By Paolo von Schirach
August 7, 2013
WASHINGTON – The idea of ditching the outmoded car powered by the obsolete and high emission internal combustion engine, while switching over to electric vehicles (EVs) is fashionable among the educated American elites. Indeed, the notion of driving a modern, silent EV that burns no gasoline (actually some models, like the Chevy Volt, use a mix of electricity and gasoline) sounds enlightened and progressive. It is a way of making a statement, a personal commitment to green technology while fighting climate change. (Never mind the small detail that the electricity that will power your green vehicle is generated mostly by burning evil, dirty coal).
Poor sales
Still, even though electric cars are supposedly the wave of the future, when it comes to actually buying them, the smart and educated American elites are not so keen. So far, sales of EVs are even more modest than the cautious projections made by manufacturers (GM, Ford, Nissan, Tesla) had indicated. GM said that it would sell about 60,000 Chevy Volt in 2012. Still, valiant marketing efforts (and tax subsidies) notwithstanding, they sold less than 30,000. And this in the US, a market in which several million cars are sold every year.
High end and far more expensive electric-only Tesla is also selling very few vehicles: about 5,000 per quarter. Notwithstanding its preposterous and indeed absurd $ 16.4 billion market capitalization, Tesla is not selling that many of its sporty, high performance electric cars. If you compare Tesla’s EVs sales with US sales of Porsche, another brand for the wealthy, the latter sells almost 100% more cars than Tesla.
Still imperfect EV technologies
So, why is it that the announced EV revolution has not happened? Quite simple. These cars, while their technology has improved considerably, are still too expensive. Besides, consumers are uncomfortable with limited battery autonomy and lack of recharging stations. Even if you consider tax breaks and other incentives, very few want to buy a rather cheap looking Chevy Volt that comes with an almost $ 30,000 price tag, after tax rebates.
Issues will be resolved
That said, I am reasonably confident that these obstacles will be overcome, probably much sooner than we think. Manufacturers will figure out a way to lower costs and extend the range of future batteries, while making them smaller, lighter and cheaper. Over time, there will be more and more advanced recharging stations. At that point, there will be no drawback in driving an EV, with the huge advantage of super cheap fuel. Consumers will benefit and people in large cities will breathe better air. Therefore, in a few years we can expect to see more attractive and finally cost-effective EVs on the road.
Trucks will be powered by natural gas
However, while electric cars have a future, it is a totally different story when it comes to heavy vehicles. As T. Boone Pickens reminds us, as of now nobody can make an affordable electric-powered 18 wheeler. At the moment, no auto company has the capability to manufacture a cost-effective heavy truck powered by an electric motor.
Still, even without electricity coming to the rescue, there is a new fuel frontier for trucks as well: and it is called natural gas, either liquefied or compressed, (LNG or CNG). Unlike electrical engines still in their infancy, compressed or liquefied natural gas engines are not new technology. They have been around for a long time. In America we did not adopt them simply because for decades we relied on relatively cheap diesel.
Cheap shale gas
But now it is a completely different story. The price of oil, (almost 50% still imported), today is much higher. At the same time, thanks to hydraulic fracturing, (better known as “fracking”), US energy companies today are able to recover plenty of cheap natural gas trapped in vast shale formations (the Marcellus shale in the North East is one of the largest) here at home. Natural gas is used mostly to generate electricity. But now we have so much gas here in America that many are planning to export it. Well, instead of selling it abroad, let’s use it to power our gigantic national fleet of heavy trucks.
Everybody wins
This slowly unfolding “natural gas as transportation fuel” revolution will be advantageous for all key players. Large fleet operators (Wal-Mart, FedEx, UPS, AT&T) will switch to natural gas-powered trucks because LNG and LNG cost on average 50% less than diesel. The environment will gain because LNG/CNG emissions are about 30% lower than diesel. The US balance of payments will gain because by using our own domestic gas as fuel we could stop importing about 3 million barrels of oil a day. Finally, our energy security will be enhanced, because by using our own gas we shall no longer depend on distant suppliers for a vital source of energy.
So, good luck to Tesla, to the Chevy Volt and all the other EV manufacturers. But when we talk heavy vehicles the future is natural gas.