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Volvo Car Corporation challenges EU’s goals and tactics on cutting CO2 emissions; CEO says electrified vehicles will struggle to pass 1% market share by 2020

In a talk at the seminar “EU Debate on Electromobility” organized by Volvo Car Corporation and held at Autoworld in Brussels, Stefan Jacoby, President and CEO of Volvo Car Corporation, said that jobs, investment and competitiveness in the European car industry could be threatened by the European Commission’s approach towards vehicle electrification.

EU targets for cutting carbon dioxide emissions are being jeopardized by the absence of harmonized incentives to consumers, he suggested. Another key issue is the urge for continuous support to automotive research and development, including electromobility.

Volvo Car Corporation urges the EU to coordinate incentives whilst supporting research and development. The European automotive industry risks losing the present technological leadership if this doesn’t happen. In the long-term, this jeopardizes our industry’s competitiveness and European jobs.

—Stefan Jacoby

Jacoby also raised concerns about the viability of the European Commission’s White Paper on Transport, which states that greenhouse gas emissions in the transport sector will have to be cut by at least 60% by 2050 to achieve the EU’s climate change goals. The paper also calls for the use of conventionally fueled cars in cities to be halved by 2030 and then completely phased out by 2050.

European car manufacturers are facing a very difficult challenge when CO2 legislations requiring electrified cars are implemented without initiatives that make these cars affordable for a growing number of consumers

—Stefan Jacoby

In 2011 fewer than 50,000 battery electric vehicles were sold in in the world, equivalent to a market share of about 0.1%. The figure suggests that the car market will continue to be dominated by traditional combustion-engine models for the foreseeable future.

It is far too early to dismiss the conventional diesel and petrol power trains. We continuously improve their efficiency. In the last two years Volvo has brought CO2 emissions from our diesel and petrol model ranges down by 13 percent.

—Stefan Jacoby

While there has been no official target set for the implementation of electrification within the EU, industry studies indicate that several member states are overestimating the speed at which electrified vehicles are being introduced, Volvo suggested.

The European Commission’s own study, ‘A European Strategy on Clean and Energy Efficient Vehicles’, forecasts only 3-4% market share for battery electric vehicles and plug-in hybrids by 2020, with a rise towards 30% expected by 2030.

Both predictions are unrealistic. Considering the lack of coordinated governmental incentives and the high battery system costs, the market share for electrified vehicles will struggle to pass the one percent mark by 2020.

—Stefan Jacoby

One main reason preventing a rapid increase of electric vehicles on the roads is that the cost for the electrification technology is not being reduced fast enough.

The automotive industry’s cost reduction efforts can’t fully compensate for the additional battery system cost. Pan-European subsidies and incentives are needed to support a successful market introduction. Unfortunately such necessary initiatives are jeopardized by the current debt crisis.

—Stefan Jacoby

Volvo recently launched the Volvo V60 Plug-in Hybrid. (Earlier post.)

The V60 Plug-in Hybrid is a great car and we have seen immense interest from the market, however while we have worked hard to bring the price tag below €50,000 [US$66,000], incentives are needed to reach a broader customer base.

—Stefan Jacoby

Electric mobility must be achieved through cooperation between the vehicle industry, governments, infrastructure providers, electric energy providers and scientific institutions, he suggested. In China, for example, the government has earmarked US$15 billion to support its domestic vehicle industry’s research and development within electrification. This far exceeds the EU and the United States commitment to electrification.

Comments

Engineer-Poet

Let's do a thought experiment here.  Suppose one took the basic BAS-II motor technology and turned it into a flywheel-integrated mo-gen of double the power (30 HP) and battery capacity.  Clutch between flywheel and 3-cyl engine, dual-clutch transmission, yadda yadda yadda.

BAS-II adds about $2k, so guess $3500 for this.  Subtract $250 for reduced parts count in the engine, and another $250 savings from using the mo-gen to control driveline vibrations instead of dampers and the like.  Total, $3k.

30 HP is enough to drive on on flat ground, even at low freeway speeds.  This car would be able to run all-electric to the limits of its battery.  It would probably achieve 50+ MPG when burning fuel.  Assume 3 miles all-electric range and a fully charged battery twice a day.  15,000 miles/year in a new car splits to 2200 miles electric and 12,800 @ 50 MPG for 256 gallons/year.  A 35 MPG car would burn 429 gallons, for a savings of 173 gallons/year.  At $5/gallon that's $865/year, paying off $3k in under 4 years.

Suppose you added a supplementary battery pack from a company like Envia.  5 kWh @ $500/kWh (packaged) would cost $2500 for 20 electric miles/charge.  Each charge saves 0.4 gallons of fuel, so 1 charge/day recoups 146 gallons/year or $730/year @ $5/gal.  This pays off in less than 4 years.  Fuel consumption would drop to 110 gallons/year, roughly 75% less than the 35 MPG car.

Unless I have something badly wrong, electrified vehicles ought to be able to take off in a serious way right now.  They'd be PHEV but they'd eliminate a lot of petroleum.  Slicing US gasoline demand by 75% would cut about 6.8 million barrels/day of consumption, which is more than US crude production.

HarveyD

A 2012 Camry Hybrid is only $2.2K more than the regular equivalent model and gets an extra 15 to 20 mpg. The pay back period with gas at $5/gal is under 4 years. With gas at $9/gal, like in Norway, the pay back period could be as low as 2 to 2.5 years.

With a mere $2.2K tax credit, the pay back period would become close to zero. With a low cost support program, we could have a few million more Camry Hybrid on the roads before 2015.

Roger Pham

Thanks, E-P, for sharing the effort of outlining similar cost-saving effects of HEV's and PHEV's.

Indeed, most personal vehicles today can be converted to HEV's with OEM-provided replacement parts such as electric motor instead of torque converter, electric A/C compressor, electric-motor driven hydraulic pump and vacuum pump for power steering and power brakes, and new intake valve cam for Atkinson cycle, and lithium battery to be placed in the location of the spare tire, and a new engine electronic control module. The OEM's dealers will take back and give credit for the replaced parts to be used for other used cars needing repairs. At $400/kWh, LiFePO4 battery will cost only $600 for 1.5 kWh necessary for most cars, while it is known for durability and safety. The owners will spend several thousands more to upgrade their vehicles, but they will recoup that back in a few years, while adding much more values to their vehicles that will significantly increase the resale values, and still cheaper than buying an entirely new HEV, especially when the new HEV may not offfer the style, the nostalgia, and the driveability of their former vehicle. Just another thought experiment.

The Prius at 50 mpg will save the owner $6,500 over 100,000 miles of driving with gas at $3.50/gal in comparison to a comparable 25-mpg car. At 200,000 miles, the savings will be $13,000. The cost premium of the Prius will be recouped from the saving in repair cost of the Prius, so the gas saving will be free gift.

Engineer-Poet

Roger, while I like the idea of shifting the existing fleet in place, just the burden of emissions certification of the modified drivetrains would be a killer.  It seems to be the ridiculous expense of emissions certification that keeps the price of NGVs so high.  I would love to know why.

Roger Pham

Good point, E-P.
Emission-wise, gasoline HEV's should be cleaner than NGV's, since HEV's do not have to idle and the engines run mostly at high-efficiency points in the map where combustion would be excellent. NG is an entirely different fuel that is harder to ignite hence higher risk of misfire than gasoline. NG is also harder on valves and valve seats, requiring extra hardening, which requires more engine modification.

The OEM's should choose models with high sale volumes first to amortize the cost. Good thing is that auto mfg's kept the same body, engine and transmission for several years before a new design, which means that one emission certification can be applied over several model years.

I think that the gov. should give some tax credit for owner of newly-converted HEV's at ~$2000 or so per vehicle, and that will make this even more popular. This $2000 "economic stimulus" will result in a lot more petroleum saved per dollar spent than the $10,000 tax credit for PHEV's. This will create jobs and help reduce gasoline demands which will then lower the price of gasoline, which will then improve the economy, which will create more jobs.
This will also help elect Presidents, Governors, Senators, and Congressmen. Instead of "Drill, Baby, Drill," our way out of high gasoline prices and economic stall, we will "Save, Baby, Save!!!" our way to economic prosperity and job security.

Thomas Pedersen

SJC,

If your comments were directed at me then you misunderstood.

EVs or not, bio fuels are not sustainable. The PHEV calculation by E-P shows what we really have to do: extend the fossil resources, not abuse arable lands even further.

I like my joyrides, but I'd rather cut down on those than abusing nature in an attempt to use as much gas as today. I estimate that my 'unnecessary' miles are about 30% of my total today. Cut those and replace the 5.4 l/100km car with a 4 l/100km car (will happen naturally within 5 years) and my fuel consumption is reduced by 48% - without any real sacrifice. And without resorting to PHEVs. A PHEV could slash another 50-75% of oil consumption - and allow most of the joyrides to be accomplished on battery power. I simply cannot imagine that my car in 2030 is not at least PHEV (though there is a high likelyhood that it's not a BEV)!

HarveyD

Over 92% of electrified vehicles (close to 3M) in the world today are HEVs, mostly Toyotas.

The next step (PHEVs) is moving in very slowly and could match HEVs production in about 5 to 8 years.

The final step (BEVs) will come in two waves

1) short range (100 to 200 Km) city BEVs slowly coming to the market in limited numbers now.

2) long range (500+ Km) BEVs will be available and mass produced some time between 2020 and 2030 or whenever improved lower cost batteries become available.

Limited refurbishing of existing 1 billion ICEVs is possible starting with Stop-Start low cost add-on - all the way to HEV status on selected models. A well managed national program could be an effective way to reduce fossil fuel consumption and import while creating a few million local jobs. It would require substantial subsidies and it is not certain that our politicians would want to touch it.

SJC

Thomas, my comments are for the general negativity that is expressed for anything that is not electric.

You do not make a compelling argument. I advocate natural gas to synthetic fuels and transitioning to more biomass over time. Much of the biomass is from crops already grown on land already in use.

SJC

HEV/PHEV still require fuel, where are you going to get that? Turn biomass into synthetic fuel, then with HEV/PHEV you use even less of it. That sure beats sending hundreds of billions of dollars outside the U.S. to buy imported oil.

Less than 1% of the vehicles on the roads in the U.S. will be EV within 10 years, that leaves lots of vehicles still requiring fossil liquid fuels.

Some might say that lots of cars will be scrapped in 10-20 years, implying that they will all be replaced by PHEVs. They never make the statement, just the inference.

Engineer-Poet
my comments are for the general negativity that is expressed for anything that is not electric.
Hogwash.  People point out problems with your xTL fixation, which you ignore.  You also ignore them when they say that CNG/LNG is superior to GTL because of the low efficiency of GTL.

You don't run numbers to check your own ideas out.  You don't even show that you understand numbers when others do them for you!  You appear innumerate, or so ideological that contrary facts don't move you.

An oil-company plant would argue against anything that isn't petroleum-compatible.  That's increasingly what you sound like.  Petroleum is going to have a cost advantage over synthetic fuels for a long time, but CNG is much cheaper and a CNG PHEV cuts petroleum out completely.  Is that what bothers you?

HEV/PHEV still require fuel, where are you going to get that?
CNG, compressed biogas, alcohol from grain unfit for feed, municipal garbage (negative feedstock cost), crop wastes.

Bob Wallace

"Some might say that lots of cars will be scrapped in 10-20 years, implying that they will all be replaced by PHEVs. They never make the statement, just the inference."

I don't think any of us have a clear idea of what sales ratios will look like in ten years.

If PHEVs can be built for the about the same price as ICEVs then they should start pushing ICEVs off the assembly lines. But if ICEVs can be built cheaper and MPG raised then initial price may keep people buying ICEVs even though the purchase price difference could be recouped in only a few years.

And one can make the same argument with BEVs in the mix.

Initial purchase price will likely swing weight with many buyers. Right now long term ownership of a Leaf is cheaper than long term ownership of a much cheaper, fuel efficient gasmobile. That's without including subsidies which makes the EV much cheaper. But we're still seeing people hesitant because of purchase price.

--

My guess is that battery prices will drop to the point where it will be cheaper to purchase an EV than either a ICEV or PHEV. I think we'll be at that point before ten years from now, but there's no way to prove that but to wait....

HarveyD

Well said Bob W. Battery performance will eventually go up by 5X to 10X and their price per Kwh will go down to 1/3 and even to 1/5 current high price. According the Secretary Chu, that could happen as early as 2017/2018. If it does, HEVs, PHEVs and BEVs would all become much cheaper to buy and their life time total cost could become much below equivalent ICEVs.

Whenever buyers can save $5K to $15K or so over 5 to 10 years with an electrified vehicle, they will think twice before buying an ICEV.

Bob Wallace

The first US Nissan Leaf was handed over to its new owner in December, 2010. The same month the first Chevy Volt was sold to its new owner. Fourteen months ago.

As of today there are only a few miles of 'electric highway' - a stretch in southern Oregon and another in Tennessee.

It's way, way too early for US drivers to have formed and opinion of electric cars, but they BEVs or PHEVs.

I've seen nothing but praise from owners and from almost all test drivers. Tales of no more >$200/mo gas bills and "1,000 miles" driven with only a tiny bit of gas used and just plain enjoyable machines to drive.

I very much remember the first days of the personal computer. Most people were wary and many dead set against giving up their typewriter or ledger book. But after a few early adopters started using computers and others saw that horns were not grown, plagues not experienced, a changeover avalanche built.

After people have watched someone they know, or have heard about their friend's brother-in-law's friend's cousin's experience they will become open to consideration.

Give them a choice that makes sense to their pocketbook and the market will switch.

We'll have to wait to see which prices come down most.

--

(I'm putting my money on Chu. And I'll have to check but I think 2017 is the long end of his time line.)


Peter_XX

If the optimistic scenarios expressed by the enthusiasts on this site would come true, I would definitely want to postpone my purchase of an EV until 2017/2018. I should also be obvious to anyone who read the article thoroughly that Volvo Car is not sharing this opinion. I would presume that their view is based on projections for actual purchase prices that they get from their suppliers. It is now up to anyone to decide if they should trust HarveyD, Bob Wallace or Stefan Jacoby. I would put my money on Stefan Jacoby…

Thomas Pedersen

I think that efficiency improvements of ICEs will push adoption of xEVs forward in time, but I don't care - as long as we stretch the fossil fuel reserves and avoid total economic meltdown during the transition to a supply-constrained future (already happening).

For biofuels to make a noticeable contribution to fuel consumption, a very large area has to be 'put under plow' as we say in Denmark. My position is that nature, the environment, the climate and humans would be better off giving that area back to nature and provide those miles driven by other means, such as:

- Further increased fuel efficiency
- CTL/GTL (with carbon capture!!!)
- Nat gas
- Electrification
- Fewer miles driven (tele-presence)
- Public transportation
- Etc.

All of the above are better than encroaching further on wild-life habitats. If nothing else, then for preserving those lands for food-production for 9+ billion people in the future.

Bob Wallace

Well, Peter, I wouldn't recommend you make financial decisions based on my opinion. I've got no inside knowledge nor crystal ball. I'm just putting together the scraps of information we have and suggesting ways things may spin out.

As for putting your money on Stefan Jacoby, why him as opposed to Carlos Ghosn, CEO of two much more successful car companies?

(Remember, Volvo is a company that almost no one wants. Ford dumped it for less than a third of what it paid. Volvo is now owned by Zhejianj Greely Holding Group of China who likely bought it as a patent/design resource for their Chinese automobile manufacturing business.)

And how about Alan Mulally whose company, Ford has just released their Focus EV? Or Toyota who is introducing a plug-in hybrid and partnered with Tesla to bring their RAV4 EV back to market?

And reflect on Jim O'Donnell, the ex-CEO of BMW, who declared electric cars to be non-starters. He was replaced by his board not that many months later, possibly due to the fact that his company was already pursuing EVs. BMW now sells the MINI-I EV.

In making your decisions I'd suggest you watch the behavior of those who do have inside information. CEOs of large auto manufacture ring companies and the US Secretary of Energy are folks who get to look behind curtains closed to the rest of us....

Peter_XX

@Bob Wallace
I only care about results. I have seen the EV “race” twice already (70’s and 90’s), which turned out to be a total fiasco in both cases. What is different this time? Well EVs are better, but so are also conventional cars and now we also have HEVs. Tough competition! Then, what about cost? Batteries are not cheaper today (note that lead-acid batteries still are the cheapest ones, as in the past). Instead, the longer range that we crave has increased the cost for the whole battery package.

Last year, slightly over 100 EVs were sold in Sweden. From 2012 we now have a “super environmental car incentive” for those who buy EVs. So, the market would “explode”. That did not happen. So far this year, only five (5) cars have been bought by private persons. So, the incentive is already now regarded as a fiasco. Instead, one should conclude that EVs already now (for the third time) must be considered a complete fiasco! The emperor is naked! Volvo must regret the money they spent on the C30 EV.

I do not care to comment on the crap you say about Volvo. Since Ford no longer sucks out money from Volvo, it is again a very successful company; the best business ever for the Chinese owners.

HarveyD

It may be wise to look at what Toyota has done, is doing and will do in the near future before closing on electrified vehicles. By 2020, Toyota says that all its models will have an electrified option and one can believe it. Other manufacturers will try to catch up soon.

Another place to look for guidance, is what is already going on with electrified highways on the US (progressive) West Coast. Those (progressive people) are getting ready for the massive arrival of electrified vehicles. Other States will want to catch up and will do the same soon.

Many other places, such as Japan, with more electrified and light weight vehicles per square Km than any nation are getting prepared for the switch over.

The road ahead for electrified vehicles is very bright and naysayers will not succeed to change the future trend.

Bob Wallace

Let's see Peter...

1) Batteries are much better today than they were in either the 1970s or 1990s. Batteries are better than they were in the first decade of this new century.

2) Conventional cars are better, but it seems to me that we're teasing the last few percentage points out of a very well developed technology. Might we see a decent sized 60MPG ICEV? Possibly, but if that happens it will likely be due to overall vehicle weight and aerodynamics and those advantages will also apply to EVs/PHEVs.

3) EV batteries were around $1,200/kW in 2008, they are now around $400 and almost certainly on the way lower.

Oops, should have read all the way to the bottom of your post before beginning to respond.

Sorry for being disrespectful by posting facts. Here, let me make it up for you...

Go Volvo! Go Team!

Volvo is Number 1!

Volvo is the Bestest in the Whole World!!!!!

Roger Pham

@Bob Wallace,
Let's be respectful to various approaches to CO2 reduction beside BEV. Volvo has been working on KER (Flywheel energy storage) for gasoline and diesel hybrid vehicles. This can result in a lot of CO2 reduction without requiring extensive electrification and may be cheaper and hence much wider adoption.
Another route would be FCV. BEV is simply too wasteful as CO2 reduction approach, since one BEV having 30 kWh capacity has enough battery materials for making 20 HEV's with 1.5 kWh battery each. In that respect, Volvo's CEO Stephan Jacoby is correct.

SJC

EP,

GTL is made from $1 for feed stock and $1 for the fuel plant per gallon of synthetic gasoline.

Refined gasoline is made for $2 in feed stock and $1 for the refinery per gallon of fuel. Both sell for the same price on the wholesale market.

I suggest that you calm down and quit blowing a gasket every time someone does not bow down and agree with your every word.

SJC

"Emission-wise, gasoline HEV's should be cleaner than NGV's"

I am not sure that is true. The Honda GX natural gas car is suppose to the the cleanest ICE car. That includes Honda Civic hybrid and the Prius.

Engineer-Poet

SJC, if the economics are so good, would you then explain to me

  • why Qatar isn't exporting GTL gasoline instead of LNG?
  • how the economics work if NG prices rise to the $8/mmBTU that many analysts say the shale plays need to be cash-flow positive?
  • how it works if NA becomes part of a world market in LNG and prices rise to the $15/mmBTU that Japan is willing to pay?
That would be an immense aid to understanding where you're coming from.

Also, if the GX is the cleanest ICE car it suggests that GTL is sub-optimal on environmental grounds.

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