PLUG OK license plate
Progress on Prepayment Plan/Battery Worry Hype
Dec 17, 2008 (From the CalCars-News archive)
This posting originally appeared at CalCars-News, our newsletter of breaking CalCars and plug-in hybrid news. View the original posting here.
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You'll now find plug-in cars included as a matter of course in trends on Cleantech/Greentech, the developing federal EnergyEnvironment/Stimulus agenda, and plans, conferences and statements about climate change. If you haven't done so recently, try a news search for plug-in hybrids. Here's our third and final posting for today, bringing you up to date on our prepayment proposal and exploring the latest problem raised by plug-in naysayers

CALCARS' DEC. 1 "PROPOSAL: PREPAY FOR PLUG-INS TO SAVE & TRANSFORM THE AUTO INDUSTRY" has gotten broad coverage. Among the online outlets that ran the full text are and­article.cfm?storyid=1589 . Among the stories with comments are The Inspired Economist­2008/­12/­12/­

  • Automotive journalist Jim Motavalli at Mother Nature Network­greencaradvisor/­2008/­12/­
    went over the top in saying "Spend more than a few minutes speaking with Felix Kramer about electric cars and very quickly you wonder if he might be a genius who's ahead of his time. Like Better Place CEO Shai Agassi, Kramer (right) isn't afraid to think big when it comes to plug-in hybrid electric vehicles and straight electric vehicles. And this week Kramer -- founder of the California Cars Initiative, a Silicon Valley-based nonprofit organization that promote 100+ miles-per-gallon PHEVs -- proferred a really big idea…It's a compelling proposal.
  • Author Paul Loeb at Huffington Post wrote a long and thoughtful analysis, including, "Here's the dilemma: Detroit needs to sell cars to survive, and they need to sell them now. But every fuel-inefficient car they produce and put on the road creates an additional lien on our common future, by increasing our oil dependence and producing tons of greenhouse gases over its ten-to-twenty year lifetime….Felix Kramer, who founded the plug-in-hybrid innovation and advocacy organization, has just come up with an idea that could solve the dilemma…This would give America's car manufacturers a huge pre-sold base for these cars, a massive incentive to getting them produced and ready for the market. It would also provide a major potential influx of capital." Loeb calls the idea "a work-in-progress" an "an innovative starting point."

EVOLVING THE PLAN: We've circulated the idea among policy people, Congressional staff -- and enough people around the transition team to hope that it's been noticed. At the same time, we've concluded that the original idea for $10K prepayments (refunded within months by federal tax credits) would limit participants to those who don't finance their cars. Talks with financial experts suggest an alternative. Buyers would pay $1,000 to reserve a car, and the federal government would match each payment with $9,000, all of which would go to carmakers under the terms described in the original proposal. $1,000 is enough money to show serious intent. Either way, the program represents a way to " allow consumers to invest in technologies that are essential to any future American economy" (LOEB) and "There's a certain parallel to the local food movement, which supports community-supported agriculture (CSAs), in which a group of people agree to pre-pay for a portion of an organic farmer's crop." (MOTAVALLI)

Our goal has been to get new ideas into the mix -- especially ones that link buyer demand with automaker performance. We'll keep you posted on any further progress.


Many will remember the objections that since 2004 have toppled one by one: "No one wants a plug-in hybid…People will forget to plug in….No one will pay more up front to save money later….We'll have to build more power plants….Who needs the complexity of two propulsion systems…You're just moving emissions from tailpipe to smokestack." Now after years when we heard "the batteries aren't ready," enough automakers are moving forward to undercut that argument. But instead of going away, the objection has morphed into the idea that because we lack a domestic battery industry, we "risk exchanging oil dependence for dependence on imported batteries."(We also hear untrue statements that lithium batteries are a recycling problem and that the world supply of lithium can't grow rapidly enough. On that topic, see­8301-11128_3-10077965-54.html for a CNET story by Martin LaMonica with many links to studies on the subject, also at Plug In America see­o/­2711/­images/­World-Lithium-Resource-Impact-on-Electric-Vehicles-v1.pdf .)

Former Intel CEO Andy Grove sees a business opportunity here. He worked with a Fall 2008 Stanford Business School class to develop a plan for a new retrofit industry to modify today's internal combustion vehicles. In the short "Electric Plan for Energy Resilience" just published by McKinsey at­clientservice/­ccsi/­pdf/­the_electric_vehicle_opportunity.pdf , he proposes a U.S. government/corporate/venture capital focus opportunity to create a "Moore's Law for batteries." And he suggests in the Wall Street Journal that his former company, Intel, might diversify strategically to create a new business line supplying batteries­article/­SB122904767715400759.html?mod=googlenews_wsj .

Here are a few reasons we think concerns about battery dependence are overstated and oversimplified:

  • We have different current and potential relationships with the petro-authoritarians and state oil companies than with China/Korea/Japan. And they are very different kinds of states. Given a choice, wouldn't we prefer China as mainly our trade partner rather than our banker?
  • Petroleum dependence is unlimited and permanent. Yet once you buy a battery you no longer need the supplier.
  • Petroleum is a product with fixed characteristics (though sources of lighter crude require less refining) and required volumes. Batteries are diverse, improving 5-15%/year in energy density and cost and continually evolving in chemistries and design.
  • For those still worried, battery production can be scaled up almost anywhere. It takes two years to go from groundbreaking to production. It's similar to thin-film solar "fabs" which are being built in Silicon Valley, because companies siting locally can benefit from many factors besides labor, which for such products can be a small proportion of total production costs.

THE CAMPAIGN TO COMBAT MYTHS AND MISINFORMATION NEVER ENDS. See Joseph Romm's­2008/­12/­14/­oliphant-and-washington-post-ignorantly-smear-gm-and-plug-in-hybrids/­ and­story/­2008/­12/­15/­11753/­589 with comments, where he points to the Washington Post, which should know better, running a cartoon by Pat Oliphant, the most widely syndicated political cartoonist in the world, who misunderstands the Volt as a 40-mile-range electric car.

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