The Plug-in Dead-end

By Kennedy Maize

Plug-in hybrid electric cars? Phooey. They don’t make economic sense.  They don’t represent “green” technology. But they do help the electric utility industry, which has been pushing them hard for a decade, as a way to get some load and revenue from power that otherwise would be dumped.

Now, my curmudgeonly view gets confirmed. The National Resource Council – the working arm of the National Academies of Science – in a December 14 report mandated by Congress and funded through the Department of Energy – concluded that plug-in hybrids are likely to be a dead end at least for the next couple of decades. This despite massive federal subsidies.

The outrageously-high costs of plug-ins, said the academy, “are unlikely to drastically decrease in the near future….Cost to manufacture plug-in hybrid electric vehicles in 2010 are estimated to be as much as $18,000 more than for an equivalent conventional vehicle. Although a mile driven on electricity is cheaper than one driven on gasoline, it will likely take several decades before the upfront costs decline enough to be offset by the lifetime fuel savings. Subsidies in the tens to hundreds of billion of dollars over that period will be needed if plug-ins are to achieve rapid penetration of the U.S. automobile market. Even with these efforts, plug-in hybrid electric vehicles are not expected to significantly impact oil consumption or carbon emissions before 2030.”

So, it is clear, subsidies for plug-ins, including R&D support, and tax write-offs to purchasers, are not going to produce significant national benefits. Let’s hope that Congress is paying attention (although that’s not likely).

The problem with the hybrids is well-known: battery technology. The batteries of choice for the plug-in sedans proposed by GM, Ford, and others remain lithium-ion technology. The NAS report notes that lithium-ion batteries have basically maxed out in terms of performance and cost reductions through scale economies. No improvements to the existing technology or new technologies are on the horizon. “Battery technology has been developing rapidly,” says the academy, “but steep declines in cost do not appear likely over the next couple of years because lithium-ion batteries are already produced in large quantities for cell phones and laptop computers.”

Plug-ins, relative to conventional hybrids, won’t have much impact on oil consumption by 2030, says the academy, particularly if fuel economy in conventional cars continues to improve. If 40 million plug-ins were in the U.S. fleet in 2030, says the report, they might save 0.2 million barrels of oil per day compared to conventional technologies. That’s a paltry 2% of current U.S. light-duty vehicle fuel consumption.

Nor will plug-ins make a dent in CO2 emissions (for those who care). The plug-ins will produce less carbon emissions than conventional gas and diesel vehicles, but not less than the non-plug-in hybrids, “after accounting for emission at generating stations supplying their electric power….”

The NAS report prompted a Dec. 18 Washington Post editorial, noting – which the NAS report did not address – that plug-in subsidies will flow to upper-income people, “the sort of people who can even contemplate buying, insuring and maintaining a car that is more expensive than usual.” The report says that improvements in efficiency of conventional cars – hybrid and old-fashioned internal combustion only – would reduce gasoline consumption by 40% over the next 40 years – without requiring taxpayer dollars.

“Politicians,” said the Post, “prefer plug-in electric hybrids and other flashy vehicle technologies. Pouring on subsidies makes it looks like the government is doing something effective about unemployment, energy independence and environmental pollution. The recent evidence, however, suggests otherwise.”