electric charging portion of plug-in vehicles. With today’s grid a plug-in EV would produce about 75 percent as much carbon dioxide as a similarly sized conventional vehicle.
There are additional grid issues as well, involving the possible need for transformer upgrading, smart meter installation and implementation of time-of-use pricing plans.
In any case, EVs are still expensive and utilities are not particularly ready for them. However, EVs from many manufacturers will be on U.S. soil by the end of this year and the beginning of next. Hopefully with large-scale production ramping up, expensive EV components, like batteries and drive systems, will start to come down.
Whether now is the time or not is a very difficult question to answer, but until the EV becomes cost competitive with the conventional vehicle, wide-scale consumer adoption is still not imminent.
Tripp Hyde is an analyst with RMI's transportation practice.