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

  1. Reviews the current and projected technology status of PHEVs.

  2. 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.

  3. Determines a maximum practical penetration rate for PHEVs consistent with the time frame and factors considered in the 2008 Hydrogen Report.

  4. 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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Summary The nation has compelling reasons to reduce its consump- in the Toyota Prius. However, it has a larger battery than an tion of oil and emissions of carbon dioxide. Plug-in hybrid HEV to allow 10 miles of driving powered by electricity electric vehicles (PHEVs) promise to contribute to both goals only and a gasoline engine that drives the wheels in parallel by allowing some miles to be driven on electricity drawn with the electric motor when power demand is high or the from the grid, with an internal combustion engine that kicks batteries are discharged. The other vehicle, the PHEV-40, is in when the batteries are discharged. However, while battery similar to the Chevrolet Volt. It has a 40-mile electric range, technology has made great strides in recent years, batteries a larger electric motor, and a much larger battery than the are still very expensive. PHEV-10. In the PHEV-40, the electric motor provides all This report builds on a 2008 National Research Council the propulsion; the gasoline engine drives a generator that (NRC) report on hydrogen fuel cell vehicles (HFCVs).1 powers the motor and keeps the batteries charged above some In accordance with the committee’s statement of task, the minimum level. present report Batteries are the key determinant of the cost and electric driving range of PHEVs. All proposed PHEVs will use 1. Reviews the current and projected technology status of lithium-ion (Li-ion) batteries, similar to the technology PHEVs. now used in laptop computers, power tools, and other small 2. Considers the factors that will affect how rapidly devices. Several Li-ion chemistries are under development PHEVs could enter the marketplace, including the inter- with the objective of optimizing performance for automo- face with the electric transmission and distribution (T&D) tive propulsion. None yet meet all essential goals for cost, system. battery life, and weight. Cost is expected to be the most 3. Determines a maximum practical penetration rate for difficult goal. PHEVs consistent with the time frame and factors considered The cost to the manufacturer of producing the first gen- in the 2008 Hydrogen Report. eration of the PHEV-10 (2010-2012) is expected to be about 4. Incorporates PHEVs into the models used in the hydro- $5,500 to $6,300 more than that of the equivalent conven- gen study to estimate the costs and impacts on petroleum tional midsize car (nonhybrid), including $2,500 to $3,300 consumption and carbon dioxide (CO2) emissions. 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 TECHNOLOGY STATUS were compared to equivalent HEVs, but the fuel savings also would be smaller. Vehicle Technologies and Batteries Costs will decline with technology improvements and A variety of PHEV configurations and electric driving economies of scale, but Li-ion batteries based on similar ranges are under consideration by vehicle manufacturers. technology are already being produced in great numbers This report considers two vehicles. One, the PHEV-10, uses and are well along their learning curves. The steep early hybrid electric vehicle (HEV) technology similar to that used 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 1National Research Council, Transitions to Alternative Transportation slowly thereafter, as listed in Table S.1. Technologies—A Focus on Hydrogen, Washington, D.C.: The National Acad- emies Press, 2008, hereinafter referred to as the 2008 Hydrogen Report. 

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 TRANSITIONS TO ALTERNATIVE TRANSPORTATION TECHNOLOGIES—PHEVS 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 nuclear power or renewable energy generation or by captur- will greatly lower the cost. At this point, however, it is not ing and sequestering the CO2 emitted by fossil fuel plants. clear what sorts of breakthroughs might become commer- cially viable. Furthermore, even if they occur within the next SCENARIOS decade, they are unlikely to have much impact before 2030, because it takes many years to get large numbers of vehicles Penetration rates for the PHEV-10 and the PHEV-40 were incorporating new technology on the road. compared to a Reference Case that assumes high oil prices and fuel economy standards specified by the Energy Inde- pendence and Security Act of 2007 (with modest increases Electric Power Infrastructure Issues after 2020, when those standards level off), as described in PHEVs replace gasoline with electricity for some of the the 2008 Hydrogen Report. The Maximum Practical sce- miles driven. The electricity will first have to be generated nario is the fastest rate at which the committee concluded and then delivered to a PHEV through the electric grid. This that PHEVs could penetrate the market considering various raises two issues: (1) whether sufficient generation, transmis- manufacturing and market barriers; it leads to about 40 mil- lion PHEVs by 2030 in a fleet of about 300 million vehicles.2 sion, and distribution capacity will be available to serve this additional load and (2) how the emissions from the additional A more probable scenario leads to about 13 million PHEVs electricity generation compare with the emissions from the by 2030. Figure S.1 shows the number of PHEVs on the road gasoline not consumed. at the two rates. Grid capacity will be available to charge millions of Figure S.2 shows the impact on gasoline use relative to the PHEVs if they are charged at night. Power demand varies Reference Case when each of the two PHEV types is intro- during the day, peaking during the afternoon and reaching duced at the Maximum Practical rate into a high-efficiency a low point after midnight. It also varies over the year, with fleet. The Efficiency Case fleet, based on Case 2 from the demand highest on summer afternoons because of air con- 2008 Hydrogen Report, includes conventional nonhybrid ditioning loads. Parts of the U.S. electric power system are vehicles and HEVs only. All cases give results similar to at full capacity during these hours of highest demand, and the Reference Case until after 2020, because it takes many additional loads could threaten reliability unless new capac - years for a sufficient number of new vehicles to penetrate the ity is added. At night, however, the system may operate at market to have an impact. By 2030, the Efficiency and PHEV less than 50 percent of capacity, and the cost of producing cases show gasoline consumption well below the Reference electricity is much lower than during peak hours. Drivers Case. PHEV-10 closely follows the Efficiency Case until paying a constant rate per kilowatt-hour of electricity are 2040, after which it shows some additional benefit. PHEV-40 likely to charge their vehicles whenever they have convenient shows benefits relative to the Efficiency Case after 2025. access to an electric outlet, potentially increasing electricity Figure S.3 shows the well-to-wheels GHG emissions demand during peak hours. Smart meters with time-of-use of the light-duty vehicle fleet for the PHEV scenarios and pricing would be one way of encouraging drivers to delay compares them to the Reference Case. PHEVs show less charging until electricity demand is lower. improvement in GHG emissions than in gasoline consump- Generating electricity to replace the gasoline that a car tion because of the additional emissions from electricity would have used emits some greenhouse gases (GHG), espe- generation. If carbon emissions from the electric sector are cially CO2. About half the nation’s electricity is produced limited, the reductions in Figure S.3 would be greater, almost from coal-fired power plants, which are large emitters of following the reductions in gasoline use in Figure S.2. CO2. However, the overall efficiency of electric vehicles is greater than that of conventional vehicles, so emissions may 2This scenario is based on the Hydrogen Success scenario in the 2008 be reduced to some extent. Large savings on emissions will Hydrogen Report but moved up 3 years because battery technology is more require decarbonizing the electric system, such as by using nearly ready for commercialization than fuel cells.

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PHEV-40 editable vectors Ref Case 40,000 (Maximum) + one-column size below Efficiency 20,000  SUMMARY Efficiency 0 The PHEV projection cases considered only the impact of 250 2010 2020 2030 2040 2050 a given number of PHEVs regardless of cost. PHEVs will be No. of vehicles (millions) Year expensive relative to conventional vehicles, largely because 200 PHEV-10/PHEV- the batteries are costly. They are cheaper to operate (driving Maximum 40 70%/30% 150 practical costs per mix + Efficiency for conventional vehicles), and mile are less than penetration eventually EPRI costs may decline sufficiently to achieve : vehicle Probable 100 penetration life-cycle PHEV-10/PHEV- cost competitiveness, as shown in Tables S.1 and S.2. A transition period with substantial policy intervention Figure S-2 40 70%/30% 50 and/or financial Efficiency :for buyers from government and mix + assistance R01653 possibly manufacturers will be necessary to support either of EIA 0 editable vectors the penetration scenarios in Figure S.1 until the higher costs 2000 2010 2020 2030 2040 2050 HFCV + one-column size below of PHEVsEfficiency are balanced by their fuel savings. The break-even Years year is defined here as the year when the fuel savings of the FIGURE S.1 Projections of number of PHEVs in the U.S. light- entire fleet of PHEVs equals the subsidies required that year duty fleet. to make PHEVs appear cost-competitive to potential buyers relative to conventional vehicles. 2050 Transition costs will depend on how fast vehicle costs 2015 2020 2025 2030 2035 2040 2045 decline and how fast PHEVs penetrate the market. Table S.2 180,000 Year shows the break-even year and transition cost for the PHEV-40 160,000 for three Maximum Practical penetration scenarios: for the Reference Case Gasoline consumption 140,000 (million gal/year) committee’s optimistic assessment of technical progress; 120,000 Efficiency if DOE’s goals for costs are met by 2020; and if oil prices 100,000 are much higher than assumed for the base case. PHEV-40s PHEV-10 80,000 (Maximum) achieve breakeven in 2040 for the committee’s Optimistic +Efficiency 60,000 technical progress, but in 2024 if DOE’s goals are achieved, PHEV-40 40,000 (Maximum) + Figure S-3 illustrating the potential importance of technology break- Efficiency 20,000 throughs. Similarly, the required subsidies are much lower R01653 0 if oil prices are very high. PHEV-10s achieve breakeven 2010 2020 2030 2040 2050 editable vectors Year much sooner and with much lower subsidies when analyzed FIGURE S.2 Gasoline use for PHEV-10s w PHEV-40s intro- one-column size belo and on a basis comparable to PHEV-40s, but also provide lower duced at the Maximum Practical rate and the Efficiency Case from oil and carbon emission benefits. The final two columns the 2008 Hydrogen Report. 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 tech- nological progress. Finally, the committee included combinations of tech- 2,000 GHG emissions (million tonnes CO2e per year) Ref Case nologies to reduce oil consumption in the light-duty vehicle 1,800 fleet, as was done in the 2008 Hydrogen Report. Advanced 1,600 Efficiency conventional vehicles (including HEVs) operating in part on 1,400 biofuels could cut oil consumption by more than 60 percent 1,200 PHEV-10/PHEV- by 2050, as shown in Figure S.4. Replacing some of those 40 70%/30% 1,000 mix + Efficiency HEVs with PHEVs, especially PHEV-40s, could reduce con- : EPRI 800 PHEV-10/PHEV- sumption to even lower levels. Employing HFCVs instead 40 70%/30% mix + Efficiency : 600 of PHEVs, however, could eliminate oil use in the light-duty EIA HFCV + 400 Efficiency vehicle fleet. 200 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 RESULTS AND CONCLUSIONS Year 1. Lithium-ion battery technology has been developing FIGURE S.3 GHG emissions for cases combining high-efficiency rapidly, especially at the cell level, but costs are still high, conventional vehicles and HEVs with mixed PHEV or HFCV and the potential for dramatic reductions appears lim- vehicles for the two different grid mixes. ited. 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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ICEV Eff + Biofuels  TRANSITIONS TO ALTERNATIVE TRANSPORTATION TECHNOLOGIES—PHEVS PHEV-10 (max) TABLE S.2 PHEV Transition Times and Costs + ICEV eff + biofuels PHEV-40 High Oila PHEV-40 PHEV-40 PHEV-10 30/70% PHEV-40/10 Mix Maximum Practical V-40 (maxPractical PHE Maximum ) Penetration Rate: Maximum Practical Maximum Practical Maximum Practical Probable + ICEVOptimistic eff + DOE Goalb Technical Progress: Optimistic Optimistic Optimistic Probable biofuels year c Break-even 2040 2024 2025 2028 2032 2034 HFCV + ICEV (annual cash flow = 0) Eff + Biofuels Cumulative subsidy 408 24 41 33 94 47 to break-even year (billion $)d Cumulative 1,639 82 174 51 363 — 2020 retail price 2030 2040 2050 vehicle difference until the Year break-even year (billion $)e Number of PHEVs 132 10 13 24 48 20 sold to break-even year (millions) aAssumes oil costs twice that in the base case, or $160/bbl in 2020, giving results similar to meeting DOE’s cost goals. Figure S-4 bAssumes DOE technology cost goal ($300/kWh) for the PHEV-40 is met by 2020, showing the importance of technology breakthroughs as discussed R01653 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. editable vectors cYear when annual buydown subsidies equal fuel cost savings for fleet. one-column size below 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. 2. Costs to a vehicle manufacturer for a PHEV-40 180,000 built in 2010 are likely to be about $14,000 to $18,000 160,000 Ref Case more than an equivalent conventional vehicle, including 140,000 a $10,000 to $14,000 battery pack. The incremental cost Million gal/yr ICEV Eff + 120,000 Biofuels of a PHEV-10 would be about $5,500 to $6,300, including 100,000 PHEV-10 (max) a $2,500 to $3,300 battery pack. In addition, some homes + ICEV eff + 80,000 biofuels will require electrical system upgrades, which might cost PHEV-40 (max) 60,000 + ICEV eff + more than $1,000. In comparison, the incremental cost of an biofuels 40,000 HEV might be $3,000. HFCV + ICEV 20,000 Eff + Biofuels 3. PHEV-40s are unlikely to achieve cost-effectiveness 0 before 2040 at gasoline prices below $4.00 per gallon, but 2010 2020 2030 2040 2050 Year PHEV-10s may get there before 2030. PHEVs will recoup some of their incremental cost, because a mile driven on FIGURE S.4 Gasoline consumption for scenarios that combine electricity will be cheaper than a mile on gasoline, but it is conventional vehicle efficiency, PHEVs, biofuels, and HFCVs. 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 undergone expected degradation over time. Costs are transition to cost-effectiveness. Higher oil prices or rapid expected to decline by about 35 percent by 2020 but more reductions in battery costs could reduce the time and subsi - slowly thereafter. Projections of future battery pack costs dies required to attain cost-effectiveness. 4. At the Maximum Practical rate, as many as are uncertain, as they depend on the rate of improvements in 40 million PHEVs could be on the road by 2030, but battery technology and manufacturing techniques, potential various factors (e.g., high costs of batteries, modest breakthroughs in new technology, possible relaxation of gasoline savings, limited availability of places to plug battery protection parameters as experience is gained, and the i n, competition from other vehicles, and consumer level of production, among other factors. Further research is resistance to plugging in virtually every day) are likely needed to reduce costs and achieve breakthroughs in battery to keep the number lower. The Maximum Practical rate technology.

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 SUMMARY 7. No major problems are likely to be encountered for depends on rapid technological progress, increased govern- several decades in supplying the power to charge PHEVs, ment support, and consumer acceptance. A more realistic as long as most vehicles are charged at night. Generation penetration rate would result in 13 million PHEVs by 2030 out of about 300 million vehicles on the road, which still and transmission of electricity during off-peak hours should assumes that current levels of government support will be adequate for many millions of PHEVs, although some continue for several decades. distribution circuits may need upgrading if they are to serve 5. PHEVs will have little impact on oil consumption clusters of PHEVs. Encouraging PHEV owners to charge before 2030 because there will not be enough of them in their vehicles during off-peak hours will require both rate the fleet. More substantial reductions could be achieved schedules that reward time-appropriate charging and equip- by 2050. PHEV-10s will reduce oil consumption only ment that can monitor—or even control—time of use. slightly more than can be achieved by HEVs. A PHEV-10 8. A portfolio approach to research, development, demonstration, and, perhaps, market transition support is expected to use about 20 percent less gasoline than an is essential. It is not clear what technology or combination equivalent HEV, saving about 70 gallons in 15,000 miles. Forty million PHEV-10s would save a total of about of technologies—batteries, hydrogen, or biofuels—will 0.2 million barrels of oil per day. The current light-duty be most effective in reducing the nation's oil dependency vehicle fleet uses about 9 million barrels per day. PHEV-40s to levels that may be necessary in the long run. It is clear, will consume about 55 percent less gasoline than equivalent however, that a portfolio approach will enable the greatest HEVs, saving more than 200 gallons of gasoline per year reduction in oil use. Increasing the efficiency of conventional per vehicle. vehicles (including HEVs) beyond the current regulatory 6. PHEV-10s will emit less carbon dioxide than non- framework could reduce gasoline consumption by about hybrid vehicles, but save little relative to HEVs after 40 percent in 2050, compared to the Reference Case. Adding accounting for emissions at the generating stations that biofuels would reduce it another 20 percent. If PHEV-10s supply the electric power. PHEV-40s are more effective are also included at the Maximum Practical rate, gasoline than PHEV-10s, but the GHG benefits are small unless the consumption would be reduced an additional 7 percent, grid is decarbonized with renewable energy, nuclear plants, while PHEV-40s could reduce consumption by 23 percent. or fossil fuel fired plants equipped with carbon capture and Employing HFCVs instead of PHEVs could eliminate gaso- storage systems. line use by the fleet.