A million EVs: Our generation’s Sputnik moment?
Bruce Rayner
4/4/2011 10:26 AM EDT
“We cannot keep going from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again.” President Obama used those words last week to introduce his administration’s Blueprint for a Secure Energy Future, which envisions cutting the nation’s oil imports by a third in the next decade and ensuring that the government purchase only hybrid or all-electric vehicles for federal fleets by 2015.
The speech built on the theme of January’s State of the Union address, in which Obama called clean-energy development “our generation’s Sputnik moment.” Back in January, Obama urged the nation to “break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015.” In the news cycle following the speech, there was some debate over whether the million-EV challenge was likely to be met—indeed, whether meeting it was even possible.
Just two months after the address, world events have brought the proposition into stark focus. Oil-rich nations of the Middle East and North Africa are beset by brewing revolution; EV technology leader Japan is reeling from a devastating quake, tsunami and nuclear crisis. These events, as they play out in the coming months and years, have the potential to influence America’s timetable for weaning itself off oil and building out an EV-friendly transportation system.
The debate over Obama’s million-EV target hinges on myriad supply and demand factors. Pike Research (Boulder, Colo.) projects the United States will miss the mark by about 160,000 vehicles. Its figure includes both plug-in electric and hybrid electric vehicles. Still, the research firm forecasts that between 2010 and 2015, the United States will field more EVs and hybrids than any other nation or region of the world, including China.
One caveat: “Our forecast was done before the earthquake in Japan, and the probability of hitting those numbers now is somewhat lower,” said Pike Research analyst John Gartner.
That’s because Japan is the world leader in lithium-ion battery production, followed by South Korea. Supply chain disruptions in Japan are having a short-term impact on battery and EV production. Toyota has delayed the planned April launch of its new wagon-style Prius in Japan. And while Nissan has resumed battery production and assembly of its all-electric Leaf, the company said production levels would depend on the frequency of rolling blackouts.
Others are more sanguine about Obama’s challenge. “One million EVs is a doable target,” said Oliver Hazimeh, director and head of the Global e-Mobility Practice at PRTM, an international management consulting firm. Still, he admits it won’t happen on its own. “There are a lot of things that have to come together.” Oil prices; the health of the U.S. economy; the mood of lawmakers in Washington; Li-ion battery availability, cost and technology development; investment in the refueling infrastructure; corporate and governmental fleet sales; the pace of Japan’s recovery—the list goes on.
Some of those factors are potential tipping points that could spur demand to increase dramatically—or to drop off a cliff. For instance, if the price of gasoline climbs toward $5 per gallon and remains high for an extended period, the positive impact on EV demand would be “significant and material,” said Pike’s Gartner. But if gas prices fall, the economy sputters and sinks back into recession, or the $7,500 federal tax subsidy for EVs is cut or eliminated, sales would retreat.
Indeed, the U.S. Energy Information Administration’s March 8 forecast raised the average cost of crude oil to $105 per barrel in 2011—up $14 from its previous projection—because of unrest in North Africa and the Middle East. Others predict oil prices could reach $130 to $150 a barrel by the summer, partly as a result of growing uncertainty over the stability of the supply from oil-producing countries hit by political upheaval. And peak oil is a concern for the longer term.
