A growing movement to bring plug-in hybrid and all-electric cars to market has emerged, bolstered by the undeniable economic and national-security benefits that result from displacing gasoline...
but neither is any particular gas car on the road today. The relevant question is whether there are enough people who want a given car to make a business out of it. Dodge makes a business out of selling 2,000 Vipers a year. The entire Hummer product line turns out 30,000 cars. It’s a niche. But the hybrid market started out as a niche, with Honda and Toyota selling 7,000 units a year between them. Now they can’t build them fast enough. People are making different decisions due to gas prices.
Fortnightly: Hybrid vehicles carry a significant premium and that doesn’t seem likely to change any time soon. Won’t that limit the market for plug-ins?
Sexton: DVD players were expensive when they first came out too, and now you can buy them for $50. Plug-in vehicles will be more expensive than standard cars at the outset, but how much more will depend on the vehicle. Toyota is saying its plug-in with a seven-mile electric range will cost about $1,000 more. The Volt will carry a premium with about $10,000 worth of batteries in it. Right now I’m sitting next to a Tesla, and that’s a lot more expensive—about $100,000.
People want them anyway. Some paid $5,000 over the sticker price for a Prius when they came out.
Fortnightly: Apart from economies of scale and cheaper batteries, what would cause electric cars to become more affordable for the rest of us who can’t or won’t pay the premium?
Sexton: I’m seeing enthusiasm for financial models that would facilitate the market. Shai Agassi [formerly a division president at SAP] formed Project Better Place and raised $200 million in venture capital money to address this exact point. Under his business model, you get the car cheap and pay a subscription fee for the electricity you use. You swap out the batteries at charging stations. The total cost of ownership is about the same in the end, but it’s easier to get people into the car if you reduce the up-front cost. [Editor’s note: In May, Project Better Place and its partners, Renault and Nissan, unveiled a prototype electric car with swappable batteries.]
Fortnightly: Some utilities show real interest in electric vehicles as a growth market, but others seem to view it as just a curiosity. Is that changing?
Sexton: Utilities are all over the map on this. Some have been wildly interested for many years. Austin Energy started a whole campaign, Plug-In Partners. Southern Company and Virginia Power got interested quite early and got a little burned because they installed a ton of chargers throughout their area so they’d be ready when the cars would arrive. But now Progress Energy and Duke are very interested in V2G.
You might expect utilities’ interest to be concentrated in areas where people are more environmentally conscious, but it’s not. We’re seeing interest among all types of utilities, all over the country.
Fortnightly: What should utilities be doing to help advance the market for electric vehicles? Will it take regulatory changes?
Sexton: It’s important for the utility industry to