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With Gas At $4 A Gallon: An Electric Cars Update

As gas prices go up, will more people buy electric cars? Industry analysts are skeptical, given the still-high price of the Nissan Leaf and Chevy Volt and persistent range anxiety, but advocates make some compelling pitches for consumers and say it's just a matter of time before EVs become more mainstream.

As gas prices go up, will more people buy electric cars? Industry analysts are skeptical, given the still-high price of the Nissan Leaf and Chevy Volt and persistent range anxiety, but advocates make some compelling pitches for consumers and say it's just a matter of time before EVs become more mainstream.

Last night I moderated a discussion about The Revenge of the Electric Car at the University of Oregon in Portland.To prepare, I checked on the state of electric vehicles in Oregon and beyond.

You might have heard that Chevy will be halting production of its hybrid plug-in Volt for a few months starting on Monday because sales have been slower than expected.

But sales haven’t been stagnant either. As MSNBC reported last week, sales of both the Nissan LEAF and the Chevy Volt are up over last year:

“Sales of both the Volt and the Nissan Leaf both increased in February. Between them, GM and Nissan sold more than 1,500 battery-based vehicles during February, making it one of the best monthly sales totals ever for the emerging technology. Leaf sales increased 617 percent, year-over-year, while sales of the Volt increased 264 percent, according to the latest sales number from February.”

It seems like everyone is anxious to see what sales will be this year, with several new all-electric cars coming out from Toyota, Chrysler, Ford and Honda.

Experts have come to the conclusion that consumers are looking for short payback time on their initial investment, a battery that can take the car 300 miles on one charge, and quick and easy charging capability. Ultimately, of course, they’re looking for lower prices than they can get right now.

John Duncan of Wilsonville became the first Nissan LEAF owner in Oregon last December. He's now one of 750 drivers of new electric cars in the state. Altogether, there are more than 1,100 electric vehicles on the road in Oregon.

John Duncan of Wilsonville became the first Nissan LEAF owner in Oregon last December. He's now one of 750 drivers of new electric cars in the state. Altogether, there are more than 1,100 electric vehicles on the road in Oregon.

A special ProPublica report found President Obama’s 2009 stimulus bill helped the EV industry by making big investments in battery innovation.

But sales didn’t exactly skyrocket as a result: At the end of 2011, fewer than 18,000 Leafs and Volts had been sold in the U.S., and several battery companies have laid off workers or declared bankruptcy.

That doesn’t bode well for meeting Obama’s goal of a million electric vehicles by 2015.  ProPublica reported “even many in the industry say the target is unreachable.”

However, Obama reported this week that the cost of batteries is coming down quickly: A 10-kilowatt-hour battery for an EV with 40-mile range is on track to cost about $3,600 in 2015 and $1,500 in 2020 compared with $12,000 in 2008.

Obama has also proposed a more stimulating $10,000 tax credit to help incentivize buyers (the federal government offers a $7,500 tax credit now).

But in the meantime, predictions for sales of electric cars are a little gloomy – even with high gas prices and lots of enthusiasm for the technology. As The Guardian reported:

“Even industry executives are not optimistic. A survey of global car executives by KPMG recently found that they do not expect electric-car sales to exceed 15% of annual global car sales before 2025. This figure is still far higher than most independent analysts offer.

‘This could be a crunch year,’ said Ed Hellwig of the auto analysts Consumers will have access to more supply and more choices in alternative-fuel cars than ever in 2012. ‘This could be the year when we see whether this is really ready to go mainstream or the public just aren’t interested.’”

 The Detroit Free Press reported it might just take longer for the enthusiasm to build into widespread sales:

“All along, you saw an enormous amount of hype for electric (plug-in) vehicles,” said Brett Smith, co-director of manufacturing at the Center for Automotive Research. “The public’s perception of the time frame for widespread adoption was way out of whack with the reality.”

 What’s happening in Oregon?

In Oregon, I talked with some of the top watchers of the EV industry. They wound up building the case for why consumers should buy EVs and why the public should give the industry time to grow before declaring it a success or failure. On the other hand, critics say, if it grows too fast, an expanding fleet of EVs will raise questions about straining the power grid, making up for lost gas taxes that pay for road work, and making sure people don’t get hit by the super-quiet cars.

Oregon continues to add to its collection of 350 public charging stations and put about 750 Volts and Leafs on the road in 2011 – for a total of a little more than 1,100 electric vehicles at the end of last year. (Its share of Obama’s 2015 goal would be about 15,000 EVs.).

Stan Sittser, transportation electrification project manager for Portland General Electric, said the utility’s grid can easily handle the extra power draw from electric vehicles – even if they grow to 10 percent of the market by 2020 (they’re about .2 percent of the market right now).

He said he’s found people are interested in EVs for several reasons: Not just a smaller carbon footprint, but also to save money on gas and for energy independence.

Getting people to buy in

 ”People need to be a little more patient. Hybrids took a good 10 years to become solid. The technology is only going to get better and better.”   — Rick Wallace, Oregon Department of Energy

PGE did some calculations on the cost of driving an electric car instead of gas and found drivers could save 75 percent on their fuel costs by plugging in at 10 cents per kilowatt hour instead of filling up at $3.50 a gallon.

“We spotted gasoline-powered vehicles 30 miles per gallon,” said Sittser. “That’s generous because a lot of cars aren’t that fuel-efficient. And we set the price of gas at $3.50 a gallon. Now it’s even higher than that.”

A new state-funded electric vehicle economic development initiative is starting up this year. Jeff Allen is leading the charge as the executive director of Drive Oregon. Allen said the electric car charging stations are here, and many of the new electric car models are intentionally launching in Oregon.

“I think the big thing now is getting people to buy them,” said Jeff Allen. “What’s most frightening is people don’t realize they’re available. That they’re here, they work now, and what options there are.”

His organization got about $1.2 million from the Oregon Innovation Council to accelerate the growth of the EV industry. But that means more than pushing electric cars on people, Allen said.

“The vehicles are the charismatic megafauna of the industry,” said Allen. “Everyone wants to focus on them, but most of the jobs and economic development opportunity are in the supply chain: batteries, wiring cables, charging stations, electric components, software … The industry is a lot bigger than most folks think.”

What the industry looks like

There are a variety of businesses sprouting up in Oregon’s EV industry already, but Allen said you “it may take some more looking” to find them than it does other companies.

For example: A company called NACCO is making electric forklifts in Fairview. A new company, Boxx is taking orders for its electric moped. Electric motorcycle maker Brammo is expanding in Ashland. And, of course, Oregon Ironworks makes electric streetcars. The Oregon Electric Vehicle Association is full of EV enthusiasts, many of whom have converted their own cars to run on electricity.

There is evidence more people are recognizing the benefits of EVs: Frito Lay has a small fleet of electric delivery trucks in Portland, the Staples uses two electric trucks at its warehouse in Gresham; Elephant’s Deli uses a Nissan Leaf for deliveries and Multnomah County just added four electric cars to its motor pool last month. Electric-assisted bikes are catching on, too, with companies like Portland’s B-using them to make large local deliveries.

How often do you drive 100 miles?

Changing the way people think about electric cars for in their daily lives might help with the sales pitch, said Allen.

“Studies all say almost nobody drives more than 20-30 miles a day. But they say no one’s willing to buy a car that doesn’t go 300 miles,” he said. “It’s not just a car, it’s you’re freedom. You want to be able to jump in a car and go to LA, but how often do you really decide to spontaneously jump in the car and drive 300 miles?”

Art James, who works on EV issues for the Oregon Department of Transportation’s Innovative Partnership Program said the average distance driven by a vehicle in Oregon is 28 miles a day. That means the Leaf, which can go 70 to 100 miles on a charge, can easily cover the daily range for most people, he said. And if they need to make a longer haul on occasion, they can rent a different car.

“Some people want to be able to take their boat to the lake a few times in the summer, and because of that they drive some humongous gas hog and they’re driving that around to the grocery store,” he said.

Gas prices and energy security

James said given the price of gas right now, electric cars offer 10 to 1 fuel cost savings that would add up pretty quickly to offset the initial price. Plus, the maintenance on an electric car is minimal: No oil changes needed.

“We’re sitting here at $4-a-gallon gas right now and people are paying 20-25 cents a mile to drive a car on gasoline,” said James. “The cost per mile is 1.5 to 2 cents for electric vehicles. If you pencil that out over five years or so, the vehicle has paid for itself in fuel costs – particularly given the fact that there’s no end in sight where fuel costs are going now. Unfortunately, people don’t think about the total cost of ownership.”

Rick Wallace, a transportation policy analyst for the Oregon Department of Energy, said energy security is a real problem in the transportation sector that EVs can help solve.

“We are depending on oil for our whole transportation sector at this time,” he said. “That’s not a good idea, depending on one fuel. In the power sector, we have hydro, solar, wind, coal and natural gas for energy. So if one goes really high we can switch to others. We need to do the same in the transportation sector. We need to branch out and diversify what we’re using.”


He said there are several ways to make electric cars more attractive to buyers: lower prices, wider driving range, more variety of vehicles to choose from, more charging stations and better incentives. That, and a little more time.

“I think people need to be a little more patient,” he said. “This is a brand new segment coming out. Hybrids took a good 10 years to become solid. Give it a little patience. The technology is only going to get better and better.”

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