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Transitions to Alternative Transportation Technologies—Plug-In Hybrid Electric Vehicles Summary The nation has compelling reasons to reduce its consumption of oil and emissions of carbon dioxide. Plug-in hybrid electric vehicles (PHEVs) promise to contribute to both goals by allowing some miles to be driven on electricity drawn from the grid, with an internal combustion engine that kicks in when the batteries are discharged. However, while battery technology has made great strides in recent years, batteries are still very expensive. This report builds on a 2008 National Research Council (NRC) report on hydrogen fuel cell vehicles (HFCVs).1 In accordance with the committee’s statement of task, the present report Reviews the current and projected technology status of PHEVs. Considers the factors that will affect how rapidly PHEVs could enter the marketplace, including the interface with the electric transmission and distribution (T&D) system. Determines a maximum practical penetration rate for PHEVs consistent with the time frame and factors considered in the 2008 Hydrogen Report. Incorporates PHEVs into the models used in the hydrogen study to estimate the costs and impacts on petroleum consumption and carbon dioxide (CO2) emissions. TECHNOLOGY STATUS Vehicle Technologies and Batteries A variety of PHEV configurations and electric driving ranges are under consideration by vehicle manufacturers. This report considers two vehicles. One, the PHEV-10, uses hybrid electric vehicle (HEV) technology similar to that used in the Toyota Prius. However, it has a larger battery than an HEV to allow 10 miles of driving powered by electricity only and a gasoline engine that drives the wheels in parallel with the electric motor when power demand is high or the batteries are discharged. The other vehicle, the PHEV-40, is similar to the Chevrolet Volt. It has a 40-mile electric range, a larger electric motor, and a much larger battery than the PHEV-10. In the PHEV-40, the electric motor provides all the propulsion; the gasoline engine drives a generator that powers the motor and keeps the batteries charged above some minimum level. Batteries are the key determinant of the cost and electric driving range of PHEVs. All proposed PHEVs will use lithium-ion (Li-ion) batteries, similar to the technology now used in laptop computers, power tools, and other small devices. Several Li-ion chemistries are under development with the objective of optimizing performance for automotive propulsion. None yet meet all essential goals for cost, battery life, and weight. Cost is expected to be the most difficult goal. The cost to the manufacturer of producing the first generation of the PHEV-10 (2010-2012) is expected to be about $5,500 to $6,300 more than that of the equivalent conventional midsize car (nonhybrid), including $2,500 to $3,300 for the battery pack. Similarly, the PHEV-40 with a $10,000 to $14,000 battery pack would cost about $14,000 to $18,000 more. These cost differences would be smaller if the PHEVs were compared to equivalent HEVs, but the fuel savings also would be smaller. Costs will decline with technology improvements and economies of scale, but Li-ion batteries based on similar technology are already being produced in great numbers and are well along their learning curves. The steep early drop in cost often experienced with new technologies is not likely. The incremental cost to manufacture these vehicles is expected to decline by about one third by 2020 but only slowly thereafter, as listed in Table S.1. 1 National Research Council, Transitions to Alternative Transportation Technologies—A Focus on Hydrogen, Washington, D.C.: The National Academies Press, 2008, hereinafter referred to as the 2008 Hydrogen Report.
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Transitions to Alternative Transportation Technologies—Plug-In Hybrid Electric Vehicles TABLE S.1 Estimated Future PHEV Incremental Costs 2011 2015 2020 2030 PHEV-40 14,100-18,100 11,200-14,200 9,600-12,200 8,800-11,000 PHEV-10 5,500-6,300 4,600-5,200 4,100-4,500 3,700-4,100 NOTE: These are the incremental costs to manufacture the vehicle itself, relative to a conventional (nonhybrid) vehicle. They do not include engineering, overhead, or other costs, or profit, and thus are not the total incremental prices to the customer. Costs for 2011 are based on low battery production rates in response to contracts initiated about 2 years earlier. Ranges represent probable and optimistic assessments of battery technology progress. Additional detail on the committee’s analysis of battery-pack cost can be found in Appendix F, which was added to this report after release of the prepublication version to clarify how the estimates were made. It is possible that breakthroughs in battery technology will greatly lower the cost. At this point, however, it is not clear what sorts of breakthroughs might become commercially viable. Furthermore, even if they occur within the next decade, they are unlikely to have much impact before 2030, because it takes many years to get large numbers of vehicles incorporating new technology on the road. Electric Power Infrastructure Issues PHEVs replace gasoline with electricity for some of the miles driven. The electricity will first have to be generated and then delivered to a PHEV through the electric grid. This raises two issues: (1) whether sufficient generation, transmission, and distribution capacity will be available to serve this additional load and (2) how the emissions from the additional electricity generation compare with the emissions from the gasoline not consumed. Grid capacity will be available to charge millions of PHEVs if they are charged at night. Power demand varies during the day, peaking during the afternoon and reaching a low point after midnight. It also varies over the year, with demand highest on summer afternoons because of air conditioning loads. Parts of the U.S. electric power system are at full capacity during these hours of highest demand, and additional loads could threaten reliability unless new capacity is added. At night, however, the system may operate at less than 50 percent of capacity, and the cost of producing electricity is much lower than during peak hours. Drivers paying a constant rate per kilowatt-hour of electricity are likely to charge their vehicles whenever they have convenient access to an electric outlet, potentially increasing electricity demand during peak hours. Smart meters with time-of-use pricing would be one way of encouraging drivers to delay charging until electricity demand is lower. Generating electricity to replace the gasoline that a car would have used emits some greenhouse gases (GHG), especially CO2. About half the nation’s electricity is produced from coal-fired power plants, which are large emitters of CO2. However, the overall efficiency of electric vehicles is greater than that of conventional vehicles, so emissions may be reduced to some extent. Large savings on emissions will require decarbonizing the electric system, such as by using nuclear power or renewable energy generation or by capturing and sequestering the CO2 emitted by fossil fuel plants. SCENARIOS Penetration rates for the PHEV-10 and the PHEV-40 were compared to a Reference Case that assumes high oil prices and fuel economy standards specified by the Energy Independence and Security Act of 2007 (with modest increases after 2020, when those standards level off), as described in the 2008 Hydrogen Report. The Maximum Practical scenario is the fastest rate at which the committee concluded that PHEVs could penetrate the market considering various manufacturing and market barriers; it leads to about 40 million PHEVs by 2030 in a fleet of about 300 million vehicles.2 A more probable scenario leads to about 13 million PHEVs by 2030. Figure S.1 shows the number of PHEVs on the road at the two rates. Figure S.2 shows the impact on gasoline use relative to the Reference Case when each of the two PHEV types is introduced at the Maximum Practical rate into a high-efficiency fleet. The Efficiency Case fleet, based on Case 2 from the 2008 Hydrogen Report, includes conventional nonhybrid vehicles and HEVs only. All cases give results similar to the Reference Case until after 2020, because it takes many years for a sufficient number of new vehicles to penetrate the market to have an impact. By 2030, the Efficiency and PHEV cases show gasoline consumption well below the Reference Case. PHEV-10 closely follows the Efficiency Case until 2040, after which it shows some additional benefit. PHEV-40 shows benefits relative to the Efficiency Case after 2025. Figure S.3 shows the well-to-wheels GHG emissions of the light-duty vehicle fleet for the PHEV scenarios and compares them to the Reference Case. PHEVs show less improvement in GHG emissions than in gasoline consumption because of the additional emissions from electricity generation. If carbon emissions from the electric sector are limited, the reductions in Figure S.3 would be greater, almost following the reductions in gasoline use in Figure S.2. 2 This scenario is based on the Hydrogen Success scenario in the 2008 Hydrogen Report but moved up 3 years because battery technology is more nearly ready for commercialization than fuel cells.
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Transitions to Alternative Transportation Technologies—Plug-In Hybrid Electric Vehicles FIGURE S.1 Projections of number of PHEVs in the U.S. light-duty fleet. FIGURE S.2 Gasoline use for PHEV-10s and PHEV-40s introduced at the Maximum Practical rate and the Efficiency Case from the 2008 Hydrogen Report. FIGURE S.3 GHG emissions for cases combining high-efficiency conventional vehicles and HEVs with mixed PHEV or HFCV vehicles for the two different grid mixes. The PHEV projection cases considered only the impact of a given number of PHEVs regardless of cost. PHEVs will be expensive relative to conventional vehicles, largely because the batteries are costly. They are cheaper to operate (driving costs per mile are less than for conventional vehicles), and eventually vehicle costs may decline sufficiently to achieve life-cycle cost competitiveness, as shown in Tables S.1 and S.2. A transition period with substantial policy intervention and/or financial assistance for buyers from government and possibly manufacturers will be necessary to support either of the penetration scenarios in Figure S.1 until the higher costs of PHEVs are balanced by their fuel savings. The break-even year is defined here as the year when the fuel savings of the entire fleet of PHEVs equals the subsidies required that year to make PHEVs appear cost-competitive to potential buyers relative to conventional vehicles. Transition costs will depend on how fast vehicle costs decline and how fast PHEVs penetrate the market. Table S.2 shows the break-even year and transition cost for the PHEV-40 for three Maximum Practical penetration scenarios: for the committee’s optimistic assessment of technical progress; if DOE’s goals for costs are met by 2020; and if oil prices are much higher than assumed for the base case. PHEV-40s achieve breakeven in 2040 for the committee’s Optimistic technical progress, but in 2024 if DOE’s goals are achieved, illustrating the potential importance of technology breakthroughs. Similarly, the required subsidies are much lower if oil prices are very high. PHEV-10s achieve breakeven much sooner and with much lower subsidies when analyzed on a basis comparable to PHEV-40s, but also provide lower oil and carbon emission benefits. The final two columns of Table S.2 show results for a mix of PHEV-40s and PHEV-10s, which are between those of each type analyzed alone, and for a slower growth rate with less optimistic technological progress. Finally, the committee included combinations of technologies to reduce oil consumption in the light-duty vehicle fleet, as was done in the 2008 Hydrogen Report. Advanced conventional vehicles (including HEVs) operating in part on biofuels could cut oil consumption by more than 60 percent by 2050, as shown in Figure S.4. Replacing some of those HEVs with PHEVs, especially PHEV-40s, could reduce consumption to even lower levels. Employing HFCVs instead of PHEVs, however, could eliminate oil use in the light-duty vehicle fleet. RESULTS AND CONCLUSIONS Lithium-ion battery technology has been developing rapidly, especially at the cell level, but costs are still high, and the potential for dramatic reductions appears limited. Assembled battery packs currently cost about $1,250 to $1,700 per kWh of usable energy ($625 to $850/kWh of nameplate energy). A PHEV-10 will require about 2.0 kWh and a PHEV-40 about 8 kWh even after the batteries have
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Transitions to Alternative Transportation Technologies—Plug-In Hybrid Electric Vehicles TABLE S.2 PHEV Transition Times and Costs Penetration Rate: PHEV-40 PHEV-40 PHEV-40 High Oila PHEV-10 30/70% PHEV-40/10 Mix Maximum Practical Maximum Practical Maximum Practical Maximum Practical Maximum Practical Probable Technical Progress: Optimistic DOE Goalb Optimistic Optimistic Optimistic Probable Break-even year c (annual cash flow = 0) 2040 2024 2025 2028 2032 2034 Cumulative subsidy to break-even year (billion $)d 408 24 41 33 94 47 Cumulative vehicle retail price difference until the break-even year (billion $)e 1,639 82 174 51 363 — Number of PHEVs sold to break-even year (millions) 132 10 13 24 48 20 aAssumes oil costs twice that in the base case, or $160/bbl in 2020, giving results similar to meeting DOE’s cost goals. bAssumes DOE technology cost goal ($300/kWh) for the PHEV-40 is met by 2020, showing the importance of technology breakthroughs as discussed in Chapter 2 and Appendix F. Reducing costs this rapidly would significantly reduce subsidies and advance the break-even year relative to the Optimistic Technical Progress cases. cYear when annual buydown subsidies equal fuel cost savings for fleet. dDoes not include infrastructure costs for home rewiring, distribution system upgrades, and public charging stations which might average over $1000 per vehicle. eCost of PHEVs minus the cost of Reference Case cars. FIGURE S.4 Gasoline consumption for scenarios that combine conventional vehicle efficiency, PHEVs, biofuels, and HFCVs. undergone expected degradation over time. Costs are expected to decline by about 35 percent by 2020 but more slowly thereafter. Projections of future battery pack costs are uncertain, as they depend on the rate of improvements in battery technology and manufacturing techniques, potential breakthroughs in new technology, possible relaxation of battery protection parameters as experience is gained, and the level of production, among other factors. Further research is needed to reduce costs and achieve breakthroughs in battery technology. Costs to a vehicle manufacturer for a PHEV-40 built in 2010 are likely to be about $14,000 to $18,000 more than an equivalent conventional vehicle, including a $10,000 to $14,000 battery pack. The incremental cost of a PHEV-10 would be about $5,500 to $6,300, including a $2,500 to $3,300 battery pack. In addition, some homes will require electrical system upgrades, which might cost more than $1,000. In comparison, the incremental cost of an HEV might be $3,000. PHEV-40s are unlikely to achieve cost-effectiveness before 2040 at gasoline prices below $4.00 per gallon, but PHEV-10s may get there before 2030. PHEVs will recoup some of their incremental cost, because a mile driven on electricity will be cheaper than a mile on gasoline, but it is likely to be several decades before lifetime fuel savings start to balance the higher first cost of the vehicles. Subsidies of tens to hundreds of billions of dollars will be needed for the transition to cost-effectiveness. Higher oil prices or rapid reductions in battery costs could reduce the time and subsidies required to attain cost-effectiveness. At the Maximum Practical rate, as many as 40 million PHEVs could be on the road by 2030, but various factors (e.g., high costs of batteries, modest gasoline savings, limited availability of places to plug in, competition from other vehicles, and consumer resistance to plugging in virtually every day) are likely to keep the number lower. The Maximum Practical rate
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Transitions to Alternative Transportation Technologies—Plug-In Hybrid Electric Vehicles depends on rapid technological progress, increased government support, and consumer acceptance. A more realistic penetration rate would result in 13 million PHEVs by 2030 out of about 300 million vehicles on the road, which still assumes that current levels of government support will continue for several decades. PHEVs will have little impact on oil consumption before 2030 because there will not be enough of them in the fleet. More substantial reductions could be achieved by 2050. PHEV-10s will reduce oil consumption only slightly more than can be achieved by HEVs. A PHEV-10 is expected to use about 20 percent less gasoline than an equivalent HEV, saving about 70 gallons in 15,000 miles. Forty million PHEV-10s would save a total of about 0.2 million barrels of oil per day. The current light-duty vehicle fleet uses about 9 million barrels per day. PHEV-40s will consume about 55 percent less gasoline than equivalent HEVs, saving more than 200 gallons of gasoline per year per vehicle. PHEV-10s will emit less carbon dioxide than non-hybrid vehicles, but save little relative to HEVs after accounting for emissions at the generating stations that supply the electric power. PHEV-40s are more effective than PHEV-10s, but the GHG benefits are small unless the grid is decarbonized with renewable energy, nuclear plants, or fossil fuel fired plants equipped with carbon capture and storage systems. No major problems are likely to be encountered for several decades in supplying the power to charge PHEVs, as long as most vehicles are charged at night. Generation and transmission of electricity during off-peak hours should be adequate for many millions of PHEVs, although some distribution circuits may need upgrading if they are to serve clusters of PHEVs. Encouraging PHEV owners to charge their vehicles during off-peak hours will require both rate schedules that reward time-appropriate charging and equipment that can monitor—or even control—time of use. A portfolio approach to research, development, demonstration, and, perhaps, market transition support is essential. It is not clear what technology or combination of technologies—batteries, hydrogen, or biofuels—will be most effective in reducing the nation's oil dependency to levels that may be necessary in the long run. It is clear, however, that a portfolio approach will enable the greatest reduction in oil use. Increasing the efficiency of conventional vehicles (including HEVs) beyond the current regulatory framework could reduce gasoline consumption by about 40 percent in 2050, compared to the Reference Case. Adding biofuels would reduce it another 20 percent. If PHEV-10s are also included at the Maximum Practical rate, gasoline consumption would be reduced an additional 7 percent, while PHEV-40s could reduce consumption by 23 percent. Employing HFCVs instead of PHEVs could eliminate gasoline use by the fleet.