Panel VIII

Building Electric Vehicle Industries

Moderator:
Andreas Möller
Head of the Division of Policy and Social Consulting
acatech, the German Academy of Science and Engineering

Dr. Möller welcomed the participants to the panel on electromobility and the electric vehicle industry. Electromobility, he said, is “an important cornerstone of sustainable mobility, not only in the United States and Germany, but world-wide.” A week earlier, the federal government of Germany had release its official two-year electromobility budget of one billion Euros, mainly for research, battery development, and lightweight construction technologies.

“The government,” he said, “wants Germany to become not only an elite market, but an elite provider in electromobility worldwide. “This is an ambitious goal in a highly competitive international field with new, powerful players. An interesting point is that the government decided not to stimulate the market with buyers’ incentives, like France, even there is a gap in total cost of ownership” (TCO). The German aim was to have one million cars, including both plug-in hybrids and pure electric cars, on the roads by 2020. He said that this goal would be difficult to reach without subsidies.

In the United States, Dr. Möller said, electromobility is also an important topic, with the Obama administration planning to invest more than $100 billion in new energy technologies, about $2 billion of that in electromobility—and amount similar to the budget of the Chinese government.

He introduced the two speakers, Edwin Owens and Dirk Arnold, who would address the topic for the United States and Germany.



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140 MEETING GLOBAL CHALLENGES Panel VIII Building Electric Vehicle Industries Moderator: Andreas Möller Head of the Division of Policy and Social Consulting acatech, the German Academy of Science and Engineering Dr. Möller welcomed the participants to the panel on electromobility and the electric vehicle industry. Electromobility, he said, is “an important cornerstone of sustainable mobility, not only in the United States and Germany, but world-wide.” A week earlier, the federal government of Germany had release its official two-year electromobility budget of one billion Euros, mainly for research, battery development, and lightweight construction technologies. “The government,” he said, “wants Germany to become not only an elite market, but an elite provider in electromobility worldwide. “This is an ambitious goal in a highly competitive international field with new, powerful players. An interesting point is that the government decided not to stimulate the market with buyers’ incentives, like France, even there is a gap in total cost of ownership” (TCO). The German aim was to have one million cars, including both plug-in hybrids and pure electric cars, on the roads by 2020. He said that this goal would be difficult to reach without subsidies. In the United States, Dr. Möller said, electromobility is also an important topic, with the Obama administration planning to invest more than $100 billion in new energy technologies, about $2 billion of that in electromobility—and amount similar to the budget of the Chinese government. He introduced the two speakers, Edwin Owens and Dirk Arnold, who would address the topic for the United States and Germany.

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PROCEEDINGS 141 U.S. BATTERY INITIATIVE FOR ELECTRIC DRIVE VEHICLES Ed Owens Supervisory General Engineer for Vehicle Technologies U.S. Department of Energy Mr. Owens said he would discuss the battery initiative at the U.S. Department of Energy (DoE) for electric drive vehicles, and refer as well to other programs within DoE and other agencies that encourage development of complementary technologies, such as motors and power electronics. The DoE had been investing in battery technology for more than 30 years, he said, with improved technology and rising funding for 20 years. The budget for 2010 was $76 million; the request for 2011 was $96 million, and the request for 2012 was $140 million. The goal for 2014 was to reduce the production cost of a plug-in electric vehicle (PHEV) battery to $300/kilowatt- hour (kWh), 70 percent below current cost. Mr. Owens suggested that the DoE’s two decades of investment may be responsible for the current hybrid vehicle industry. Until this year, he said, all the hybrids on the roads of the United States contained IP developed and owned by the DoE. “We’ve continued to invest in the newer lithium-ion technology,” he said, “and we see that technology as well reaching the marketplace. So between the nickel metal hydride batteries that came out of DoE funding and the lithium-ion technology, we see spillovers from our R&D programs directly into the marketplace.” The DoE battery technology program extends from basic research on fundamental electrochemistry through battery cell development, battery pack development, and, more recently, full-system development and support for commercialization. “This range of program and sustained support are reasons it’s been so effective over the years,” he said. The research programs are driven by specific performance goals for batteries. Depending on whether the goal is a conventional hybrid; plug-in electric vehicle (PEV) with some form of range extension, like the Chevy Volt; or an all-electric vehicle, the requirements for the batteries—and therefore the technology—are different. “I don’t mean you have to meet all these goals to commercialize the batteries,” he said, “because some of them in vehicles today don’t meet the goals. But having a set of goals provides a way to measure achievement and focus development—not only within the research community, but also for the potential battery manufacturers. Then they understand where they need to go.” Battery price is a critical issue for successful electric drive vehicles, he said, and it is too high. A few years ago batteries for hybrids cost $1,000 to $1,200 a kWh; today the price is about $600 to $700 per kWh. The DoE’s short- term goal is to reach $300 by 2014, and ultimately $150. “Just large-scale production in large plants at higher volumes will not bring the cost to these levels,” he said. “What’s needed is improved technology with less but higher-

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142 MEETING GLOBAL CHALLENGES performing materials. We need higher-performing basic chemistry that allows the battery size to shrink and the costs to go down.” The American Reinvestment and Recovery Act (ARRA), Mr. Owens said, brought a unique opportunity to create a battery manufacturing industry in the United States. The DoE invested $2 billion in helping create and support it, and has invested another $750 million in transportation, electrification, and other measures to encourage an infrastructure for all-electric and plug-in hybrid electric vehicles. The investments have been made across the battery supply chain—from the basic materials through cell manufacturers—to encourage an industry that before ARRA did not exist in the United States. Prior to the ARRA investments, the United States had about 3 percent of the lithium-ion battery manufacturing capacity in the world. These investments and corresponding investments by the manufacturers themselves are likely to bring enough capacity to meet all U.S. demand through at least 2015, he said. An executive of a battery company had told him that new battery plants would have been built without U.S. investment, but they probably would have been built in Korea. “By using this unique and hopefully once-in-a-lifetime investment, we have seen the creation of what we believe is going to be a stable U.S. manufacturing capability.” Mr. Owens turned to battery cost and production anticipated to 2014. Both the ARRA and the Advanced Technology Vehicle Manufacturing Loan Program have been used to support development of battery production capacity in the United States. Some plants are already in production, and more are scheduled to come on line. Estimated capacity by 2015 is about 10 million kWh of automotive-scale lithium-ion batteries. “That compares well with the production capacities that have been announced for manufacturers selling to the U.S. automotive industry,” he said. “These are cumulative numbers of announced capacity before GM announced that they were increasing the capacity of the Volt production facilities. Even at that time it looked like we had enough production capacity to reach 1.2 million vehicles on U.S. roads by 2015.” He emphasized that “this 1.2 million vehicles is a milestone, not an end objective;” the number represents only 0.4 percent of the U.S. vehicle fleet. “So even at this rate we’re just getting our toe in the water. But it’s interesting to note that production capacity and demand for these vehicles pretty well matches.” The ARRA has also allowed DoE to invest in other areas of electric drive technology—not only in motors and power electronics, but also in industrial vehicles, classes 3 through 7. These small trucks typically operate in urban areas, and are “an interesting target for early adoption of leasing PEV and electric drive.” An advantage, he said, is that it is easier to sell trucks on the basis of life-cycle cost than initial purchase price. The ARRA has also helped develop infrastructure to support plug-in and electric vehicles. The country is in the process of its largest deployment of electric-drive vehicles and charging infrastructure, deploying 13,000 electric-

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PROCEEDINGS 143 drive vehicles and 22,000 charge points associated with those vehicles. One objective is to understand how individual consumers use their electric vehicles and how they charge them in order to encourage more adoption. Part of the DoE effort is to develop codes and standards needed to smooth the introduction of new vehicles and harmonize them with partners in Europe and Asia. A goal is the ability to develop vehicles in one place that can be easily transferred or sold in another. In summary, Mr. Owens said that DoE had been supporting battery development for several decades, and as these batteries have improved, DoE and other agencies had increased investments to support commercialization, including an increased focus on the charging infrastructure and other efforts to remove barriers. He attributed part of DoE’s success to its commitment to a long-term research program that recognizes improvement and continues to support companies. GERMAN DEVELOPMENTS IN ELECTRIC VEHICLES Dirk Arnold Deputy Head of Division Environmental Innovation and Electric Mobility Federal Ministry of Economics and Technology (BMWi) Mr. Arnold said that the symposium was well-timed at a peak of activity for electromobility. The previous week, a report from the National Platform of Electric Mobility was presented to Chancellor Merkel, followed two days later by a government response to the report. Electromobiity, he said, was closely related to the Integrated Energy Climate Program, initiated in 2008 by four collaborating ministries. In 2009 the government issued a stimulus package for R&D in electric vehicles, and would evaluate the results. In August 2009 a National Development Plan for Electromobility was released, with goals for 2015 and 2020. Also, the federal government had created a Joint Unit for Electromobility, and in May 2010 established a National Platform of Electromobility. His division was able to join about 150 people from industry and research to evaluate the platform’s goals in developing electromobility in Germany. Mr. Arnold summarized the activities assigned to participating ministries. The Ministry of Economics and Technology was providing grid integration and performing research in energy, IT, and transport systems, including drive components and power train. The Ministry of Transport was using its funding to stimulate eight model regions across Germany and create a battery test center. The Ministry of Environment was carrying out fleet tests, recycling lithium-ion traction batteries, and launching a commercial program for hybrid buses. Finally, the Ministry of Research focused on development of production technologies, factory systems for lithium-ion cells, and battery

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144 MEETING GLOBAL CHALLENGES systems. It also maintained a network of excellence in systematic research and developed research centers in electrochemistry. The government platform for electromobiity had several key objectives: • Contribute to climate protection, grid stability, and extended use of renewable energy. • Better understand grid stability, especially in the wake of the events of Fukushima, and prepare to scale down nuclear energy. • Support market leadership of German automotive and supply industries. • Maintain competitiveness through innovation along the new value chain. • Aim to be a lead supplier for EM for the automotive industry. • Facilitate new urban mobility and road transport concepts. • Raise public awareness and encourage EM acceptance. A central milestone for the effort is to have one million EVs and PHEVs on Germany’s roads by 2020. In order to reach that milestone, the government had established an action plan with the following contents: • Deploy additional R&D subsidies of 1 billion Euros from the present until 2013. This would represent a doubling of the previous support, from 2009 to 2011, of 500 million Euros. • Award tax exemptions for EVs. • Provide a framework for EM in the form of university training and road traffic laws. • Designate a small number of regions as showcases for EV use. • Employ tax money in the form of R&D rather than consumer incentives. • Employ competition as the best incentive for innovation. Among the key challenges for R&D, he said, was energy storage. Essential goals here include lowering battery costs, enhancing energy density, extending battery life cycle, and improving safety. For vehicle technology, goals include development and improvement of electric components and electrification of ancillary units. A final goal is grid integration, including construction of charging facilities and introduction of IT technologies, time- sensitive charging, and feeding charge back to the grid. The National Platform included several framework conditions, beginning with education and skills, battery recycling, standardization of plugs and other components, and a regulatory framework by which to identify appropriate locations for facilities. It also aimed to strengthen markets by

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PROCEEDINGS 145 developing business cases, accelerating market penetration; supporting market preparation, and modeling EM showcases in various regions of the country. Mr. Arnold emphasized that while the platform represented important perspective, “we can’t do anything without industry. We need them to focus the whole effort.” He concluded on a note of strength—manufacturing the automobiles themselves. “Part of our job is development of production technologies,” he said. “That’s something where Germany was always very strong—creating the machines, creating the cars.” DISCUSSION A questioner asked whether it would not be faster to import batteries rather than develop them at home so as to move electric vehicles to market more quickly. Mr. Owens said that battery R&D programs had been “critical in getting us to where we are today, but they’re not sufficient. You can develop the best technology in the world, and if you can’t make it into real batteries, and those batteries into packs that service vehicles, you’ll never get the vehicles on the road. That includes the safety, the standards, and the charging infrastructure. Our perspective is you have to support the battery and vehicle development from the fundamentals of the science all the way through to production.” Another participant asked how long the technology might be subsidized. Mr. Owens said that the U.S. energy program supported five areas: active research programs in electric drive, biofuels, improved energy efficiency, fuel cells and hydrogen, and natural gas. The DoE program focused on a variety of areas that provide tools for industry. “I think that electric vehicles are getting a lot of emphasis today because they’re successful. I don’t see the DoE’s electric program as picking a particular technology. Rather, this is one of the ones we’re working on, and the market seems to prefer it, so we’re going to try to help it along.” He said the Congress was the only body that could determine how long the government would subsidize EV research. Mr. Arnold said that the German government would provide subsidies for as short a period as possible. He added that the situation is complicated because of climate goals, not only for Europe but globally. “If we think that only the consumer should pay more money for expensive cars that can reach those goals, we need to help with batteries that are efficient enough, of course using an open technology.” Dr. Prabhakar said that the premium to buy an electric vehicle is about $10,000, but that the total cost of ownership (TCO) is probably lower. “What is the payoff period at the current premium?” she asked. Mr. Owens said that as gas prices rise, the payoff period shortens. But by modeling consumer use of hybrids and PHEV, even before a recent rise in fuel prices, “it appeared that in total life cycle costs, hybrids were already economically viable in the United

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146 MEETING GLOBAL CHALLENGES States. The difficulty is that consumers tend to focus on first cost.” One reason for DoE’s interest in class 3-8 industrial vehicles is that they are easier to sell on a life cycle basis. Those sales would increase production of batteries, bring down costs, and increase manufacturing expertise. “So anything we can do to stimulate demand for Li-ion battery technology will make the cost situation better.” Mr. Arnold said the TCO problem can be reduced by three other factors. First, battery cost will drop as batteries become more effective. Second, faster recharging will help consumer acceptance. Third, grid integration of the battery can bring reimbursement for unused electricity. A questioner asked about disposal at the end of battery life. Mr. Owens said the DoE believes that batteries will be easily recycled, and there is also much interest in reuse. Current knowledge is limited, he said, but lifetimes are estimated at well over 10 years, “and probably longer.” Mr. Arnold agreed, and said that in Germany, the Ministry of Environmental Protection was developing recycling possibilities and on second uses of batteries before recycling. One important focus is the use of older batteries to help stabilize the grid by storing and releasing energy as needed.