This blog is designed to highlight the diversity of views and news stories on urban energy topics that appear daily in the media. They are intended to provoke discussions on how cultural, geographic, political, and institutional influences shape the way energy markets operate and energy policies are made in cities around the world.
Sunday, July 01, 2012
This Summer, Electric Cars Are Merging Into California’s Traffic
By JOSIE GARTHWAITE
New York Times SAN FRANCISCO
IT doesn’t sound as sexy as the 1967 Summer of Love, but for Californians with a passion for plug-ins, the warm months of 2012 are turning into the season of the electric car.
Some four years after the $100,000-plus Tesla Roadster became the nation’s only new electric vehicle capable of highway speeds, a wave of more affordable plug-in cars are coming to market. And California, the state with the nation’s largest auto market, the worst air quality and the most stringent emissions rules, is the first to catch the tide.
By summer’s end, nearly a dozen plug-in cars and crossovers may be traveling the state’s highways, including five or so that are arriving before the end of August. The latest models are from upstarts like Tesla and Coda Automotive as well as from global giants like Ford and Toyota.
Aside from the state’s longtime role as a trend incubator, other factors have combined to make this a test bed for what proponents hope will be a new age in personal transportation. The state’s policy makers have set tough emissions rules mandating a rising number of zero-emission vehicles, and they’ve offered tax incentives for buyers. As a hotbed of high technology and entertainment, California has plenty of influential early adopters with ready cash. An expanded charging infrastructure is being developed and, perhaps most important, battery-powered cars grant access to the coveted car-pool lanes on congested freeways.
Among the most anticipated electric models of the summer is the Tesla Model S luxury sedan, with base prices of $58,570 to $78,570, depending on the size of the battery pack and, consequently, the driving range on a charge. While the car was under development, Tesla collected more than 10,000 reservations without so much as a test drive. Once promised for delivery in 2009, the S — Tesla’s second model — at last reached customers on June 22.
“The people who buy this car are the movers and shakers — leaders in arts, entertainment, business,” said Paul Scott, a co-founder of the advocacy group Plug In America who now sells electric Leafs at a Nissan dealership in downtown Los Angeles.
“I sold a Leaf to Danny DeVito,” Mr. Scott said. “He’s that kind of guy. But you’ve got a lot of people who just will not put themselves into a small car.” On the other hand, he said, celebrities who live large are the ones who “will drive the market” if they embrace upscale electric cars like the Tesla, influencing purchases by regular Janes and Joes.
Following the Model S’s introduction last weekend, Tesla is providing thousands of test drives for reservation holders, starting in Fremont and Los Angeles before moving on to a dozen cities across North America.
California drivers are also getting a chance to get behind the wheel of the $38,145 electric sedan from Coda, based in Los Angeles, at test-drive events through the summer in Southern California and the San Francisco Bay Area. The car will initially be sold through four dealerships in the state.
What’s markedly different about the plug-in vehicle market this summer is the growing presence of some of the world’s largest carmakers. Ford began slowly delivering its $40,000 Focus Electric to dealers in May (a month in which just six units were sold) and was expecting to ship 350 cars to dealerships in California, New Jersey and New York by the end of June.
Honda plans to start leasing its Fit EV for $389 a month in California and Oregon on July 20, with a move into six East Coast markets next year.
Certainly, electric vehicles are still in their tentative early days. “There will be model launches, but each one will be a few hundred or a few thousand,” Michael Omotoso, a senior manager of LMC Automotive, a research firm, said in a telephone interview last week. "We don’t expect an E.V. to be a big seller like the Toyota Prius anytime soon. But we also don’t expect any of these cars to be a big disaster.”
LMC’s forecast for 2012 puts sales of all-electric vehicles at only one-tenth of 1 percent of the nation’s light-vehicle market, or about 12,000 vehicles. And plug-in hybrids, which have a gasoline engine as well as an electric drive system that can be charged with a cord, are projected to claim three-tenths of a percent, or about 40,000 units.
For automakers, Mr. Omotoso said, “the significance is to show that you can produce an electric vehicle at a price that maybe not the average consumer can afford, but a lot of consumers can afford.” He added, “It’s a first step toward having a significant number of electric vehicles in the next 10 to 20 years."
As for Tesla, the Model S release is but one of its milestones this summer. In addition to opening five new stores, Tesla will provide the battery pack and powertrain for the $50,000 Toyota RAV4 EV, which goes on sale late this summer in San Diego, Los Angeles, Sacramento and the Bay Area. This electric crossover follows the rollout, in March, of a plug-in version of the Prius hybrid. Through May, Toyota sold 3,631 Prius Plug-ins, the majority of them in California.
Smaller players are adding to the bubbling E.V. activity in California, too. An electric motorcycle company, Brammo, plans to ship its long-promised Empulse R model this summer. By early August, a start-up called Scoot Networks will offer more than 50 electric scooters to members through a scooter-sharing program in San Francisco. Also over the summer, a Bay Area nonprofit, City CarShare, plans to make a big push for members to rent plug-in models it is adding to its fleet.
All of these summer arrivals join earlier releases including the Leaf and the Chevrolet Volt, the Fisker Karma plug-in hybrid and the egg-shaped battery-powered Mitsubishi “i,” a $30,000 electric car that is to arrive at dealers this month. And while Tesla has ended sales of its first model, the Roadster sports car, many of the 2,500 sold went to Californians.
Sales of the 2013 Volt, which is said to have slightly more electric range than before, are to start in August.
The relatively high concentration of new electric offerings in a few regions of California could help raise awareness and add momentum to the nascent market. Cars from companies as varied as Ford, Honda and Tesla “will help Californians to feel like there is a real commitment across the industry,” John Gartner, an electric vehicle analyst with Pike Research, said in an interview. He noted that the state’s gas prices were among the highest in the 48 contiguous states, adding to consumer interest in alternative-power vehicles.
On the other hand, Mr. Omotoso said that if gas prices fell below $3 a gallon nationally, as some analysts expect, “we’re going to see more people buying trucks again, and fewer people being interested in hybrid and electric vehicles.”
He added that if the Republicans won the White House, “there will be less enthusiasm to keep this $7,500 tax credit,” which the federal government has provided for electric vehicle purchases since 2010. California currently offers state tax rebates of up to $2,500 for battery electric cars and up to $1,500 for plug-in hybrids.
Tesla says it expects to deliver 5,300 Model S sedans in 2012, and another 20,000 next year. But Mr. Omotoso said he expected the company to achieve less than half its 2013 sales goal. “People who like technology and like to be different will buy the Model S,” he said. “But a lot of luxury buyers are more traditionalists. They’ll stick with what they know.”
It is hardly by chance that this wave of electric vehicle activity is landing in California. “It’s kind of the birthplace of the modern electric car,” said Mr. Scott, the Leaf salesman. “This is where the powerful stuff comes from, the really coolest stuff” — the motors, controllers and battery-management systems that defy old notions of electric cars as glorified golf carts.
Mr. Omotoso cited the state’s environmental awareness, its technological savvy, the long urban commutes and the pockets of wealth in Silicon Valley and Hollywood as factors that have enhanced Californians’ affinity for plug-in vehicles.
Public policy has also contributed. The state’s 1990 Zero Emission Vehicle mandate decreed that in 1998 through 2000, zero-emission vehicles must make up at least 2 percent of sales in the state by the six largest carmakers. The state set the bar at 5 percent of new vehicles for 2001 and 2002, and at 10 percent for 2003 and beyond.
Under pressure from the auto industry, California changed the law, and automakers crushed many of the 4,000-plus battery-electric vehicles deployed from 1996 to 2003 — but not before some 1,000 charging stations were in place.
“Several thousand fairly aware, high-tech, wealthy people got these cars and said, ‘Whoa, this is good,’ ” Mr. Scott said. “We had this large group of people who were cognizant of the electric car, and we talked loudly. So that’s why California is where a lot of this stuff is happening. We know about electric cars, and we don’t shut up about it.”
The state’s latest clean car rules, passed in January by the California Air Resources Board, or CARB, establish higher quotas for more automakers in 2018-2025. The current rules apply to six automakers — the three Detroit-based companies and Honda, Nissan and Toyota. In 2012-14, about 2 percent of the cars they sell in the state are required to be zero-emission vehicles.
Also, beginning with 2018 models, BMW, Daimler, Hyundai, Kia, Mazda, Volkswagen and others who sell more than 20,000 vehicles a year in California will be required for the first time to sell models with very low, or no, tailpipe emissions.
Based on the new mandates, CARB projects there will be 1.4 million zero-emission vehicles on the road by 2025, making up 15.4 percent of overall sales in California. The target for each individual manufacturer shifts depending on its market share and annual sales.
Toyota’s low production plans for the RAV4 EV (just 2,600 over three years) and Honda’s intent to provide just 1,100 Fit EVs over two years — only under a lease with no option to buy — have prompted some plug-in proponents to deride the models as “compliance cars” offered just to meet quotas.
“For years we were just fighting to get the carmakers to build the cars,” Mr. Scott said. “Now they’re building the cars, and it’s just so slow.”
From a business perspective, however, the bare-minimum strategy makes sense. "If you’re losing money on each one you make, you want to make as few of them as possible," said Mr. Omotoso. "If we get to a point where carmakers can at least break even, or make a little bit of a profit — which may not be for 10 years or more — we can see them producing more plug-ins."
A Toyota spokeswoman, Jana Hartline, said the zero-emissions mandate was “really a moot point.” In an e-mail, she called the mandate “a fact of life for over 20 years,” and said the company was committed to meeting California’s requirements through a combination of plug-in hybrid, battery-electric and hydrogen fuel-cell vehicles. .
What good is a new E.V. if you have nowhere to charge it? Wheels have been set in motion for $100 million in new charging infrastructure throughout California, under a recent settlement between a New Jersey-based power company, NRG Energy, and the California Public Utilities Commission. The deal is meant to close the book on offenses committed by Dynegy (the assets of which are now owned by NRG) during the Enron scandal and the state’s 2001 energy shortages.
“It’s a solution to the chicken-and-egg problem,” Frank Lindh, general counsel for the public utilities commission, said in a telephone interview. “People won’t buy electric vehicles unless they’re confident there’s a place to charge up. And companies don’t want to invest in charging infrastructure unless people are buying electric vehicles.”
A competing provider of charging systems, ECOtality, has filed a lawsuit over the deal, calling it an “illegal giveaway” that would give NRG a monopoly in the California E.V. charging market. But if the settlement is approved by the Federal Energy Regulatory Commission and goes through as planned, it could give places like San Francisco, San Diego and Los Angeles the densest E.V. charging networks in the world. Mr. Lindh said he expected the settlement to win federal approval “definitely this summer” and perhaps before July.