Dear Jim Letters: The Electric-Car Future

The two Jims have been friends for 20 years, but that doesn’t mean they agree on everything: Jim Motavalli thinks that environmental factors loom large and the EV revolution is right around the corner; Jim Henry thinks the inherent conservatism of American consumers will keep it a niche market for a long time to come. Here’s what happened when they traded off on the subject:

Jim Motavalli: I think the EV revolution is firmly established, and by 2020 a significant portion of the global auto fleet will be either battery powered or plug-in hybrid. Although turning over the fleet could take a long time, I predict 30 to 40 percent EV penetration by 2020.

Jim Henry: In my opinion only two things can drive American consumers into EVs in greater than token numbers, and neither one of them is concern for the environment: 1. If gas prices really skyrocket—say more than $5 per gallon—and then stay there. 2. If fuel-economy legislation makes it so a really high proportion of EVs is the only way for the car companies to achieve their targets. Either way, I think 30 to 40 percent is way too high. Cost, EV range limitations and resistance to “newfangled” technology will all serve as a brake on EV share in the real world.

I had an interesting talk with my neighbor’s father the other day. He’s a retired U.S. Merchant Marine, well-read, globally well-traveled, technologically savvy and not sentimental about cars and car brands. He recently turned down a big discount on a new Toyota Prius because a used Toyota Camry in his view represented a better value. It’s pretty hard to argue with that.

He also has a friend in the Boston area who’s scared to drive his Prius outside the metropolitan area, because the friend is worried that no one but a Toyota dealer will know how to fix it, or even how to tow it. We may agree that the friend with the Prius is being a little silly—Toyota dealerships are pretty much everywhere, and chances are small that on any given trip, the Prius will ever need anything but gasoline—but it shows you how at least some consumers think.

Jim Motavalli: Consumers (and corporations, too) are inherently conservative, we can agree on that. The value of the home computer and the copying machine were not initially recognized. EVs represent a disruptive technology, so they aren’t going to be accepted overnight. And both gas prices and corporate average fuel economy (CAFE) are big drivers. But you’re leaving out two other big ones: climate change and peak oil. Both dictate moving away from fossil fuels, and at a very rapid pace.

I think if we’re not already at global peak oil, with demand exceeding supply, we soon will be. (The actual date will be clear only in retrospect.) The recession has temporarily slowed demand, but recovery will send it roaring back. And as the NASA scientist James Hansen has pointed out, we have soared into the danger zone with more than 350 parts per million of carbon dioxide in the atmosphere. Business as usual will get us quickly to 500 parts per million, which would result, he says, in “unstable ice sheets, rising sea level out of humanity’s control [and] extermination of a large fraction of the species on Earth.”

What’s consumer preference compared to that? The imperative to move to zero-emission transportation will soon become clear. The auto industry is recognizing these twin crises, and responding with a race to develop game-changing battery packs.

Jim Henry: I don’t disagree what people should do, what they inevitably will have to do. But in the meantime, “consumer preference” outside of a highly motivated few is going to be for what’s easy and familiar, namely the gasoline-powered, internal-combustion engine. In my opinion that’s been key to mass popularity for hybrids, such as it is—it’s not the battery power, it’s the conventional power that convinces people a hybrid is a safe choice.

I took a university course back in 1975 called “Limits to Growth” that predicted we would all be sitting in the dark right about now, knitting sweaters, because we were going to run out of fossil fuels, and because there was nowhere to put spent nuclear fuel. What’s actually happened was that as oil prices rose, new sources of oil came online. What was once impractical and uneconomical became attainable. I don’t think we’ll give up on fossil fuels until the last erg is wrung out of the last piece of oil shale.

Sure, the “highly motivated few” will become more numerous. Media events like An Inconvenient Truth, for instance, probably influence people more than we realize at the time and become part of the accepted wisdom. But I think EVs will remain on the fringe for a long, long time.