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In The Wake Of A123, Should The Government Still Pick Energy Technology Winners?

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The battery technology firm A123 burned cash faster than it was coming in the door in a market for PHEV that is not as hot as many would like.  But unlike other green energy companies to flame out the A123 bankruptcy saw one an industry giant, Johnson Controls, ride in to make a bid for its assets.

Not even the $7500 Federal tax credit has been enough to get car buyers to buy a Chevy Volt. Toyota Prius is turning from the name of one car into a franchise of several model types in an effort by its corporate parent to leverage its investment and brand eminence in the category and capture the higher mileage ratings to satisfy its CAFÉ obligations.  Honda, meanwhile, signaled its intent to essentially offer a hybrid option for each of its mainline vehicles.

So is the love affair with the PHEV over before it really began?

Yes and no—and that’s a good thing.

The government’s approach to picking energy technology winners has turned into a colossal loser. Buying a car is still a very personal statement about our self-image, status, and persona.  Some cars make a statement we see as consistent with who we think we are.  And some do not.  Prius has been successful commercially because it oozed ‘tech savvy, environmentally responsible, fun to drive, and just hip enough to be well regarded in any company of friends.’  Chevy Volt screamed ‘the government made me do it.’  It is Yugo-like, bloated, plastic remnant from GM’s past with a big battery with a very limited range so I still have to put gas in it probably sense of uncertainty about it. Prius owners rarely have buyers’ remorse. Chevy Volt owners seem to worry about whether it will keep working until the hugely expensive beast is paid off.’

The commercial success of hybrid technology tells us the market is ready for well designed, reasonably priced, good performing electric vehicles.  But pushed beyond hybrids to PHEV involves more cost and more risk than most car buyers think prudent given the evolving state of battery technology.  The result of the government push for PHEV is to make the perfect the enemy of the good.

Johnson Control is buying the assets of A123 because it wants the patents and other intellectual property for future use.  That is a prudent business decision by a firm with deep enough pockets to keep investing in battery technology advances.  So let’s hope they make the most of it.  We need better battery technology not just for vehicles but for energy storage and time shifting of energy use.  But it is going to take a lot more than a Chevy Volt to change the game in vehicle efficiency or energy transformation.

Image: Electric Car Storage via Shutterstock

Gary Hunt's picture

Thank Gary for the Post!

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Bob Meinetz's picture
Bob Meinetz on Oct 30, 2012 3:21 pm GMT

Somehow, in this election year, the idea that government tech subsidies should be compared to a stockbroker picking winners and losers for clients has taken hold. And the clients are risk-averse neurotics, who will jump off a bridge if they don't see a profit tomorrow.

That's not how it works (or has ever worked, for that matter). If government investment in tech has a lousy record, then government non-investment is abysmal - and the list of products we use every day which depended on government assistance to get off the ground is a mile long.

Hopefully the freakish storms we've been experiencing will help convince those with an eye toward the bigger picture that we don't have the luxury of waiting for the next great energy idea to walk in the door.  Reducing our carbon footprint, and the money spent to that end, should be more along the lines of a Manhattan Project than building a billionaire's portfolio.

Jon Gundersen's picture
Jon Gundersen on Oct 30, 2012 4:50 pm GMT

Man get your facts straight.  The Volt was invisioned and designed before the government jumped in.  And GM had to fight to keep it from being cancelled. The government did not make them do it, the government  almost got it cancelled. 

I do agree buying a car is a personal stmt for many. And once  more drivers experience the power, quietness and smoothness of driving electric more will be sold on that alone. It is pretty easy to see you do pay more up front but you save on the re-occuring maintenance and fuel costs. Yes, I drive an Amercian made Volt with almost 40k miles on it.  My fuel costs have been cut  by more the 50% and so far spent $30 on maintenance.

Rob Peterson's picture
Rob Peterson on Oct 30, 2012 9:29 pm GMT

Gary,

This is Rob Peterson from Chevrolet Communications. 

Your characterization of the Volt's success is inaccurate, especially in contrast to the Toyota Prius.  The Chevrolet Volt, development of which began in 2006, sales have already exceeded those of the Prius first two years (2000 - 6000, 2011 - 15,000) and have grown for seven consecutive months (the last two being best ever).

Secondly, your statement that Volt owners "seem to worry about whether it will keep working until the hugely expensive beast is paid off" is unfounded and couldn't be further from the truth.  Volt owners are the most satisfied in the industry based on Consumer Reports most recent customer satisfaction survey and the been acknowledge as having the top score in its segment (surpassing the Prius) the past two years in JD Powers APEAL study which measures customer satisfaction. 

In the past two years the Volt has won practically every automotive and automotive technology award including Motor Trend, North American and European car of the year and many others.  Comparing the Volt to a Yugo, referencing the Volt's "limited range" (not sure how 380 miles of EV and extended range driving can be considered limited) and pure ignorance of the facts noted above doesn't prove your transparent political agenda, it only serves to put your credibility on this topic into question.

Rob

Rick Engebretson's picture
Rick Engebretson on Oct 31, 2012 8:33 am GMT

Sincere thanks for defending good reasoning, good economics, good transportation development.

Without googling it, let's say 100 million vehicles are now in service that have an electric generator. The electric powers HVAC, lights, entertainment, and vehicle management controls from brakes to fuel to ignition. The list of electric use in vehicles expands in all directions to power lifts, gps, ...

Taking electric generation out of vehicles is clearly not an energy, safety, reliability, utility, or comfort consideration. And with new focus on engine power train and fuels flexibility, evolving hybrids have great prospects in the next 100 million vehicles sold, with great advancements to environmental impact.

Bob Meinetz's picture
Bob Meinetz on Oct 31, 2012 4:11 pm GMT

Rick,

Your claim that "Taking electric generation out of vehicles is clearly not an energy consideration" is just wrong.

It's a huge energy/efficiency consideration. Generating electricity centrally and storing it locally is at least 30% more efficient than having 100 million separate generators and carting around the fuel to run them - not to mention that all 100 million need to be replaced every 5 years or so.

Paul O's picture
Paul O on Oct 31, 2012 8:06 pm GMT

Grading this article:

About A123....100%

Chevy Volt.....30%

Government Approach...100%

 

Overall score 77%

Rick Engebretson's picture
Rick Engebretson on Nov 1, 2012 2:31 am GMT

BobMeinetz, I also appreciate your support for all electric vehicles. Many markets are eager for them. Noise and exhaust are considerations urban drivers are more inclined to, I hope.

My niche in the world requires dealing with farmers who demand 4wd pickups and much more. It's the "mud truck" monster off road types I absolutely don't get; destruction for the thrill of destruction. Snowmobiles can do a lot of damage to a hay field, but try prevent that without a helicopter. Simply, 4 months of the year windshield de-icers are important for me.

The people I criticize most harshly, are those that are a little too inflexible with others.

Jon Gundersen's picture
Jon Gundersen on Nov 4, 2012 5:13 pm GMT

The plugin Prius does qualify for a tax credit.  Its a credit on the taxes you pay.  The law, as Pres. Bush enacted has the credit based upon the size of the battery. And correctly so.  

From the IRS: "For vehicles acquired after 12/31/2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500."

The Prius goes about 11 miles on electric battery, (4.4kWh) .  The  Volt has about  38 mile range, (16-kWh battery).

If in the market for a PHEV you should consider your driving habits and consider the vehicle that best matches your needs, assuming you 'like' the vehicle too.  The Volt is great for me (long commute), but for my wife the Prius wins out.


Jon Gundersen's picture
Jon Gundersen on Nov 4, 2012 10:09 pm GMT

I here you on the snow. I live in NH. The extra weight of the battery makes the car handle the snow a bit better than a normal front whell drive. At least the Volt did and I'm sure the Prius will too.  But when the snow is deep nothing like 4 whell drive. Ford has the C-Max Energi plugin SUV coming out soon that might have better  deep snow ability. I think its great the choices for plugins are starting to grow.

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