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Who revived the electric car?

The auto industry faces its biggest changes in 100 years


 

It must have been hard not to gloat. Chris Paine—filmmaker, eco-activist, gadfly to the lumbering beast of the U.S. auto industry—was sitting on a panel as a special guest of General Motors Corp., sharing thoughts on the future of transportation. Paine’s 2006 documentary Who Killed the Electric Car? had made him a blood enemy of GM, which is what happens when you suggest a company has conspired with government and Big Oil to scuttle its own product. Yet here was GM, flying Paine out to Detroit three weeks ago to witness the unveiling of—you guessed it—another electric car. At a symposium afterward, industry types who not long ago vilified him as a distorter of truth listened intently as he passed judgment on their efforts to reinvent themselves. “If they’re reaching out to people like me,” the filmmaker concluded, “they must be getting serious.”

In the last 12 months, such spectacles have become a norm in the auto industry, a looking-glass world where environmentalists now stand shoulder-to-shoulder with Big Three executives, and the head of General Motors openly muses about the electrification of the U.S. auto fleet. Words are cheap, of course. But these ones point to the carmakers doing something we never thought they would—decoupling themselves from oil—and recently the carmakers have backed the talk with action. Two weeks after GM unveiled the production model of the Chevy Volt, an electric car equipped with a gasoline generator to recharge its batteries, Chrysler stunned the auto world by introducing three electric-powered vehicles it developed in secret. The cars are projected for sale in 2010, which will put them on pace with both the Volt and a plug-in electric car Nissan Motor Corp. plans to test-market within two years.

And those are just the electric cars. Toyota is working on a plug-in version of the Prius that after a full charge would allow drivers to go 10 km while using scarcely a drop of gas. Ford is road-testing its Escape plug-in hybrid as we speak. Honda? Just got its hydrogen fuel-cell car approved for sale by the U.S. Environmental Protection Agency—an industry first, and a last hurdle before the car goes to market.

For people like Paine, it’s all a little dizzying. “I don’t trust car companies as a rule,” he told the liberal radio network Air America. “But they’re certainly making it look very real.” As recently as two years ago, GM maintained that its previous electric car, the EV1, was not commercially viable; now it’s staking its future on similar technology. Chrysler cranked out its three electric prototypes in one-quarter the time it normally takes to develop a new model, raising questions about whether it is truly ready to join what increasingly resembles an arms race.

Then again, fear has a way of clarifying the mind, and if one GM executive compared the Volt to “a moon shot,” it’s because Detroit is in desperate need of a success. According to some estimates, half of the cars sold in the world by 2020 will run on something other than gasoline. And fuel-saving alternatives are already the fastest-growing segment of the market, with sales of hybrids, including plug-ins, projected to climb to 2.5 million by 2015, from 500,000 in 2007. Yet the Big Three have allowed their Japanese competitors to dominate the field in recent years, with Toyota claiming more than half of the U.S. hybrid market last year.

Whether Detroit’s Hail Marys will close the gap is unclear. Consumers may rightly wonder whether they should commit to a vehicle developed in less time than it takes to age a decent bottle of wine. And what if the economy craters? What if the price of fuel goes back down? Sure, a car like the Volt costs one-sixth what it takes to drive an average car. But its projected US$40,000 price tag may drive a lot of mid-market buyers back toward fuel-efficient gas models.

With so many obstacles still ahead, drivers shouldn’t expect the Big Three to turn on a dime, says Dave Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. “This is going to be incremental,” he cautions. “These companies will start by selling 40,000 models, then 100,000 and so on.” Still, Cole isn’t one to overlook the psychological hurdle the industry has just crossed. At long last, carmakers are ready to part company with the internal combustion engine, he says, with implications for practically everyone on the planet: “We’re at the threshold of the biggest change in 100 years of the auto industry.”

Getting to this point has not been easy. Back in the early 1900s, when inventors were trying everything from batteries to coal to propel their buggies down the road, the internal combustion engine was itself a brilliant solution, and with oil as plentiful as it was, fuel efficiency remained a non-issue for the next seven decades. Even the OPEC shock of 1973 failed to get Detroit interested in alternative fuels: instead, small foreign cars that drank less gas flooded North America, forcing Detroit to offer equivalents.

Only the debate over global warming in the 1990s, with its spectre of curbs on carbon emissions, turned the tide, and it was during this period that the Volt’s ancestor, the EV1, gave form to the utopian dream of a zero-emission vehicle. Starting in 1996, GM test-marketed the car in California on a lease-only basis, sending a flutter through the Hollywood do-gooder set. Mel Gibson leased one. So did Chris Paine. But there was a problem: the car could only go about 120 km after a 15-hour charge, which put GM in the position of trying to sell a vehicle that could get you there, but not necessarily home. So in 2000 the company decided to go back to the drawing board, informing the original 800 lessees they would not be allowed to purchase their EV1s and—in a particularly ham-fisted gesture—crushing the last specimens of the car at a facility in Arizona. That suspicious-looking act became the centrepiece of Paine’s film, while spawning a host of adjunct conspiracy theories (the company still finds itself denying that it scrapped the car because it was “too reliable” and therefore likely to cut into its aftermarket maintenance revenues).

In the big picture, though, the death of the EV1 didn’t much matter. By then, Toyota and Honda were selling early versions of their gas-electric hybrids, which attracted enough socially conscious buyers that the Big Three automakers were forced to match. Ford was experimenting with hydrogen fuel cells and producing gas engines that could also burn ethanol. GM, meanwhile, was putting lessons from its experience with the EV1 to work. New lithium-ion batteries offered the prospect of cheaper, more efficient power packs, while the true breakthrough came during long-distance testing of the EV1, says David Paterson, vice-president of corporate and environmental affairs for GM Canada. “The engineers had been towing motorcycle trailers with generators on them so they didn’t have to stop to recharge,” he says. “At some point, somebody asked, why not put the generator on-board the car?”

In short, the innovations necessary to get electric cars on the road were more or less in place by the time GM issued a concept version of the Volt in 2007. The X-factor was consumer demand, and if drivers had their own psychological barrier, they crossed it last April when oil surpassed $100 a barrel and stayed there 20 weeks. By August, sales of light trucks in North America, including large SUVs, had plunged nearly 18 per cent from the same period last year—a decline of 1.18 million vehicles. This retreat might have sent the automakers into a panic, had Washington not intervened with a whopping $25-billion loan package meant to ensure the new technology will be affordable to average buyers. As GM chairman Rick Wagoner put it at a congressional hearing: “The good news is we’re going to subsidize your purchase.”

A good thing too, considering the heart-stopping costs of developing,
manufacturing and marketing an alternative-power vehicle. GM sank more than $1 billion into the EV1, and while executives are tight-lipped about development budgets for the current vehicles, it’s safe to assume they too approach 10 figures. Nowhere is the pressure on car companies more evident than at Chrysler, where electric-car engineers crammed the normal four-year process of developing new models into an all-out sprint of 12 months. Now the real work of parts procurement, manufacturing and assembly begins, says Doug Quigley, an executive in charge of Chrysler’s electric car group. “It’s as if we’ve just finished running a big race, then someone fired a gun and said, ‘Now you officially start.’ ”

Building a car from the ground up was never an option, Quigley adds, given GM’s sizable head start. So he took a more streamlined approach, adapting plug-in electric to the company’s existing models. The result is three distinctive models, each wearing a different Chrysler brand and each aimed at a specific market. There’s a Jeep Wrangler for yuppies still attached to their SUVs, a two-seat Dodge sports car for the young and young-at-heart, and a Chrysler minivan for suburban families. Like the Volt, the van and SUV will run on batteries backed by a gasoline motor for recharging on the fly, with a range of about 56 km on a full charge (the two-seater will boast a battery range of about 200 km).

The numbers look competitive, and Quigley speaks confidently about Chrysler’s ability to “pull ahead of everyone in the pack.” But it’s going to be a battle. Last week, GM announced plans to build a $349-million plant in Flint, Mich., to build the Volt, showing just how far its program has advanced. And while Ford had previously seemed focused on turbo-charging technology to improve fuel economy, it too is getting interested in electricity. In a recent speech, executive vice-president Mark Fields enthused about the performance of the plug-in version of its Escape Hybrid (“120 miles per gallon over the first 30 miles” after a full charge) while noting the company was plowing two-thirds of its R & D budget—nearly $4.7 billion annually—into fuel-saving technology.

It’s an unprecedented spending spree, which has the potential to break the supply end of the business wide open, says James Rubenstein, an expert who has studied the parts network that keeps the automakers running. He points to the lithium-ion batteries expected to power the plug-in electrics. While car assembly remains centred in the U.S. Rust Belt, lithium-ion was developed in Silicon Valley to power cellphones and computers, so that may prove the most logical place to make them. “At this point, we don’t know whether this is good for Michigan, for California, for Canada or for Asia,” he says. “The assumption is it will disrupt the supply chain quite substantially. There will be major winners and losers.”

Already, a kind of gold-rush mentality has taken hold, as myriad suppliers pop up in hopes of snagging orders from the automakers for unfamiliar products. Last year, project leaders like Quigley had three battery suppliers to choose from. Now they have 13. Conversely, it is a seller’s market for electrical engineers, as the Big Three assemble ever-larger teams to design and test their products. Greg Cesiel, program director for the Volt at GM headquarters, can’t even ballpark the number of engineers he has working on the project. “It’s certainly in the hundreds,” he says. “But we have people all over the world working on this program.”

And as with all spending sprees, the spectre of disaster is never far off. At the same panel where Paine spoke, long-time auto analyst John Casesa worried aloud about the ability of the Big Three to make themselves over amid a struggling economy—not to mention the toughest competitive environment in their collective history. “They have to do battle with the Toyotas and Hyundais, and that’s just to get through today,” said Casesa, a consultant who guides investors on auto-related businesses. Given the Japanese makers’ head start on hybrid technology, throwing themselves into eco-cars may prove crippling. “Honestly, I don’t know if all of them in the next 18 months will be able to stand as independent companies.”

One of the biggest challenges will be choosing which technology to bet on, adds Rubenstein. Many experts believe the next decade will see the market splinter almost equally between electric cars, hybrids, ethanol-burning vehicles, fuel-cell vehicles and fuel-efficient gas models. That puts individual carmakers in the position of gambling big on one technology, or trying to keep pace in several. “But they just don’t have the resources to be the market leaders in all of them,” he says.

Finally, and perhaps most importantly, established automakers will need to be on close watch for interlopers, some of whom have been experimenting with electric transport a lot longer than they have. In the last few years, venture capitalists in California have been plowing money into electric-car start-ups, leading some analysts to wonder whether Silicon Valley might supplant Detroit as an automotive centre in the clean-car era. Last June, Tesla Motors Inc. opened up a showroom in Los Angeles to market its all-electric sports car, drawing admiring press from around the world. Few seemed put off by the vehicle’s $109,000 price tag. Stir up enough buzz, observers reasoned, and the demand for cheaper models will follow.

The good news in all this is that consumers stand to gain, be it in sticker price, choice of energy source or the presumable clearing of air on highways across the continent. Whoever benefits, we’re about to witness a level of drama unseen in the industry since Henry Ford mass-marketed the Model T—the all-out race to cash in on road transportation’s second great invention. Which may explain why Paine has planned a sequel to his film, tentatively titled the Revenge of the Electric Car. A thumbnail plot is easy to predict: murdered vehicle comes back to life, makes its killers pay the price. GM might not be fussy about the ending. But hey, they live in Detroit, not Hollywood.


 

Who revived the electric car?

  1. I am sure the big three will take thier baleout momey and run.
    They will try to shove the gas guslers down the consumers throat because thaty is where the profit is.
    They manufacture ethenol fueled vehicles in Brazil,Why not here?.
    A electric vehicle with a ethanol fueled engine for charging the batterys would be polution free.
    Larry

  2. You don't cite any sources, where are you getting your information/figures about people's increased demand for electric cars. Can you really attribute the growth of the electric car industry to the documentary? I'm writing a piece on the demand and cause for electric cars from 2000-2010. Do you have sources to share?

  3. the car is ugly

    • it looks gay

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