While the traditional fossil fuel vehicle is pretty much a dead weight when it’s not in use, electric cars offer promise of increased utility. Automakers have been on a roll finding – and implementing – novel ways of integrating the electric car into our lives. Ford’s foray into sustainable energy partnership with SunPower is one just positive step forward. On August 2nd, Nissan took a similarly bold step forward in increasing the utility of electric cars in our lives with the introduction of the “Leaf to Home” system.

The process uses the Leaf’s 24kWh (killowatt hour) battery to power a house. Through the system, the Leaf battery connects to the home power distribution panel using a special connector linked to the Leaf’s standard charging port. The power control system is a two way design that can be used to charge the Leaf conventionally, but in the advent of a brown or blackout, the Leaf’s battery returns electricity to the home. Designed for Japanese homes, which use an average of 12kWh of electricity a day, the Leaf to Home system would barely supply an energy voracious American home for a day (typical American homes suck down 30kWh of juice daily).

Nissan is working with commercial partners to produce the system, and expect production by the end of the year. With the recent disruption in electricity production in Japan as a result of the Tohuku Earthquake, and ensuing shutting down of nuclear power stations, Japanese households have been subjected to brownouts and blackouts with increasing frequency. Nissan hopes the Leaf to Home system can help alleviate the effect of these occurrences. Nissan also believes this two way system could also be beneficial in reducing overall household electricity consumption, providing energy back to the grid during peak demand during the day (if the car isn’t being used) and recharging the battery at night when demand is low. In conjunction with sustainable energy production methods such as solar, it could reduce a household’s demand to zero in certain circumstances.

Hopefully other manufacturers take heed of Nissan’s system and partner with other household energy providers to bring out more systems like this. By making the car become an integral part of the energy usage composition of a home, households can take a major step forward in reducing their energy consumption. Considering the number of households with cars, the impact could be significant. The downside to this system is how starkly consumptive American households are with electricity. Reducing our home consumption, adding renewable energy sources such as solar – and cleverly making our vehicles do more work than just burn energy could radically reshape domestic energy concerns. Of course the installation and construction of these systems means more jobs too. In this difficult economic climate, that’s something everyone can agree on.

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In the United States, federal laws already allow significant income tax deductions that apply to new vehicles, such as the upcoming Nissan Leaf.   According to IRC 30D, purchasers of electric cars are allowed a basic tax deduction of $2,500 and vehicles with larger battery packs can provide tax savings up to $7,500.  Those who modify a gas guzzling car into a vehicle capable of operating with electric charge qualify for a tax benefit of $4,000.  Overseas in the UK, government grants provide up to £5,000 to buyers of ultra-low carbon hybrids, or plug-ins.

So what about the States?

Depending on the state in which you live, tax incentives can vary wildly.  For example, California‘s Clean Vehicle Rebate Project allows rebates up to $5,000 for low-carbon cars and up to $20,000 for commercial trucks.

Washington car buyers are exempt from paying sales taxes on electric and fuel-cell powered cars.   Converted cars are eligible for tax credits as well.

The state of Tennessee, choosing to go in an interestingly different direction, is offering free charging equipment to plug-in owners who need to refuel at home.  As of now, however, only certain cities are eligible.

Florida provides special financing arrangements for those who wish to install charging equipment on their property.   Residents or businesses in the Orlando metropolitan area can apply for free charging equipment from Coulomb Technologies.   All electric vehicles are allowed on the High Occupancy Vehicle (HOV) Lane.

To learn more about the wide variety of rebates, grants, and credits that might be offered in your state, the Department of Energy breaks down the laws and tax incentives.  As you can see in the table, certain states are way ahead of others (ahem, California) in the subsidizing game… for better or for worse.

These laws are fluid, and they are certainly going to be amended and updated once the plug-in rollout hits full speed.  In determining whether to opt for an electric car, price is obviously a major consideration for consumers.  Whether it trumps performance, and more importantly, convenience, is another question.  It seems, however, that all these considerations are at least being worked on.

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G

• The new Global Battery Systems Lab is located at the Warren Technical Center campus on the outskirts of Detroit. According to information coming from the company, it cost GM $25 million to construct, takes up 33,000 square feet, and employs over 1,000 engineers. The facility will operate 42 thermal chambers and 160 test channels that will expose batteries to real-world driving conditions and test the limits of their design and capacity. Included in the testing are 32 battery “cyclers” that will continuously charge and deplete battery cells for further efficiency studies. The battery headquarters will most likely be utilized by GM and its suppliers, LG Chem and Compact Power, to perfect the sort of lithium-ion batteries in the upcoming Volt and its successors.

While this new facility sounds like a definite step in the right direction to improve the technology and compete with Chinese battery heavyweights, some of the numbers don’t seem to add up. Firstly, $25 million is a very small number for a state-of-the art lab. To put it in perspective, Apple recently announced that it would be spending $1 billion on a server farm. Second, employing a thousand engineers would be very expensive – certainly exceeding the price tag that was given – and appears to be an excessive concentration in one facility. Additionally, the start date of construction was only last August and there is no word yet if more money is needed to operate and expand the center.

In the meantime, GM has plans to create a battery-focused engineering curriculum at the University of Michigan, around which they plan to construct another battery lab.

Amidst these developments, the speculation that the Volt program might be discontinued is probably going to quiet down, perhaps for good.

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There have been several prominent speculations over whether GM will abandon its plug-in program.   Keith Johnson, writing for the Wall Street Journal, has come out saying he believes the Volt will be an unpopular choice for consumers and the new government ownership.   He argues that with taxpayers now about to own 70% of the company, management will be trimming costs and focusing on models that are affordable and have a high certainty to sell well.   They can either cut the Volt line, or continue it in the hope that “either costs come down or consumers suddenly change their habits and run out to buy a $40,000 compact sedan.”

On the other side, Michael G. Richard writing for Treehugger.com,  believes in a more long-term approach.   Comparing the Volt to the Prius (back when oil was $20-$30/barrel), he argues that GM management will look towards a future where electric cars are in high-demand and oil prices are closer to the peak they hit in 2008.   Without introducing the Volt, they will not be able to learn about electric vehicle-technology and will thus “miss the boat” when its competitors are releasing 2nd and 3rd generation plug-in vehicles.

Is There an Internal Debate?

GM spokesman Tom Stephens proclaimed  earlier in the week that the Chevrolet Volt program has not been altered due to GM’s current financial woes.  According to Stephens, plans are still on track to bring  it to market by late 2010 — Additionally, they are even deciding on which other brand should get a vehicle based on the Volt’s Voltec technology.

Besides the optimistic statements from management,  Compact Power, GM’s battery supplier, recently offered their perspective that the Volt is GM’s highest priority program.  For now, at least, there does not seem to be any loss of commitment to the EV program.

Uncertain Future

There are dynamic forces at work affecting the supply and demand side of the electric vehicle equation.  The global recession has made consumers less apt to spend on a car with a $40,000 price tag that offers some green prestige.  Lower oil prices make the switch even less appealling.  On the other hand however, government subsidies and infrastructure spending by companies such as Better Place are providing  incentives that are hard to ignore.  If companies can plan for a future where charging stations are adequately dispersed, battery technology is improving, and competitors are cranking out newer and better models, it will be unwise to completely buck the trend.   Statements from the Saudi Arabian Oil Minister predicting  nearly $200/barrel oil within 2 years further that view.

With the flux in consumer spending habits and public/private expenditures, there is probably no real consensus within GM whether the Volt will be a success.  This is precisly why I believe they will continue the program.    Their survival will depend on diversification and an ability to respond to the market.   Keeping all their eggs in the combustion-engine basket could deliver a knockout blow should oil spike back up or a revolution in electric battery technology tags them as “behind the curve”.   As Mr. Richard argues, they need to have their first generation plug-in vehicle hit the market, not because it will be an instant success, but so they have the expertise and infrastructure in place to produce a best-seller years down the line.

Update (6/1/2009): Michael Moore, who has often spoken about GM and its problems, has blogged about his thoughts on the GM Bankruptcy affair.   Moore  offers his advice on how to save the entire  industrial complex built around automakers,  largely by advocating the development of an electric vehicle and light rail infrastructure.

Usually outspoken on issues of corporate incompetence, Moore takes on a more conciliatory and  foreward-looking tone.  It is an interesting read for anyone familiar with his historically “controversial” calls for action.

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One of the thorniest issues facing the mass adoption of electric-only vehicles is the time it takes to charge them – plugging in for a couple hours seems cumbersome for anyone wanting to drive more than just to work and back. There have been several solutions proposed, such as waiting for advances in battery technology, battery-swapping stations, and improving charging standards and infrastructure. A group of engineers in South Korea, however, have proposed and tested an idea that is totally different: letting the road charge your vehicle while you drive.

The scientists from South Korea’s acclaimed KAIST University have already begun work on a project that aims to lay induction strips on city roadways to charge fleets of buses and cars. They would be about 20 to 90 centimeters wide and several hundred meters long. Vehicles that are outfitted with sensors and magnetic devices would be able to receive power through a process called inductive charging, without coming into direct contact with the strips. Additionally, cars will be outfitted with a very small battery that can provide additional range.

Safety issues are expected to be minimal as humans and animals would be able to touch the strips without receiving a shock.

A few buses on KAIST campus are already making use of the technology, and the capital of Seoul, with its population of 10 million and fleet of 9,000 gasoline-powered buses, has promised to set aside funds to construct the roadway charging system. Test runs are expected to start within a year.

The engineers at KAIST were provided government grants of $50 million to fund two projects, one of which led to this development. It is unclear, however, what the costs would be to extend this idea to a major city. One spokesman at the Korea Advanced Institute of Science and Technology estimates the price at $318,000 per kilometer of road. That does not include the cost of upgrading vehicles. It seems feasible that a small fleet of buses running along a lightly travelled route can be used as a test scenario.

Undoubtedly, many cities around the globe will be watching the initial test-runs in Seoul. Yet with so many varying proposals for electric-vehicle technology coming out, it is hard to predict which model, or models, will finally prevail.

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The American Clean Energy and Security Act, also known as H.R. 2354, was opened up for amendments and debate today in Congress.  The legislation is meant to introduce  measures that increase energy efficiency, deploy green technology, and transition the country away from fossil-fuel dependence.

The Bill mandates utilities to begin development of plans that support electric vehicle infrastructure and standards for incorporating their integration with a smart power grid.   It also authorizes the Secretary of Energy to provide financial assistance for the deployment of plug-in vehicles throughout the country.   This assistance includes, but is not limited to, providing funds to offset the costs of purchasing electric cars, funding the construction of charging stations and battery-exchange stations, and promoting the integration of plug-in vehicles with the grid.  It also states that the Secretary of Energy may financially assist automakers with the retooling of factories and the purchase of batteries for first-production models.

H.R. 2454 further directs the President, the Department of Transportation, the EPA, and various state regulatory agencies to establish regulations for greenhouse gas emissions and fuel economy standards.

With the private and public sectors collaborating to ensure wholesale upgrades to the energy infrastructure, it is increasingly becoming a question of when as opposed to if plug-in vehicles will have a major impact internationally.

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The startup entity behind this model is called Better Place, and the man at the helm is Shai Agassi.    Agassi’s ambitious propsal includes installing a network of charging stations where customers can swap the old batteries from their cars with new batteries.  Sophisticated software will allow the company to determine when electricity prices are at their lowest, at which point the old batteries will be recharged.  At peak hours when demand is high, they will be able to sell excess power back into the grid.  The third party to this electricity arbitrage will be the buyer, who according to Better Place will benefit from the low cost of electricity when compared with gasoline.   Additionally, the waiting time to switch batteries will be minimal, as Better Place has engineered a robot capable of performing the task in under a minute.

The whole scheme, and especially the prospect of having a hassle-free battery swap, will require massive standardization.  This is where Better Place’s partners come into play.  Agassi has formed an agreement with Renault-Nissan, who will be spending about $600 million to build electric versions of its existing vehicles.   The expected deployment date is 2011, and in the meantime Better Place, along with several energy companies, will be constructing the electric infrastructure.   Stations are already spring up in Japan and Israel, and investors plan on raising $1 billion (Australian) to construct a similar network in Australia.

We are so used to thinking of our cars as necessary capital expenditures with maintenance costs and a fixed life.  Our mobile phones, on the other hand, are largely subsidized by telecom companies who offer contracts or pay-as-you-go deals.   In the latter scenario, more of the driver’s costs are deferred, and they vary according to his or her needs.

This business model, however, does seem to have its drawbacks.  Consumers will have to adopt the mindset of their car becoming a standarized accessory, rather than a symbol of self-expression.  Additionally, the prospect of having to visit a charging station each time you want to “refuel” is daunting and might be hard to accept — Designing the vehicles with the ability to plug-in at home will go a long way to solving this.   Another problem is basing the pricing model off the distance that the driver travels:  this might create an incentive for customers to “steal” power from their batteries, transferring it out to another battery perhaps, and simply swapping at a station for free.  However, if Better Place were to switch to pricing for the charge in their batteries instead of mileage, it would make it difficult to implement charge-at-home functionality (unless a tamper-proof “meter” were placed in the car).  And finally, the cost of building the infrastructure will be extremely high, yet without plenty of swapping stations available, it would be hard for a driver to justify signing up.

Mr. Agassi and his company already have a lot of believers despite the large hurdles facing them.  Whether his model succeeds or fails, it will have lasting implications for the auto industry.   We will continue to keep an eye out here for the latest related developments.

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Called “The Business of Plugging In”, the conference will be held from October 19-21 at the MotorCity Hotel and Conference Center.  It will bring together various interest groups to discuss the future of plug-in electric vehicles.

“This conference will foster the dialogue among utilities, automakers, regulators, universities and other stakeholders to assess the environmental impacts of PEVs and to assist with the understanding of how widespread adoption of electric vehicles will impact the electric system,” said Al Fields of DTE, an energy company.

An executive from GM said before the conference said that the industry needed “customer-pleasing vehicles, a mature supply base, a capable/green grid, plug-in ready communities, and plug-in ready car buyers… the key stakeholders must work together to deliver great cars, outstanding batteries, convenient charging outlets, and real value for the money.”

It should come as no surprise that Detroit will start playing host to annual meetings around the topic of PEVs.  You could argue that they are a couple years behind in the game.  It’s hard to tell from the news release, however, how many high-powered corporations and investors will be attending; and once they get through discussing the major hurdles, will everyone still be as enthusiastic about the sector?

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