GM, CMU: Who's Right About The Electric Car? (Hint: Neither)

By Richard Read

Richard Read

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Jon Lauckner, VP of Global Program Management at GM

A week ago, Carnegie Mellon University issued a report that said long- and mid-range electric cars are "not cost effective in any scenario". Their rationale?

• The expense of installing a battery big enough to get 40 miles per charge is never going to pay for itself in fuel savings.
• Furthermore, just producing those batteries has a more negative impact on the environment than the C02 emissions of a hybrid car with a shorter electric range--say, something around  seven to ten miles per charge.
• Electric car batteries don't seem to hold up more than seven years max, and when they run out, owners face junking the car after less than a decade or installing a new battery for a chunky $16,000 or so.

All that is to say that cars like the gas-electric 2011 Chevrolet Volt, which shoot for the 40-mile option on electric only, then back it up with a small gas engine, should be reconfigured to run off hybrid powertrains with smaller, lighter, cheaper, shorter-range batteries.

A week later, General Motors' VP of Global Program Management, Jon Lauckner, has posted the official GM response. His arguments?

• A battery with only a seven-mile range means a major inconvenience for buyers, since they'll be recharging more often.
• With only a seven-mile range, the 78% of drivers who commute 40 miles (or less) to work would spend most of their time running off their gasoline engines, which would erase the environmental benefits of driving an electric car.
• Batteries for the Volt are expected to run closer to $4,000, not $16,000.
• When CMU was crunching cost-effectiveness, it forgot to take into account the federal tax credits for purchasers of electric vehicles, which run from $2500 to $7500.

A very unscientific poll conducted in the TCC employee lounge has revealed that both CMU and GM are, in business lingo, full of it. And here's why:

• In GM's favor: If CMU was that far off on battery cost estimates, that's a major strike against the study's accuracy. Since battery cost is one of the cornerstones of CMU's argument, you have to wonder what else they might've flubbed.
• Also in GM's favor: Who's gonna want a car with an electric-only range of seven miles? How can that begin to offset the cost of the powertrain?
• In CMU's favor: Even with the reduced battery expense, the Volt is still going to run around $40,000. If Americans drive around 12,000 miles per year, and they save around 10 cents per mile with an electric car, the buyer of a $40,000 Volt would have to drive it for over 13 years to make that purchase more beneficial than buying a $24,000 hybrid like the 2009 Prius. Even the most commitment-friendly folks are gonna wince at that.
• Also in CMU's favor: As one commenter on the GM site so succintly put it, "If the business plan for success of the Volt requires a sweetheart legislation package of incentives, then it’s not a good business plan."
• And thirdly in CMU's favor:  GM never addresses the environmental impact of producing the 40-mile-range batteries and whether that might be offset by performance. Seems like sloppy debate technique to us--but then, we were statewide Lincoln-Douglas champs back in high school. (Go 'Naders!)

Feel free to rip us a new one via email or in the comments below. Go on: we dare you.

[sources: Bloomberg, GMblogs]