Auto Task Force Advisors Respond to Criticism of Advice on Plug-Is
By John O'Dell April 19, 2009Automakers Need Rechargeable Hybrids, EVs, Task Force Consultants Say
The Boston Consulting Group, hired by the Treasury Department to analyze recovery plans being submitted by General Motors Corp. and Chrysler LLC to the administration's Automotive Task Force, says it stands by the accuracy of its January report on the prospects of the electric vehicle segment in coming years.
The global consulting firm's analysis came under fire last week from Felix Kramer, founder of the influential plug-in hybrid and EV advocacy group California Car Initiative, or CalCars.
He said in a lengthy posting on the CalCars website that he feared the consultants had based their finding - that electrified vehicles are too costly still to be competitive with internal combustion engine vehicles without a wide range of government incentives - on flawed data.
Kramer's concern is that while the Obama administration has said it wants to encourage development of plug-in electric vehicles with a goal of seeing a million on the road by 2015, the consulting group seems to be downplaying rather that supporting the idea that such a goal is attainable.
Kramer linked the consulting group's January report to the the task force's finding, when it rejected GM's inital recovery plan last month, that the Cvevrolet Volt plug-in due out at the end of next year will be too pricey to be commerically viable in the early years. He appears to be concerned that this is an indication that the task force is getting advice to tell GM to drop or delay the project.
But GM has said it will move ahead with the Volt and in a short statement provided Green Car Advisor today, Boston Consulting said that its Janauary report did not single out the Volt or any other specific model and that, indeed, it believes rechargeable, or plug-in, hybrids and all-electric vehicles need to be part of every automaker's fleet.
Here's the statement:
"Our January 2009 report, "The Comeback of the Electric Car? How Real, How Soon, and What Must Happen Next," discusses the prerequisites necessary for widespread adoption of electric cars in general, and not of specific models.
"The report's analysis was based on information from a wide range of sources and on a modeling of the propulsion-market evolution in Western Europe, North America, Japan and China, incorporating regional differences in average mileage, carbon dioxide regulations, taxes and likely acceptance of technologies.
"According to our projections, [global] sales of around 3 million electric cars and 11 million hybrids by 2020 are realistic under reasonable incentives and fuel-cost assumptions, with ICE-based cars still making the majority of the market.
As the report makes clear, our view is that all automotive manufacturers need to include rechargeable, or plug-in, hybrid-electric vehicles in their fleets. But unless governments intervene with strong incentives for car makers, power companies and consumers, key auto markets will remain dominated by ICE-based cars.
Since the report's publication, numerous informed parties - including many OEMs, suppliers and battery makers - have reaffirmed the validity of our estimates and conclusions. We will provide future updates as our research unfolds."
And we will be happy to report on those updates.
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We expect the Automotive Task Force will be examining some of the further confirmations cited by the Boston Consulting Group. We also hope they will be checking with leading consulting firms including Bain and McKinsey, which have developed projections of higher volumes.
BCG's statement doesn't say anything new. It just repeats the projections contained in the January report: global totals of 1.5 million EVs, 1.5 million range extenders (series and parallel PHEVs) and 11 million hybrids. (The only thing we don't take strong issue with is BCG's statement that internal combustion cars will still make up the majority of the 2020 market; averting that will be an enormous challenge.)
Let's simply look at the mathematics of BCG's scenario compared to one showing how US automakers can reach President Obama's goal of one million PHEVs by 2015. Starting with 100,000/year in US in 2011, increasing 50% annually after that brings us to cumulative total produced by 2015 of 1.3 million. Extending that rate to 2020 brings the annual volume for U.S. plug-in vehicles (by then including many EVs as well as PHEVs) over 3.5 million. That means the U.S. will meet by itself exceed BCG's projection of the 3 million global total.
Meanwhile, carmakers going to the trouble of building hybrids with powerful motors and sophisticated control systems may increasingly decide to take them one step further -- adding larger batteries and charging capabilities to make them PHEVs. This is especially likely if consumer incentives that are higher for PHEVs than for HEVs remain in place or are replaced by carbon-correlated incentives, or if other factors cited by BCG as possible but unlikely become contributing factors. If most of those HEVs turn into PHEVs, we can have well over 6 million plug-ins in the US in 2020.
If U.S. vehicle production is 1/3 the worldwide total, our estimate of 3.4 million in the U.S. will translate to 10+ million new plug-ins worldwide that year. And if in fact HEVs are eclipsed by PHEVs, we can have over 20 million plug-ins globally in 2020. These are the numbers to compare back to BCG's 3 million projection.
-- Felix Kramer, Founder, Calcars.org
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