At a breakfast with reporters this morning, Energy secretary Steven Chu spoke about the Obama administration’s dedication to researching and developing alternative sources of energy. Chu referred at one point to advances in electric vehicle batteries as a point of promising federally funded research.
“It’s now within grasp…that you can get a battery where the business plans are one-third of the cost of today’s batteries, where you can get ranges now that would allow cars instead of 100 miles on a single charge, go 300 or more miles on the same charge,” Chu said. “The 300-mile one is completely within grasp, thinking that within five years the automobile companies will be testing those batteries.”
In the meantime, however, electric cars are expensive, inefficient, and not selling particularly well. As Chu noted, current electric vehicle technology is only such that cars can travel 100 miles at a time before having to be recharged. And GM’s flagship electric car, the 2011 Chevrolet Volt, currently costs $41,000, though consumers can get a $7,500 tax credit from the federal government for buying an electric car (though there’s now a proposal in Congress to make that tax credit a simple rebate). And yet the Volt experiences less-than-stellar sales. As Jonathan Last wrote last month, sales of the Volt in January and February 2011 totaled to less than 600. Sales went up in March to 608, according to Chevrolet, bringing the total Volts sold in the first three months of 2011 to 1,210. If the trend continues, that means Chevrolet will sell less than 5,000 units this year. But Chu says GM expects to sell even more.
“I heard…that GM initially was thinking of [selling] 5,000 cars a year,” Chu said. “They’re reevaluating that. They think the demand is much, much higher.” In reality, initial production estimates were 60,000 when development first began on the Volt in 2007. Even as late as last October, GM set expectations at selling 10,000 to 15,000 units in 2011 and predicted that number would reach 60,000 for 2012. (No word yet on expected production levels for the newly announced Volt convertible.)
Even if sales do end up reaching one of these changing goals, many of the orders for Volts aren’t from retailers selling to consumers; they’re for corporate or government fleets. GE announced it will purchase 12,000 Volts, but it’s perhaps no coincidence that the company whose CEO is the President Obama’s favorite would be assisting in the administration’s goal of getting a million electric vehicles on the road.
So what’s the value of encouraging these cars to market if the American consumer just doesn’t want to buy electric right now? Chu argues that the rapid technological research in rechargeable car batteries, funded by the federal government, is making more efficient, less expensive, and unsubsidized electric cars a reality in the near future. “When you can buy a car for $25,000 without subsidy and it can really go three or four hundred miles, then I would say that there would be a significant market penetration,” Chu said. “One hundred miles at $30,000, it’s different. But the trajectory is very rapidly going in this direction.”
Chu was asked about congressional Republicans’ forthcoming proposed budget cuts to energy research and development. Such cuts, he said, would be devastating to reaching the goal of having marketable electric cars.
“You turn off the spigot for this research and [these] ideas, you will be saying, alright, United States, you’re not in the race anymore,” Chu said. “And that would be tragic. The rest of the world recognizes that there’s a race to these things, that this is within grasp. It’s not a pipe dream 30 years from today or 20 years from today. It’s in the next decade.”
