March 03, 2009
Chevy Volt Cost Effective?

Some Carnegie Mellon analysts think the Chevy Volt pluggable hybrid electric car has a battery that is too large for economic use.

But one of the main justifications GM offers for its long-term survival, "leadership in advanced propulsion technology," has been shaken by a report from Carnegie Mellon University.

The study concludes that plug-in hybrids like the Chevy Volt - GM's most publicized technology project - "are not cost effective in any scenario." GM says the Volt can go 40 miles on a single charge. But a better choice, according to the report, is a car that goes less than 20 miles on a charge.

I think one of the problems with pluggable hybrids is the high frequency with which they will need to get plugged in for recharge. You just want to pop out of our car and walk inside. If your commute round trip is over 20 miles per day then you'll need to plug the Volt in for recharge every commuting day. With a 20 mile range you would need to plug in for recharge after a commute of over 10 miles. I would rather have the higher battery capacity just to avoid the need to drag out a power cable to the car on a daily basis. For anyone who doesn't park in their own garage the need to recharge is especially onerous.

But Jon Lauckner, a GM VP involved in Volt product development, argues that the Carnegie Mellon researchers assumed too high a cost for the batteries.

The mistake in the study that "jumps of the page," Lauckner told AutoObserver, is the assumed baseline cost of the lithium-ion batteries used by the Volt and, most likely, other future PHEVs: $1,000 per kilowatt-hour.

"That's very high compared to the cost we're paying today," said Lauckner of the Volt's prototype lithium-ion batteries developed by Korean battery expert LG Chem. "And very, very high compared to the (battery cost) in the near future," once even modest engineering improvements and economies of scale kick in, Lauckner added.

The cost of batteries is not the only important assumption for a study on pluggable hybrid cost effectiveness. One also needs to make assumptions about future prices for gasoline. Well, Saudi Arabia might already have passed its oil production peak and non OPEC-12 oil production peaked in 2004. Khebab expects a sharp decline in world oil production starting in 2010. The Volt might come to market at a time of far higher oil prices. The decline in oil demand has caused its price to plummet. But such a low price has prompted a huge reduction in new oil projects. Since existing fields suffer from declining production a reduction in new oil field development will lead to lower production in future years. Oil prices will likely retrace their previous rise once economic recovery begins.

One wonders what GM expects to pay for batteries 3, 4, 5 years from now. The rate at which battery prices fall will play a large role in determining how easily we can move away from our reliance on dwindling supplies of oil.

Share |      Randall Parker, 2009 March 03 11:41 PM  Energy Electric Cars

Garson O'Toole said at March 4, 2009 5:32 AM:

Randall Parker said “The rate at which battery prices fall will play a large role in determining how easily we can move away from our reliance on dwindling supplies of oil.” There is a prominent electric car maker who is confident that battery prices will decline sharply:

Tesla CEO Elon Musk's newsletter the other day: He says that the laboriously hand-assembled lithium-ion battery pack in the Tesla Roadster would cost about $36,000 to replace today, but should last at least 100,000 miles, or about 7 years. … Pay $12,000 now, Musk wrote, and reserve a replacement battery for seven years from now …
This quote is from the Edmunds Green Car Advisor website. Of course, it is not easy to raise funds in this financial climate and 12K *now* would be handy.

brian said at March 4, 2009 8:33 AM:

Missing from the analysis is the fact that we are likely to run out of Lithium and other (rarer) elements used in rechargeable batteries and ultra-capacitors long before we run out of oil.

Economies of scale only work when the inputs are cheap and plentiful.

brain said at March 4, 2009 9:39 AM:

Yes, we are certain to run out of lithium, just as we have already run out of chromium, carbon, oil, food, and so on. Just as the Club of Rome predicted 40 years ago.

When they substitute silicon and nitrogen doped carbon nanotubes we will start to run out of carbon, silicon, and nitrogen as well. It won't be long. We is all doomed, doomed I tells ye!

Back to reality: the world economy is taking hit after hit. Obama's misbegotten economic porkulus is adding misery to misery. If you really believe that energy costs are going to shoot up soon in the middle of this clusterfucck deflation, think again.

Things are changing rapidly below the surface level of the human world. Simple minded extrapolations are less than useful in this environment.

David Govett said at March 4, 2009 1:13 PM:

There is no end to this ending. I'm gonna get in on this doomsday racket. I've got it! We're running out of omnium, a rare element available only from me. Send me $1000 and I'll send you a vial of it.

Fat Man said at March 4, 2009 9:31 PM:

Whatever batteries cost 7/40ths of a battery will cost less. Ditto on weight. Less weight means better performance. Less battery means lower cost.

A Volt with a 70 lbs. battery that does not stick into the passenger compartment strikes me a more useful vehicle.

My bets: Toyota brings out a PHEV with a 7 mi range that can be charged in one hour from an ordinary 110 V / 15 A line. It costs $25K and sells well, and GM brings out a $40K Volt and can't sell them at all.

Nick G said at March 5, 2009 3:09 PM:

"the laboriously hand-assembled lithium-ion battery pack in the Tesla Roadster would cost about $36,000 to replace today"

That's a retail price, with a hefty markup. Tesla was paying $20K two years ago for the cells.

"Less weight means better performance"

Only a little, with regenerative braking. Wind resistance is the biggest thing with a PHEV/EV.

"GM brings out a $40K Volt and can't sell them at all"

Nah. They're going to price it high as good PR will allow, to capture the early-adopter premium and the $7,500 rebate. They're likely to price it at about $37K, which would put the after-rebate price at $29,500. They're probably going to have to ration them...

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