“The potential for grid-connected vehicles to decimate our demand for liquid hydrocarbon fuels should be clear. Freed from the psychological barriers which hinder widespread market acceptance of pure battery electric vehicles, plug-in hybrids with an all-electric capability of just [30] kilometres would slash liquid fuel consumption, since such a high proportion of journeys undertaken are well within this range.”

"Plugged In: The End of the Oil Age” by WWF
(Dr. G. Kendall, 2008)

Automotive Powertrain Revolution
Is it enough to offer the Libralato engine as a better, smaller, cheaper alternative to conventional reciprocating engines? For some applications, yes. However, the end is in sight for the internal combustion engine as the prime mover for road transport.

Speaking at the Detroit Auto Show, Jan 2009, Ford's vice-president of product development, Derrick Kuzak, was quoted as saying, "Next-generation hybrids, plug-in hybrids and pure battery-powered vehicles are the logical next steps in our pursuit of greater fuel economy and sustainability,"

Given diminishing oil reserves (fig 4.), the prospect of oil prices rising to $150/ bbl by 2015 (Deutsche Bank forecast), concerns about global warming and fears about energy security, it is no surprise that Yvo de Boer, head of the U.N. Climate Change Secretariat, told a global transport ministerial gathering in Tokyo in Jan 2009,

"There can be no doubt that the transport sector will come under intense pressure and needs to dramatically change direction. Transport industries should no longer find themselves in the position of beggars for billions of taxpayer's dollars. Instead, they need to come back into pole position of drivers of economic growth, through the production of smart and efficient cars, trains, ships and planes."

From the US Electrification Roadmap Nov 09
“Electrification of transportation has been identified as a high priority by a number of governments around the world. As industry gears up to meet demand, many governments are creating initiatives to quickly expand their electrified vehicle industries. In many cases, local, national, and regional governments have signaled their commitment to electrification by instituting regulatory frameworks that transparently support [Grid Enabled Vehicles] GEV adoption over the long term through financial support, high gas taxes, and strong fuel efficiency rules. To be sure, different national factors and priorities are driving the move to electrification. In some cases, the shift is derived from a need to mitigate basic energy security issues associated with oil consumption. In other cases, governments increasingly view electrification as an opportunity to abate environmental problems such as CO2 emissions. However, perhaps the most interesting trend is that many nations—particularly in the export-oriented developing world—see early establishment of the future automotive industry as a source of national competitive advantage.”

North America
The regulatory push for greener vehicles is intensifying in the US, where Congress recently mandated a 42 per cent improvement in fuel economy by 2016, raising average US fuel economy to 35.5 mpg (42.6 mpg UK-Imperial). The US President Barrack Obama has launched a new Energy Plan, a key pillar of which is the goal of putting one million plug-in hybrids on US roads by 2015. The American Recovery and Reinvestment Act passed in Feb 09, provides over $6 billion of incentives for PHEVs including up to $7,500 in tax credits to consumers for up to 200,000 vehicles by each manufacturer, before the subsidies are phased out. The energy plan also includes increased fuel economy standards of 4% per year, up to $4 billion in retooling tax credits and loan guarantees for domestic auto plants and parts manufacturers to support their manufacture of the new fuel-efficient cars, advanced battery programs, a mandate for all new vehicles to be flex-fuel vehicles, and a call for America to develop next-generation biofuels and the required infrastructure.

Europe
The climate consensus in Europe is arguably the strongest in the world, and European governments have moved aggressively to reduce CO2 emissions in the transport sector. From a regulatory standpoint, EU member states have committed to stringent vehicle emissions standards over the next 10 years (through 2020). By 2015, average emissions for new light-duty vehicles will need to be 120 g CO2/km. By 2020 that figure falls to 95 g CO2/km. The current European light-duty fleet, almost 50% powered by diesel, averages 160 g CO2/km [153.5 g/km sales weighted].

Many European countries believe that electric vehicles will be vital to reaching the EU targets. In addition, most European countries impose significant taxes on refined petroleum products like gasoline and diesel. In 2008, for example, premium unleaded gasoline prices averaged $3.49 per gallon in the United States, compared to $7.86 per gallon in the United Kingdom, $7.70 per gallon in France, and $8.13 per gallon in Germany.3, 4 The industrial EU-wide average was $7.85 per gallon. These comparatively high fuel prices translate into relatively higher ownership costs for a conventional vehicle versus more efficient alternatives.

ISRAEL. Israel is an ideal candidate for electrification since it traditionally imports nearly all of its energy and considers energy supply of utmost national security importance. Moreover, the country is relatively small and is essentially an island, as driving through surrounding countries is not possible. High gas prices, currently around $6 per gallon, short driving distances, and a relatively simple north-south highway system make the logistics of electrification with battery-swapping very straightforward. The government has provided strong policy support to spur the deployment of GEVs and the required supporting infrastructure. The tax rate for a new conventional vehicle is 92 percent in Israel, but the rate for an EV is set at just 10 percent through 2014, rising to 30 percent in 2015. The rate for HEVs and PHEVs is 30 percent through 2012, 45 percent in 2013, and 60 percent in 2014. As part of a partnership with Better Place, Israel will build 500,000 electric vehicle charging stations and 200 battery swap facilities for a reported $200 million. The goal is to deploy 10,000 to 20,000 GEVs per year, starting in 2011.

DENMARK. Denmark’s DONG Energy has extensive wind resources, which generate peak electricity at night. A relatively small country with ample overnight charging capacity and an environmentally concerned citizenry, Denmark was another attractive candidate for Better Place. The government taxes new vehicles at a 180 percent rate and is making electric vehicles exempt from such taxes as least through 2012.

UNITED KINGDOM. The UK has been a leader in developing a vibrant marketplace to support electric vehicles. The city of London has the largest installed base of charge points, offers consumers 2,000 to 5,000 pounds ($3,161 - $7,904) in tax incentives for EV purchases, and has waived its significant road taxes and city congestion charges for those driving GEVs. The city also offers free parking for GEVs in some areas. In addition to infrastructure, consumers have a surprisingly wide array of pure EV choices in the UK. They can purchase a Mitsubishi i-MiEV, a Mega City, a Citroen C1 ev’ie, a Reva G-Wiz, a GEM e4, a MyCar, a Stevens ZeCar, or a Tesla Roadster. Many of these cars will largely appeal only to early adopters, but the sheer availability and proliferation of EVs in the London area demonstrates the city’s seriousness about vehicle electrification. In April 2009, London mayor Boris Johnson declared that the city would be the “electric vehicle capital of Europe” and pledged £20 million ($32 million) to put 100,000 EVs on London streets supported by 25,000 charge points. The funds Johnson promised are about one-third the estimated cost of the project and are in addition to £250 million the UK government had already set aside for electric vehicle incentives and £100 million for research and development. In March 2010, Nissan announced plans for full scale production of its EV Leaf at its plant in Sunderland, NE England.

GERMANY. Germany has been accused of being behind in the European EV race due to the initial ambivalence— and even hostility—of its domestic automakers to the concept. However, in August 2009, the incumbent government trumped other European nations by setting a target of 1 million EVs by 2020 and allocating €500 million ($736 million) to achieve that goal. Prior to this announcement, Daimler had been dabbling in several demonstration projects throughout the country, the largest in Berlin. The Berlin pilot initially installed 500 chargers and had 100 Daimler smart EDs. The collaboration included RWE, the second largest German utility, and also added Vattenfall, another European utility. BMW and E.On Germany’s largest utility, are installing a similar project in Munich using Mini Es and other projects are taking place in Frankfurt and the Ruhrgebiet region.

FRANCE. France has been moving aggressively toward vehicle electrification. The most notable developments have been in Paris, where the national utility, Électricité de France (EDF), has been trying to encourage electrification since the 1990s, when it installed more than 200 charge points throughout the city. Paris still has an installed base of electric vehicle charger points that rivals the number in London, with plans to introduce more. In October 2008, French President Nicolas Sarkozy committed €400 million over four years to aid in the development of an electrified transportation system; in April 2009, he established a goal of 100,000 electric vehicles sold in France by 2012. The first planned instalment of these vehicles was to be 100 EVs from Renault to arrive in 2010. In October 2009, France made successive announcements intended to dramatically boost the efforts already underway. The Minister of Energy, Jean-Louis Borloo, committed €2.5 billion ($3.6 billion) to speed the introduction of electric vehicles; the money is to be split among “research, subsidies, and infrastructure development.”

The largest portion of the money is allocated to the installation of 1 million charge spots over the next six years After announcing the allocation of funds, France unveiled a specific 14-point plan that clearly outlines requisite milestones to achieve significant electric vehicle development in the country. The city of Paris is also in the process of trying to implement a unique project patterned after its successful bike-sharing program and car sharing programs such as ZipCar or Car2Go. The goal is to establish an EV-only car sharing service throughout the city and possibly extending to the suburbs. The project has run into financial and legal hurdles, but is still underway. Outside of Paris, Toyota has partnered with EDF in Strasbourg to test 100 plug-in Priuses.

SPAIN. Spain has set an ambitious goal of 1 million EVs in the country by 2014 under the banner of the Ministry of Industry’s “Project Movele”. The five-year project has been given €235 million with test pilots being established in Seville, Madrid, and Barcelona. Vehicle tax credits of €7,000 ($10,299) are also available.

AUSTRIA. A coalition of partners in Austria announced in July 2009 a project dubbed “Austrian Mobile Power” that aims put 10,000 EVs on Austrian roads by 2013 and 100,000 by 2020. The partners include Siemens AG and Magna International.

THE NETHERLANDS. The Netherlands has unveiled an extensive electrification plan in recent years, beginning with removing the vehicle registration tax (€6,000) for electric vehicles. The tax now varies by vehicle efficiency, with the purchase of a “least green” car entailing a tax increase of €540. Companies developing vehicle charging infrastructure receive a 20 percent tax cut. The Dutch government is also investing €10 million to “support the large scale, early introduction of electric mobility” and is using the funds for practical testing. Initial deployment is occurring through a public-private partnership with vehicle-manufacturer Th!nk, which is delivering 500 cars in 2009 to Elmonet, an importer and provider of GEVs for the Netherlands. In July 2009, the Dutch cabinet released a €65 million action plan to promote GEVs. Among its provisions is GEV exemption from the nation’s road tax. An independent panel of interdisciplinary experts has been formed to develop an electrification rollout plan that will ensure stakeholder accountability and standardized charging. Jean-Paul de Poorter, the Minister of Transport, says the government’s goal is to put 200,000 GEVs on the road by 2020, though he personally believes that the Netherlands could reach 1 million by 2025. To support this goal, the government has joined with 11 of the country’s regional utility management companies to install 20,000 charging stations nationwide by 2012.

OTHERS. Portugal is in the midst of installing 1,300 charging stations and has announced a partnership with Nissan-Renault. Italy has EV pilots underway in Tuscany and Rome, with more to follow in Milan and Brescia. Ireland has set a target of 10 percent electric vehicle penetration (more than 250,000 vehicles) by 2020.

Another trend spreading across Europe may have a significant impact on future vehicle electrification demand: Low Emission Zones (LEZs) in many major cities. LEZs are demarcations within highly congested areas. Only vehicles with certain maximum rated emissions, designated by stickers, may enter the zones. In some cases, higher-polluting vehicles may pay a fee to enter the zone as well. The scheme has been impactful in its roll-out in Berlin and London and has quickly spread to more than 80 cities in 10 countries. The main driver behind LEZs is a push to reduce pollution caused by Europe’s densely populated and congested cities. As the trend for LEZs progresses, it is reasonable to assume that their success may spur demand for even more stringent emissions levels, increasing demand for grid-enabled vehicles.

East Asia
JAPAN. The speed with which domestic automakers Nissan, Mitsubishi, and Subaru are moving forward with the development of electric vehicles has driven Japan to pursue an EV-friendly agenda. The cities of Tokyo and Yokohama have both announced partnerships and pilots with all three automakers. The Toyota Electric Power Company (TEPCO) has been exploring EVs in small-scale pilots for several years and has gathered some of the most complete consumer behaviour data regarding EVs available to date. In August 2009, Better Place announced a pilot program in Tokyo under which a taxi company will test their battery swapping design.

China. Chinese leaders have identified electrification as a high strategic priority on two fronts. First, domestic deployment of GEVs is a relatively straightforward energy security strategy. As the Chinese economy has rapidly expanded over the past several years, oil consumption has increased as well. Between 2000 and 2009, annual oil demand grew at an average rate of 6.7 percent. Domestic Chinese oil production, meanwhile, has remained relatively flat, leaving the gap to be filled by increasingly substantial oil imports.

Between January 2004 and September 2009, Chinese oil imports grew by 80 percent. The key driver in rising Chinese oil demand, and therefore imports, has been the transportation sector. In 2007, the International Energy Agency forecast that annual light-duty vehicle sales in China would surpass those of the United States in 2016. In fact, it now appears that China accomplished this feat in 2009. Total light-duty vehicles sales through the first three quarters in China were 9.6 million compared to 7.8 million in the United States. Importantly, the growth in Chinese auto sales is forecast to continue for decades. In 2008, there were 65 million registered vehicles in China. This figure is expected to reach approximately 150 million in 2020 and nearly 230 million by 2030.

The projected impact of this growth in vehicle ownership will depend heavily on technology. According to the IEA, based on existing technology and policies, over the coming decades roughly two-thirds of global oil demand growth will occur in China and India. Of the total increase of 21.2 mbd in the IEA reference scenario, nearly one-third will occur in the Chinese transport sector alone. If grid-enabled vehicles and other efficient technologies are deployed in high concentrations, the growth in Chinese oil demand clearly could be curbed, and the need for ever-higher quantities of imported oil could be mitigated.

In addition to energy security concerns, Chinese leadership is also dealing with very tangible consequences of urban pollution. Many cities are already grappling with the effects of high concentrations of air pollution, and China can hardly afford to add nearly 200 million conventional vehicles to its fleet over the next 20 years. Thus China has also identified electrification as a critical environmental sustainability measure that will support future economic growth by providing access to energy in the transport sector.

Chinese political leadership has targeted electric vehicle manufacturing as a strategic industry that will allow it to maintain its global manufacturing dominance. China views grid-enabled vehicles as an opportunity to vault their foreign rivals, especially considering that a dominant share of global lithium-ion battery production already takes place in the country. Although the Chinese government is working to develop a domestic EV market, it is becoming clear that the major Chinese automotive firms have their long-term sights planted firmly on the export market. At an industry conference in Tianjin in early September 2009, Minister of Science and Technology Wan Gang said that given China’s large lithium deposits and extensive battery-manufacturing experience, GEVs are a strategic area of interest, and as a “key driver for a new economy” will be an opportunity for China to “catch up with and exceed developed countries.”

China has supported its electrification strategy with credible, long-term public support. In 2009, the central government began an initiative to develop sufficient electric vehicle infrastructure for large scale deployment in the country’s largest 13 cities. Wuhan, a city of more than 9 million people, will be the lead city in the project. Wuhan is working with Nissan to develop the infrastructure, and the automaker will provide the with infrastructure investments over the succeeding four years in the cities of Shanghai, Beijing, Shenzhen, Chonqing, Hangzhou, Jinan, Dalian, Kunming, Changsha, Nanchang, Changchun, and Hefei, which range in population from 1.1 million to 17 million people. The government’s goal is to have installed capacity to produce 500,000 grid-enabled vehicles by 2011. These initiatives are naturally supported by government funding. Ten billion yuan ($1.5 billion) has been set aside to nurture research and development. The government is also offering a 60,000 yuan ($8,791) per-vehicle incentive and a 500,000 yuan ($73,255) incentive on bus purchases.57 China has provided battery and GEV companies with generous low-interest loans from state banks and has a multi-year technology development program on which it spent $161 million between 2006 and 2008. The State Grid, a state-owned company that controls most electric transmission lines, is planning the construction of charging infrastructure.

The Report “Automotive 2020: Clarity Beyond the Chaos” by IBM Global Business Services (Aug 08), gives a good indication of the upheaval that is taking place within the Automotive Powertrain industry.

“In the next 10 years, we will experience more change than in the 50 years before.”
European automotive OEM executive

In early 2010, the International Energy Agency released the following forecast for the global growth of vehicles with grid enabled and ‘alternative’ powertrains.

This level of ‘electromobility’ penetration is absolutely necessary to reduce overall fleet average CO2 emissions and global atmospheric CO2 to levels which avoid dangerous climate change. Figure 34. below illustrates how new vehicle emissions must be substantially lower, to bring average fleet emissions down to levels which seriously mitigate against atmospheric CO2 emissions rising above 450 ppm. This level of concentration is widely regarded as a threshold, beyond which there is a much greater probability that global average temperatures will rise by more than 2oC and global scale threatening consequences will ensue.

⁵Source: Powertrain 2020 – The Future Drives Electric, Roland Berger Oct 2009