As an engineer, economist and energy executive, I’ve been interested in following the economics of energy at local and geopolitical levels. The economic efficiency (or inefficiencies) of energy supply chains continue to be of great interest in my work life and in satiating my personal interests. Electricity from renewable resources is on the mind of everyone who pauses to think about the power supply chain. The supply of oil for transportation is about as interesting now as it ever has been; as global supplies are moving to more difficult and capital intensive means of production.
The newest production technique to increase supply in the United States is essentially melting shale and tar sand in Northern Canada with steam and sending it by pipe or rail to US-based refineries. This process is becoming pretty energy intensive and costly. Using natural gas to make steam, to then make thick oil out of the hard material and diluting the heavy oil with a solvent so it can flow in a pipeline, to then refine it into petrol, seems like an overly complex way to get energy for a car to get to and from work. The economic pressure to seek alternative solutions is at an all-time high to say the least.
I’ve owned a long list of great cars over the past 34 years. Muscle cars, super cars, utility vehicles, pick-up trucks, compacts, track cars, and so on. I’ve had the thrill of zero-to-60 pulls in less than 2.9 seconds and been flying along the long, flat back roads of Canada. I’ve been lucky enough to drive ridiculous speeds around race tracks in the most wonderful machines. In summary, I’ve been fortunate to have the full range of experiences in whatever the car industry has dished up over four different decades. I’ve even been called a “petrol-head” by my family and friends because of my love of speed, noise and adrenalin. But things have changed for me and they are likely to change for all of us.
I recently acquired my first electric car, a Holden Volt. (Technically, it’s an extended range electric car because you carry back-up power on board; but I’ll get to that later). After driving an electric car around for this short time, I’ve reached an interesting position of extreme clarity. The Volt is the definitive expression of the future of transportation. There is no two ways about it, you cannot picture personal transport without seeing each commuter sitting in an electric car; and, based on what I’ve experienced so far, they will be very happy to do so.
Here is why:
I’ve discovered I can travel to and from the Auckland CBD from the North Shore as many as eight times on a single charge. This morning I used 1.5 kWh getting to work. That trip costs around 30 cents. When I get my time-of-use meter installed, I expect that same trip will cost 10 to 15 cents. I charged it up a couple of days ago, at night. At peace with the knowledge that geothermal, hydro and wind power had a big hand in getting me the electricity. Each time I hit the brake in the stop-and-go life coming over the bridge, I smile as the battery graphic on the dashboard tells me it receives some electric power. Another smile occurs when the downward glide on the south side of the bridge recoups nearly half the power used climbing the upward side. The little green ball on the dash tells me I’m using the optimal amount of electricity as the commuters beside me shift up and down; burning petrol in engines designed to go 50 to 150 km/h. My 10 cent trip, for them, will likely cost a dollar or two. The economic difference is not trivial over a week, year, decade or lifetime. Petrol costs in the order of 4 to 8 times (depending on driving habits) more than electricity in a car, and unless the car is a hybrid, all the energy used through the loss of momentum when braking is not recovered. It sounds kind of funny, but as oil comes in short supply, the world can no longer waste those little bits of energy associated with 2 billion drivers hitting the brake pedal; and the economics are now here to recover it.
The idea of visiting a petrol station, no more than once a year, is realistic. Or better said, petrol stations for me are only required to leave town. This is a material luxury for moms dropping the kids at school on their way into work. Society will not take long to embrace the freedom of loading a car with energy while sleeping. (Hard to put a price on all this; but anyone who has dripped petrol on your shoes or hands would clearly prefer not to, if given the choice. This will be a big deal for some, you can bet on it.)
Opponents will say, “yes but look how expensive the Volt is. The savings in operating costs are bogus and easily chewed up in a premium paid for batteries and electric motors.” Well, it is true, it is a costly car, compared to some. But how do you economically evaluate the comfort and quality in a car? Very few question the economics of a 3 series BMW or an Audi A4 over a Honda Civic or a Toyota Corolla. Nobody tries to dissuade a keen buyer from those choices because of the economics. I would argue instead that the Volt is a sumptuous ride wrapped in all the great creature comforts that those icons have. It is the tightest, best built Holden ever made (according to Holden NZ’s boss) as the car is built to be silent. Thankfully, Holden saw the wisdom of building a car where rattles and shakes were eliminated against the imperceptible hum of the electric motor. As you likely know, for motor vehicles, silence costs money.
In fact, you could argue it is even better than those icons, in many respects. The silence is rewarded by better sounding music. The commute is serene with a smooth ride resulting from no transmission. The cabin is odour-free and the car clearly does not contribute fumes to the air outside. When on the phone, clear-crisp voices coming through the hands-free mobile are not affected by the slightest ambient noise. Constant feedback of the benefits of silence is inherent in a drive-train not made up of a million little explosions in cylinder heads. Now that’s a comparison worth making, as at the end of the day, a ride should be measured on the quality of the experience. The only murmur of an engine you ever feel is when the on-board generator kicks in to extend your trip when the battery runs down. This is when the annoyance becomes a virtue as any anxiety of running out of power goes away. Brilliant stuff.
For those that love a fast car, you might ask where’s the visceral joy and the rush of speed and the guilty pleasure of your head-snapping back with each stomp of the pedal? Not a big problem as the torque of electric motors can move this car along in the optional sport mode. It feels as fast as a 3 litre V6 in my estimation. Not bad for 1/8th the cost of fuel! Besides, who gets that thrill of speed commuting to work anyway?
Finally, the question of managing the overall capital cost. The sticker price of this Holden is right up there with entry level BMWs, Audis and Mercedes Benzes. It’s a lot of capital to invest in chasing lower operating costs. But it is not as bad as it sounds, as the good folks at Holden will lease the car for similar monthly costs as a Volkswagon Passat or a fully loaded Ford Falcon. Not bad at all.
What about the future cost of electric cars? Time will tell. But I am personally confident that a car without a transmission, drive train, rear axles, differential, engine or backup generator will easily be as cheap as a low end Honda or Toyota with all those parts in the near future. This is a certainty in my mind; if you remove all the bells and whistles, the Volt will be simple and easy to build. I imagine a sub-$20,000 Chinese no-frills electric car is on its way, and you can bet it will be the choice of the masses when the 8 times savings in fuel costs are advertised. And if the Chinese do it in numbers, you can bet the Japanese, Koreans, Indians and even the Americans and Germans will not be far behind.
It doesn’t take much of an expert to note that as petrol costs rise, power from other sources are starting to fall. Filling your car at work with solar power is not far away. Vast parking lots with solar panels shading electric cars will be very normal, quite soon. The shade happens to lessen the air conditioning demand in the first few minutes of starting up as well. It is all smart; and all a part of getting an energy supply chain that is more economically efficient. It could be argued that no amount of naysaying or vested interest stonewalling can stop the enormous power of the economic advantages contained in this ultra-simple supply chain.
So there you have an early piece of feedback from an early adopter. It is now likely that I will always have a car that delivers all of these benefits. Inexpensive to run, luxurious, quiet, fill-it-up at home, good looking, adapts to long trips and performs when I need it. It also contributes to making our scare petroleum resources last a little longer. Not bad at all.
Thank you General Motors and Holden for making it available in New Zealand; (and for the record, they did not ask me to share these thoughts with you!)
CEO, Pulse Energy