Plug-in electric cars can’t get enough attention these days. Whether it’s the buzz surrounding the Tesla Model S, proud announcements from auto manufacturers about upcoming plug-in electric vehicles, or constant bragging from your local neighborhood electric car owner, it’s easy for US and Australian consumers to assume that electric cars are the way of the future.
However, there are some key facts about electric cars that most of this buzz seems to overlook:
- They’re expensive. A 2013 Tesla Model S costs $60,000 – $95,000, depending on the size of the battery pack. This is an incredible cost premium over similarly sized luxury cars from BMW, Lexus, and Mercedes-Benz. While it’s true that you can “earn back” this premium every time you drive by the gas station without filling up, this earn back period can take years.
What’s more, this earn-back period is dependent upon a $7500 federal income tax credit. Without that credit, most electric cars are not cost-effective for at least six or seven years.
- There are electricity infrastructure capacity concerns. Currently, a miniscule percentage of vehicles utilize public electricity systems for fuel. However, if even 10% of the vehicles in the US (estimated at more than 250 million total) start to plug-in to power outlets, that represents 25 million new high-demand electric appliances being added to the existing power grid.
The Sierra club is quick to dismiss the impact of these new electricity demands, suggesting that “smart grids” and night-time charging will be no problem for the existing power grid. However, research from Deloitte shows that there are considerable unknowns beyond 2015. From concerns about neighborhood transformers being able to handle overnight charging loads, to the realization that one “super charger” fast charging system can use as much peak electricity as 40 households, it’s clear that no one knows exactly how the US electrical system will cope with 2 million electric cars, let alone 25. Australia’s electrical system is no more or less capable of managing these vehicles than the United States – no one really knows.
- Consumers aren’t rushing to buy electric cars. Despite generous US federal tax subsidies ($7,500 per vehicle) and US state tax subsidies (ranging from a few hundred dollars to a few thousand), no electric vehicle sales projections offered by manufacturers have been met. What’s more, most electric cars have seen substantial price drops shortly after debuting. While these price drops have started to prop-up sales, no electric car manufacturer is happy about sales…and as a percentage of total vehicle sales, electric car sales are miniscule.Australian consumers, on the other hand, have almost no interest in buying electric cars…at least that’s my assumption, as there aren’t many electric models available to Aussie consumers (and by not many, I mean three).
- Range concerns aren’t going away. The simple fact is, buying an electric car means sacrificing the ability to drive long distances, at least not without stopping (and waiting) for recharges while traveling. This is an inherent limitation of electric vehicles.
While all of these problems with electric cars can be overcome or minimized in time, the fact that there’s another technology on the horizon poised to challenge battery-electric vehicles: the fuel cell.
Automakers Are Spending Billions on Fuel Cells
The first thing to understand about managing an auto manufacturer is that you always need to think 5-10 years ahead. It can take 2-3 years to bring a new model to market, and even longer if this new model contains new technology or represents a fundamental shift in the way cars are built. Thus, if you know what automakers are spending their money on today, it’s relatively easy to project what the car market will look like in 5-10 years.
If recently announced fuel cell collaboration announcements from Toyota and BMW, or Nissan-Renault, Daimler, and Ford are any indication, fuel cells would seem to be coming fast. According to senior Toyota exec Takeshi Uchiyamada – the man who pioneered Toyota’s Prius program – battery-electric cars do not have nearly as bright of a future as the fuel cell vehicle. Here’s what he told Reuters earlier this year:
“Because of its shortcomings — driving range, cost and recharging time — the electric vehicle is not a viable replacement for most conventional cars…We need something entirely new.”
When Uchiyamada said “something entirely new,” he was talking about vehicles powered with fuel cells.
Why Fuel Cells Make More Sense Than Batteries
The big battery packs that cars rely upon are heavy, expensive, and take a long time to recharge. Unlike fuel cells, these big battery packs don’t have a lot of practical application outside of the auto industry (only Boeing is using a large battery pack on some of their new aircraft to improve airliner fuel economy).
Fuel cells are lightweight, can be “recharged” with hydrogen in a matter of minutes, and are being used to generate power for more than just cars…Bloom Energy sells “servers” that use fuel cells to generate power for entire buildings. This is an important point – there are dozens of industries that are willing to invest in fuel cells. Automakers aren’t doing all the innovation themselves, which means they’re sharing costs with other fuel cell developers.
By pairing a fuel cell with an existing electric car power train, vehicle owners enjoy the best that electric cars have to offer (minimal maintenance costs, excellent performance) while being able to stop and refuel their vehicles with hydrogen, just like they do with gasoline.
Finally, hydrogen gas can be refined from natural gas (which is plentiful) or biogas (which is 100% renewable). Without trying to be graphic, biogas can be harnessed from decomposing waste and used to power vehicles…that about as “green” as you can get.
While the future is notoriously difficult to predict, the smart money seems to be on the fuel cell. The battery electric car party is just about over.
Author David Lye is an auto enthusiast who has never quite given up on the internal combustion engine. When David isn’t writing about fuel cells, he’s helping to promote www.fincar.com.au, an Australian company that helps consumers with auto financing and novated leasing.
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