Ken’s Take: The conventional plan has been to make small hybrids — that few outside metroplexes are interested in, and which stand no chance of generating profits for auto companies. I like that this plan tries to transforn SUVs and pick-ups into socially responsible rides..
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Excerpted from the McKinsey Quarterly, “An Electric Plan for Energy Resilience”, by Andy Grove and Robert Burgelman, December 2008
Every president since Richard Nixon has vowed to reduce the United States’ dependence on foreign oil. None has succeeded. Imports—and thus America’s vulnerability to disruptions—have increased to where now they supply two-thirds of consumption.
Our aim should not be total independence from foreign sources of petroleum. That is neither practical nor necessary in a world of interdependent economies. Instead, the objective should be developing a sufficient degree of resilience against disruptions in imports. Think of resilience as the ability to absorb a significant disruption, bigger than what could be managed by drawing down the strategic oil reserve.
The best alternative to oil? Electricity. The means? Convert petroleum-driven miles to electric ones.
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What would it take to build enough plug-in electric vehicles (PEVs) to make a significant dent in oil consumption?
Revamping the fleet of automobiles already on the road through production of new automobiles would take far too long for comfort. If ten automobile manufacturers each introduced a new PEV now and increased its production as fast as Toyota did with its highly successful Prius, the vehicles would still account for less than 5 percent of the 250 million vehicles on US roads a decade from now.
We believe the United States should consider accelerating this movement by creating an industry of after-market retrofitters.
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We estimate the price tag of such a pilot project to be around $10 billion, owing to the present high cost of batteries, which are around $10,000 each.
Assuming an average gas price of $3 per gallon, the payback period to the owner of a retrofitted vehicle is at least ten years, not a strong economic incentive.
But the benefits of this program—testing and validating a key approach to energy resilience—accrue to the well-being of the United States at large. As the general population is the predominant beneficiary, economic assistance flowing from everyone to vehicle owners, in the form of tax incentives, is justified.
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There are different approaches to retrofitting vehicles. We favor GM’s Volt design, in which the car is directly driven by an electric motor. To simplify the retrofitting task, we would limit the scope of the program to six to ten U.S. models, selected on the basis of two criteria: low fuel efficiency and large numbers of vehicles on the road. Most of these vehicles would be SUVs, pick-ups, and vans.
Further, we propose targeting fleets of automobiles owned by corporations or government entities. That way, many retrofits could be performed at just a few locations.
Given the current difficult economic conditions, auto dealers and garage operators may well be attracted by this potential new source of revenue and be eager to participate, helping the program in its early stages.
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The biggest problem, however, is the availability of batteries. The most suitable battery technology, which offers both a sufficient range and enough power to provide the acceleration required by today’s drivers, is the lithium-ion battery system. Making the batteries required for one million vehicles would mean doubling current manufacturing output.
There is another issue we need to consider. While there are many sources of the batteries’ raw materials—such as lithium and cobalt—battery manufacturing is almost exclusively based in China, Japan, and Korea. To avoid battery manufacturing becoming the next source of dependency, we have to build domestic technical and manufacturing capability.
Another important goal is to improve the cost and quality of battery technology.
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We are approaching the inevitable decline of oil availability which gives the United States the opportunity to move into a more desirable strategic position. Today, we compete with countries whose richer natural resources give them a strategic advantage. If we shift transportation towards electric miles, we gain an opportunity to employ our own resources: newly energized governmental leadership, a tradition of high-volume manufacturing, and a culture of technological innovation.
These capabilities and skills have served the United States well in the past, and the drive toward electric miles may help revitalize them. That result is every bit as important as the electric miles themselves.
Edit by DAF
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Full article:
http://www.mckinseyquarterly.com/Energy_Resources_Materials/Environment/An_electric_plan_for_energy_resilience_2276
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