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

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Jon Lauckner, VP of Global Program Management at GM

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]

 
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Comments (25)
  1. "Not everyone lives in a city"

    I live in a small town 120 miles from a major airport. As such there is no way an electric only car will ever work out here. Surely there will be a balanced approach where we will have efficient gas or diesel cars that can travel vast distances. Electric may work in the cities, but don't forget about others that are far removed.
     
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  2. "CMU is right"

    The payback for the Volt is 13 years if you don't count the battery replacement cost. Any battery replacement cost only extends the payback period.
    Even if GM's $4000 estimate is right, the resale value of a used Volt will be pretty poor if the buyer is wary of this expense.
     
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  3. "RE: City"

    Remember there is a gasoline engine on the "volt." After 40 miles of driving has drained the battery, then the gasoline generator would kick in and power the electric motors so you could keep driving.
     
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  4. "Wrong again"

    I don't kn, ow if either party is right. I do know GM has a history of making wrong decisions that by the time they are to market are obsolete. Either way, Hydrogen power is a better solution, not batteries.
     
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  5. "Mr"

    It seems to me that the conversion kits are more on target - they use much cheaper batteries that do not last as long but can be replaced for relatively low cost (or added to for more range). We could have electric cars now if the existing technology was used.
     
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  6. "MANAGER"

    Why leave out the fact that the Volt will be eleigibale for the $7500 tax rebate. Now a $40,000 car will be $32,000. I think that takes some time off the 13 years needed to recover fuel costs. Plus if someone does use it in electric only mode 90% of the time, the savings will be much higher. I wonder why everyone seems to be able to come up with new scenarios that add cost to the car, but never argue new benefits. How about not having to stop at gas stations and the time saved there, how about not idling in drive throughs or in traffic, why is the flexibility of this platform never discussed, apparently it can be adapted to use diesel, fuel cell, e85 power sources.
    There are a lot of doomsayers, but I'm excited because someone (GM) has taken the steps to change what we drive, and maybe this is the beginning of the end of our dependence on foreign oil, and in the future fossil fuels altogether.
     
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  7. "We're optimistic, but..."

    ...Even at a technical cost of $32,000 plus tax, the owner of a Volt would have to drive it for nearly seven years to see a benefit that outweighs buying a $24,000 Prius hybrid. That figure--and my calculations in the article--are based on the HIGHLY optimistic assumption that the Volt is only driven in electric-only mode.
    Seven years isn't a particularly long time to drive one vehicle, but if the battery gives out at seven years (as the CMU study indicates), replacement would totally wipe out any of the Volt's savings.
    Trust me: we're all very excited about the possibilities. The industry as a whole is in turmoil now, but the future is thrilling. That said, the way forward is complex, and there will be some serious missteps. Electric cars are definitely on the menu, but at the Volt's cost, it doesn't seem to make much sense--and if it doesn't make much sense, chances are, it won't sell.
     
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  8. "and yet..."

    I'm gonna bank on Congress insisting on Volt/Buy US legislation, now that GM's future is this vehicle. Don't bother with payback/ROI calcs--Congress can just add zeros to make it pencil in. I'm more interested in the entertainment value watching all these environmentalists flip-flop on electrics/hybrids, once they have to write big checks for new batteries as well as disposal of the old ones.
     
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  9. "On the bright side"

    Wow, it is amazing how many people are so stubborn and Afraid of change...these people must love sending there hard earned pay to the big middle Eastern oil Co. If you think Positive good things Will happen,. Numerous individuals and companies have proven 100+ Mi. is doable Now,... at highway speeds included. The Big 3 are just over complicating a simple thing. You are on the internet do some research people.Most people I know don't even hold on to a car for Seven years, five is usually upgrade time regardless of price. Stop letting the industry Brain Wash you....
     
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  10. "That's not quite the point"

    @JRL: I think all of us would love to see an electric car with a 100+ mile range. I think all of us would love to reduce our dependence on foreign resources and cut our energy consumption. However, what the folks at CMU are saying--and what GM doesn't really deny--is that given the current technology, electric cars aren't cost-efficient. In other words, they may be great for the environment, but they're not going to be attractive to buyers. To really take hold in the marketplace, those cars have to do what they say they can do, and do it at a competitive price.
    .
    Also: some of us hold onto vehicles MUCH LONGER than five years. Just sayin'.
     
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  11. "That's not quite the point"

    @JRL: I think all of us would love to see an electric car with a 100+ mile range. I think all of us would love to reduce our dependence on foreign resources and cut our energy consumption. However, what the folks at CMU are saying--and what GM doesn't really deny--is that given the current technology, electric cars aren't cost-efficient. In other words, they may be great for the environment, but they're not going to be attractive to buyers. To really take hold in the marketplace, those cars have to do what they say they can do, and do it at a competitive price.
    .
    Also: some of us hold onto vehicles MUCH LONGER than five years. Just sayin'.
     
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  12. "We gotta start somewhere"

    The bottom line is none of the solutions that have been mentioned so far may end up to be the right one. But if we wait until we have the absolute best answer before we do anything, which is exactly what the oil companies want us to do by the way, nothing will get done. Ford is coming out with a 100mi. all electric car in 2011. We'll see.
     
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  13. "Remember Also"

    Eventhough someone drives the volt on battery power only, you would have to operate the gas generator periodicly to keep the fuel system from gumming up.
     
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  14. "Ms."

    It seems that many have forgotten that GM already made a very nice, reasonably priced electric vehicle which was called the EV1. They "snatched" those cars from the users that LOVED them and wanted to even buy them for a ridiculous amount of money just to have the ability to use such a superb vehicle.
    I am definately not a liberal, but I gotta tell ya ... something is VERY strange about what has happened and is happening with the electric car. Perhaps refreshing ourselves by watching a little film called "Who Killed the Electric Car?" would be helpful.
     
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  15. "Ms."

    It seems that many have forgotten that GM already made a very nice, reasonably priced electric vehicle which was called the EV1. They "snatched" those cars from the users that LOVED them and wanted to even buy them for a ridiculous amount of money just to have the ability to use such a superb vehicle.
    I am definately not a liberal, but I gotta tell ya ... something is VERY strange about what has happened and is happening with the electric car. Perhaps refreshing ourselves by watching a little film called "Who Killed the Electric Car?" would be helpful.
     
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  16. "Feasible Electric Cars"

    Try looking at a little company from Norway called THINK. They already sell a car in europe and have a larger minivan style under development with a 120 mile range and a great deal cheaper than the volt.
     
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  17. "The Electric Car"

    It would be nice if an EV would cost so little after inflation hits the car industry
     
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  18. "Once upon a hybred..."

    As Confused & Mark s. already commented on earlier,GM already made an affordable, hybred that got about 40 mph on the battery at which time the driver switches to gas & the the gas motor charges the battery while powering your car just like it always has. They made about 15,000 or so, but they kept it very low-key & the few ads they did run were so out there, they didn't even say what they were selling.People in Europe were lined up to buy one of these and eat the large shipping costs,because their electric & hybred cars (yes,they've have them going on 2 decades now) are tiny.The thing is though, Going hybred or electric doesn't just stop our oil consumption by lowering our gas use, but also - The oil we use in cars & everything else that goes into the combustible engine market,The Trucking industry that moves oil,gas,Engine parts etc. around our country 24/7 is a small country unto itself with trucker restaurants,hotels,gas stations,& mechanic shops.All of the amenities, accessories,detailing,and decorations truckers can buy for the outsied & inside of their trucks;not to mention the companies that make the rigs (The small town where I live makes drive-shafts for rigs & have about 90% of that market. Well,you get my drift.So, we have a huge sector of lobbyists (representing good folks, I have no doubt about that)that for decades have managed to convince Washington to keep the status-quo,have helped their "bosses" flaunt EPA rules & regs, and have intimidated GM and anyone else who is actually trying to make "green products" and take some responsibilty for our planet instead of just Stringing the Government & public along like they have.So,the little guys at GM who built the EVs watched while the big guys loaded up these thousands of brand new cars and (you guessed it) threw them into a landfill,Making the status-quo safe once again in America. The End.
     
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  19. "EV1"

    GM built, then had destroyed, a small fleet of electric vehicles called the "EV1" to lease to a select few customers; all the people who had them thought they where the best cars they had ever driven. Watch "Who Killed The Electric Car?" about what GM did to them!
     
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  20. "You need to do better research"

    The Volt will be obsolete before it reaches the show room floor. You and your readers need to properly research the current advances in battery/electric storage technology; ie EEstor and ZEEN cars. I f you check out these two companies you will soon discover that a highway capable car will soon be on the road; spring of 2010 according to ZEEN Motor Copany. This car will have a range of 450 km and will charge up in as little as 5 minutes with an industrial strength electical outlet; similar to what a welder would use. Or if you plug it into a regular wall outlet it will chare in 8 hrs; 4 hours for 3/4 charge and 8 hrs for a full charge. I am quit shocked that no one has commented on this revolutionary technology. Not
    only will EEStor save the planet but it will also revolutionize many electrical problems currently faces in industry. No environmental issues one tenth the wait of current batteries etc. Please try to update your thoughts on the Electric car and don't trust the company that HAD an electric car, a car that could savwe them from bankruptcy ,the same company that sold the rights to their own succesfull battery to an oil company. Way to go GM. Morons
     
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  21. The question is what the CMU study would show when one takes into account the more expensive electric sports cars? While more expensive they do have the required range.
    Q. What is the range on a fully charged Lightning?
    A. We are seeking to exceed a range of 188miles/300km on a full charge.
     
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  22. Hey, has everybody lost sight of the real purpose of going with something/anything other than foreign oil and eventually fossil fuels; "it's the economy and the environment stupid!" Yeah it's going to cost me the consumer a little more to purchase an electric vehicle and yeah maybe I will not get my payback in 7 or 14 years "whatever", but is it not time Americans pave the way to improving the environment and saving our natural resources. We all need to stop thinking in terms of “what’s in it for me” and start looking at preserving and protecting this earth for our kids and their kids to come.
    One major equation that has been missed by CMU; what happens when oil prices raise the price of gas to $5 plus dollars a gallon and that is not an if, it’s only a matter of when!
    Now let’s address the $24,000 Prius hybrid. I commute 120 miles round trip a day, by the way I have a 2009 Chevrolet Tahoe Hybrid, and I am exposed to these small fuel efficient hybrids on a daily basis. Just the other day I was following one of them that was occupied by three large occupants. We were in stop and go traffic and this thing could hardly get back up to speed after slowing in traffic which resulted in adding an additional (estimated) 20 minutes commute time to everyone behind them. I wonder how that figures in the equation?
     
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  23. This is a great article. CMU is right on
    There is nothing wrong with the concept of an electric car. It still needs to be perfected though.
    The people who call others doomsayers or afraid of change have a narrow field of view. At this time it will cost more to operate an electric or hybrid. The cars cost more for one. The batteries will wear out. They have a seven year life span that is not saying at seven years they quit. They will gradually need to be charged more often and not hold a charge as long well before seven years. For those concerned about the environment need to research how destructive it is to produce a battery. The environments around these plants are dead. NASA tests there Mars rovers at a plant in Canada because the area is dead like Mars. That is why they are not made in the US. The EPA would have a fit.
    What about the electricity? I wonder if that cost was figured in. It is not free. Plug your hair dryer or electric heater in and leave it running for a 2 weeks and see what your bill will be for the month. That is only using 1500 watts. An electric car will need to be charged 10 to 12 hours every day. Guess where the electric comes from. Coal, oil yes foreign, nuclear etc. If everybody drives an electric car we will need more foreign oil to make the electric to charge our cars. But that’s ok since we don’t have to actually pump it in ourselves. Out of site out of mind. Gas bills may go down but wait until the electric bill arrives. LOL What if I run my AC or radio, how will that affect the charge?
    Someone mentioned not keeping the car for seven years. What will become of it? Who in their right mind would buy a used electric car that will not perform as well? Does it go in a landfill or left at a junkyard? What become of the batteries? Will they be leaking into the groundwater? We may have concerns in the US but most other places won’t care.
    E85 is a joke cost about 10 to 20 cents less than gas. You get less miles per gallon, less power.
    People who think they are supporting foreign countries buy buying gas need to look at reality. If you don't want to support them then stop buying the product. I get my gas from an oil field in Texas that distributes all around the country. Research people. Foreign oil is not the only import. Go to Wal-Mart or any store. Everything we buy comes from foreign countries.
    Maybe in time the technology will get better but you have to remember, electric cars have been around for a very long time as well as ethanol. There is not much improvement. I like my gas powered car and I bet I will be passing a lot of electrics on the roadways because I know my gas range and I can get gas anywhere. Good luck getting a charge because if you use the gas engine you could have gotten a bigger car at a cheaper price to do that.
     
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  24. electric cars will have a place in the near future. They can use all the cheap oil to fire the new electrical power plants they will need to generate the electricity needed during the night to charge all the cars.
     
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  25. Gm and the large companies are basically lying. There are many people in this country who converted their vehicles to all electric who get 40-100 miles on a charge. These people are using golf cart batteries or of the shelf car batteries getting better mileage than GM. Now I know GM can do better than that considering their old EV in the late 90's achieved higher numbers than that. The only thing stopping all electric vehicles now is the oil companies. There is a businessman where I live with an all electric Chevy S-10 with a range of over 40 miles on a charge. The Rav-4 EV already achieved 100 miles or more on a charge ten years ago until GM's co-owner for the batteries sued them for copyright infringement(The co-owner is an oil company) effectively stopping the continuation of the vehicle. Look on the net and learn the truth. Electric vehicles are profitable and cost effective. The powers in control doesn't want this type of vehicle.
     
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