Santa Clara Mag Blog
Prepare for a JOLT!
Thursday, Feb. 24, 2011
With gas headed toward $4 a gallon, that’s put a charge on one of the news stories that closed out 2010: the re-emergence of the electric car.
Born before the Model T, given up for dead a decade ago by General Motors, the electric car is now roaring... make that gliding back to life. In the closing weeks of 2010, a few hundred plug-in hybrid Chevy Volts and all-electric Nissan Leafs were delivered to U.S. customers.
The trickle of deliveries presages a coming deluge. Nissan has already booked 20,000 reservations for the LEAF, plans to make 50,000 in 2011, and expects to sell 500,000 annually by 2013; G.M. plans to make 10,000 Volts this year, and recently boosted 2012 production from 30,000 to 45,000 units.
Watching the developments is Silicon Valley veteran and electric vehicle evangelist James Billmaier ’77, author of JOLT!: The Impending Dominance of the Electric Car (Advantage, 2010).
Santa Clara Magazine spoke with Billmaier a few weeks before the delivery of his very own Nissan LEAF. He won’t be the only EV early adopter in the family. Billmaier’s father, 92, is the oldest customer to have reserved a LEAF.
SCM: Why will consumers choose electric vehicles over the gas-powered cars they now drive?
Billmaier: The short answer for the consumer is better, faster, cheaper – and electric vehicles are a blast to drive. But, the great thing about plug-in vehicles is that there are so many reasons for consumers to buy them – and the reasons vary based upon the individual. This was a major reason for me writing JOLT!
I discovered that while the planetary reasons, what I call “the Al Gore arguments,” were a huge motivator for a certain set of people, those same arguments were polarizing for another set of people.
The father of the Chevy Volt, G.M. Vice Chairman Bob Lutz [now retired], believes that human-caused climate change is a hoax. However, Bob Lutz is a huge fan of electric vehicles.
In Bob's case, it’s all about eliminating our dependence on foreign oil and the problems associated with defending the part of the world where we source 30 percent of our petroleum.
The meta-level arguments for Americans buying electric vehicles are reasons of national security, economic recovery and expansion, competition with China – but mostly EVs are a blast to drive. EVs are addictive in a good way.
SCM: One of the strengths of JOLT! is in dispelling many of the myths that threaten to impede the adoption of EVs – that they are prohibitively expensive, that you are merely trading emissions at the tailpipe for those at the (likely coal-fired) smokestack, that drivers will be stranded by a dead battery. How will EV supporters overcome these misconceptions?
Billmaier:: These types of myths have existed for every previous technological paradigm shift. When I was running the software networking group at Sun Microsystems at the outset of the Internet revolution, every week the media would run doom and disaster stories of how the entire Internet infrastructure was about to explode.
The Chevy Volt was just named North American car of the year; the Nissan LEAF was just named European car of the year.
Both cars are sold out.
Every major car company in the world is bringing a plug-in car to market this year or next year. High-information consumers who understand the benefits of EVs are buying these cars.
Those consumers are the most influential component of the adoption food chain. The influencers are buying the cars, they will drive the cars, and they will tell their family, friends, and neighbors to do the same.
The transition of personal transportation from one powered by petroleum to one powered by electricity is "impending." It is not a question of if; it is only a question of how soon.
SCM: Better Place CEO Shai Agassi has predicted that by 2020 electric cars will outsell gas-powered cars. Is that timeline too ambitious?
Billmaier: I agree with Shai's prediction. Based upon the predictable technology advancements of electrical energy storage combined with all of the other significant advantages of electric drive trains vs. internal combustion drive trains, by 2020 the advantages of EVs over gas-powered cars will be so significant that even the most naïve consumer will choose a plug-in car.
SCM: Speaking of Agassi, the Better Place model (miles as a service comparable to minutes and mobile phones; the use of battery swapping stations) is not mentioned in JOLT! Can the Better Place model work? Is there room in the marketplace for competing EV networks and technologies?
Billmaier: There are many different business models being tested right now.
I believe that the Better Place battery swap concept has huge adoption challenges throughout the auto value chain. I think this model will only be successful in small market niches.
There are some models, such as what NRG is trying in Houston, based upon a monthly subscription, that are interesting.
However, I believe that the EV will be treated like any other electric appliance (air conditioner or computer) and the electricity will be paid for in a similar way.
As for competing EV networks and technologies, just like the cell phone business, there will be competitors. At a high level, there will be cooperation, just as you can roam from a Verizon cell network to a Sprint cell network.
SCM: How long do you think EVs will need government support such as tax incentives and grants for charging stations? Billmaier: The interesting thing is that EVs would need no government support if we would just remove taxpayer subsidies paid to offset the true cost of gasoline.
U.S. taxpayer dollars used to protect oil pipelines and oil-tanker shipping lanes, combined with direct subsidies paid to oil companies, amount to about $2 per gallon of gas. We are really paying at least $5 per gallon each time we fill up our tanks with gasoline.
That equates to about $12,000 in taxpayer subsidies over the life of a gas-powered car.
Many argue that the true cost of gasoline is much higher due to downstream health and environmental impacts.
That said, I do not believe it is politically feasible to remove taxpayer-provided subsidies to the oil industry at this time.
However, in an effort to level the playing field and allow accurate market forces of capitalism to occur, U.S. and state governments should offset the taxpayer subsidies being provided to gas-powered cars for the next 5 to 10 years – or until we find the courage to remove the oil-industry subsidies.
SCM: Has the landscape changed even in the few months since the publication of JOLT last fall?
Billmaier: The manufacturing capacities of both Chevy Volt and Nissan LEAF have increased multiple-fold.
Nissan is now talking about a 500,000-unit worldwide production capability by 2012; Chevy has increased their manufacturing capacity plans four times, based on the demand they’re seeing.
To put this in perspective, Nissan has a worldwide manufacturing capacity of this first-run car of about 20,000 cars, which sold out. In just the Seattle area, where I live, we had 2,200 reservations – 10 percent of global capacity – and 11,000 households did a “hand raise” to say they were interested in buying one. The demand is huge.
-- Justin Gerdes, freelance writer for SCM
Coming tomorrow here on the Santa Clara Mag Blog: A review of JOLT! by Justin Gerdes.