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.
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