Friday, July 30, 2010

Merging Onto Electric Avenue

From CTV

Merging onto electric avenue

Simon Houpt and Joanna Slater

If you ask Peder Norby what he thinks of Al Gore, he’ll chuckle and use the phrase “snake-oil salesman.” He refers to “quote unquote global warming.” He’s a self-described conservative Republican, calls himself a boring person, and has never been on the cutting edge of anything. And yet Mr. Norby, a 47-year-old planning commissioner with the County of San Diego, may just be an unlikely poster boy for one of the most momentous movements now under way, a worldwide revolution that its most ardent advocates say has the potential to pre-empt wars and save the planet.

And it all begins with the adorable little car sitting in the driveway of Mr. Norby’s southern California home, the one with the license plate that reads “SUNGAS.”

Just over a year ago, Mr. Norby took possession of a Mini E, a two-seat version of BMW’s sporty Mini Cooper runabout equipped with an engine powered entirely by a 260-kilogram lithium-ion battery. At the time, he was one of only a few hundred North Americans driving an electric car. But now, with the announcement this week by General Motors that it will start selling its long-awaited electric and gas-powered Chevrolet Volt for $41,000 (U.S.) in November, and Nissan Motor Co.’s promise of an eight-year warranty on the battery of its Leaf, U.S. and Canadian roads may soon be experiencing a charge of the electric brigade.

Still, with even Toyota’s Prius remaining something of a cult favourite, is there a big enough market for any of the manufacturers to make a profit on the new vehicles?

The skeptics are already pouncing. In a New York Times op-ed, a leading automotive editor called the Volt “G.M.’s Electric Lemon.” Polls on auto websites resounded with sticker shock (even though the approximate Volt price had been known for more than a year). Rush Limbaugh mocked the car as the province of elites and said the various government subsidies (in the United States, a $7,500 U.S. tax rebate; in Ontario, a $10,000 tax rebate) proved that “nobody wants this.”

But Mr. Norby, for one, points out that many sectors (see: the oil industry, the gas car industry) receive vastly greater sums from the government. He recalls the grim, grey days of the 1970s, an era of gas pump oil shocks and putrid brown skies above Los Angeles before car companies were forced by new environmental laws to install catalytic converters. And despite his political leanings, he’s grateful for government involvement in helping industries adapt. A few years ago, he took advantage of government subsidies to convert his home entirely to solar power (which means charging his Mini is 100 per cent emissions-free).

The first year of his Mini lease cost $850 a month; that has now been cut to $600 a month, meaning it now costs him less to run than a similar gas-powered vehicle. Maintenance costs are almost non-existent.

And, he adds, there’s a patriotic reason to drive an electric car. “With the founding of this country, we did not want to be dependent on any foreign government or kings. We wanted to be an independent nation,” he said. “I don’t believe we’re independent today. I believe we’re dependent on foreign governments and kings, some friendly and some unfriendly, and I don’t like it.” (And yes, while he recognizes Canada isn’t a Middle Eastern kingdom, he’d rather the U.S. buy oil from us by choice rather than by necessity.) If Mr. Norby is not your typical environmental foot soldier, that may be because this revolution is drafting people with a wide range of motivations: the potential market for electric vehicles may not yet be deep, but it is unexpectedly broad.

“The early market is driven by enthusiasts who have very strong feelings about technology,” says Tom Turrentine, the director of the Plug-in Hybrid Electric Vehicle Research Center at the University of California, Davis. “A lot of the buyers are like people who buy iPads,” But research by his institute shows the next wave of buyers ranges from casual and hard-core classic environmentalists to people worried about air quality, from peak oil advocates to citizens concerned about the military and economic security of the United States. At this point, he says, a lack of knowledge about electric vehicles may be the greatest roadblock to their success.

A few hours up the road from Mr. Norby – further than you could get on a single 100-mile charge of the Mini, that is – Peter Trepp is doing his part to spread the word. The first person to take delivery on a Mini E last year, he regularly blogs about the experience and is writing a book, a primer for the electrically curious.

“If I pull into a Starbucks parking lot or something, at least once a week I have a 10-minute conversation about the car,” says Mr. Trepp, the CFO of the enterprise software firm ServiceMesh. “Somebody sees it, wants to know what it is – ‘It’s a hybrid, right?’ ‘No, it’s all-electric.’ ‘How can it be all-electric?’ You launch into a conversation.” In fact, Mr. Trepp carries around cards in his Mini that he hands out as a follow-up, pointing people to his blog if they’re interested in more information. His wife uses them too when she’s driving and finds herself buttonholed by bypassers. “She’s less interested in engaging people in these long and relatively nerdy conversations,” he explains.

While Mr. Trepp took the lease because he’s a technology fan, the last few months have added an urgent undertone to the conversations. “I’m a born-and-raised Republican, but things like the B.P. oil spill, if that doesn’t underscore our need to start thinking in this direction, I don’t know what would,” he says, adding that he endorses President Barack Obama’s heavy support of new energy initiatives.

Which is part of what’s now helping to motivate the auto makers. Toyota has enjoyed a halo effect for years because it was the first prominent manufacturer of a commercially available hybrid. G.M., looking to reposition after bankruptcy, could use some of that magic. “It certainly won’t hurt,” says Mr. Turrentine, who notes that G.M.’s former Hummer brand became, “a symbol of a misguided industry, so certainly they’re looking for a symbol to show they’re not misguided.”

But how good are the economics? The Volt “is a great idea and it’s going to do very well eventually,” says John Roy, an alternative energy analyst at investment firm Janney Montgomery Scott LLC. “Kudos to GM for doing the right thing, but don’t expect to sell 2 million of these,” he says. (On Friday, G.M. announced it was increasing its production capacity for 2012 by 50 per cent, to 45,000.) Mr. Roy notes that electric cars still have huge hurdles to climb in the U.S., including “range anxiety,” or concerns about how far a charge will carry a vehicle, the poor performance of the batteries in cold weather, and the fact that the models run small for American tastes.

As someone who evaluates the market for its investment potential, he worries that the hype has run ahead of the reality. “I want this stuff to work but it’s got issues,” he says, which may be solved with time and new technologies. “In 20 years, we’ll have 200-mile [electric] cars and plenty of charging stations.”

But other analysts counter that the future will arrive far sooner than that, prodded by massive government assistance. They note that four-fifths of American drivers commute less than 40 miles each day, which is exactly the Volt’s range.

In one sign of changing times, earlier this month, New York Mayor Michael Bloomberg inaugurated the city’s first electric-vehicle charging station at a parking garage in midtown Manhattan. The company behind it, Coulomb Technologies, hopes to have 5,000 such stations installed by October 2011.

While it will be a long time before electric cars take over the road, the rollout of such vehicles is accelerating. Every major car maker either has an electric car on the road or is developing one. In the coming months, Nissan will launch the Leaf, an all-electric car, and Ford is entering the scene with its Transit Connect EV, a small van.

“Will we see them in mass this year? No,” says Michael Lew, an energy analyst at Needham & Co. LLC, a New York investment firm. But he expects them to gain traction. By 2015, he predicts they’ll make up nearly 5 per cent of global car sales, or more than 3 million units.

Lyle Dennis, a New Jersey neurologist who just turned in his Mini E after a one-year lease, in anticipation of buying a Volt, says driving an electric car is simply fun. “Every time I got in the car I was happy about it, because you sort of get this inner thrill that you’re driving around without oil.”


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