As I wandered the Plug-in 2008 Conference this week in downtown San Jose, California, I had an un-original but startling thought: Is Silicon Valley the new Detroit?
For a trade show and conference that is essentially about cars, this one looked nothing like any car show I've ever seen. In fact it looked like a typical computer trade show. The place was swarming with smart, well-dressed 20-somethings and gray hairs were few. Only a handful of cars were on display in the exhibit hall. And the sessions were decidedly technical, preferring performance curve charts and hard data over flashy videos.
These attendees weren't interested in body styling or macho demonstrations of horsepower. They had an entirely different set of things on their minds, like peak oil, climate change, and the uncertain future of transportation.
From the presentations I saw, one thing was clear: These young technologists aren't waiting for the Big Three to lead us into a new era of personal transportation. They're unafraid to admit that we have some serious problems, and they know that we have very little time to accomplish an unprecedented technological revolution. They aren't beholden to the gas-burning technologies of the past. And they're accustomed to working at light-speed, compared to the glacial speed of innovation that characterizes the lumbering old automakers.
Step On It!
Andy Grove, former CEO of Intel, kicked off the conference with a bold challenge to convert 10 million existing gas guzzlers to plug-in hybrids within four years. By comparison, Toyota has only built one million Priuses to date. But for a computer company chairman like Grove, such a challenge is just the thing that gets his juices flowing.
He didn't just issue the challenge, though. He's got plenty of ideas on how to pull it off: A federal tax credit to offset half the cost of the conversion, paid for by licensing fees on all cars, boats, and planes. Give the electricity away for free for the first two years. Harness open source collaboration to speed development. And call on the venture capitalists of Silicon Valley to fund the innovations that are needed.
Transforming our rolling stock so that it can run on mostly electricity is, as another famous computer industry mogul likes to say, a "no-brainer." Peak oil means we have a looming shortage of liquid fuels, but all renewable energy technologies make electricity, not liquid fuels.
With the latest battery technology, most PHEVs can run 40-60 miles on electricity alone. According to Anant Vyas of the Argonne National Laboratory, a 60 mile electric range is enough to offset 75% of vehicle miles traveled.
That could take a hell of a bite out of our consumption of petroleum.
James Winebrake, an expert with the Rochester Institute of Technology and Department of Energy alum, noted that the $500 billion [more like $700 billion now] that we spend on foreign oil is enough to buy every American driver a "neighborhood electric vehicle" over a four-year period.
He calculates that hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) could replace 40% of our existing fleet by 2030. In the process American households would save $316 million dollars a year, even after accounting for the increased electrical demand, since electrically-powered miles costs a fraction of gas-powered miles. (A typical The economic benefits of the shift, he says, extend across the entire economy as more jobs are created and more discretionary income is freed up.
And that doesn't even include the benefits to public health, transport outside the household sector, and general economic development and capital costs.
A Great Race to Save Society
Dr. Andy Frank, a professor of mechanical and aeronautical engineering at UC Davis who is credited as being the father of the plug-in hybrid, broke the numbers down in his keynote address.
We have 200 million cars on the road today, but we only make 15 million new cars each year. So at best, if the country's entire auto manufacturing capacity were to build nothing but PHEVs, in 10 years we could only replace about 50% of the fleet. (Other speakers suggested the replacement rate might run as high as 7-8% per year, but did not cite details.) [This section has been corrected from the original version; please see note at the end of this article.]
Peak oil and rising prices, along with global warming, are such urgent and serious challenges that we simply have to move faster than that. "We are in a great race to save society," he said, and offered his prescription on how to accelerate the transformation to a transportation fleet 90% powered by renewable energy:
- Replace and modify vehicles, because replacement alone is too slow. We might replace 1-5% of the fleet per year, but we could modify 10-15% (20-30 million) per year. (That makes Grove's call to modify 10 million in four years seem slow!)
- Offer government subsidies to help drivers buy PHEVs, to overcome the initial higher cost of the vehicles and create the surge in demand that will drive innovation and more rapid production. He observed incisively that the subsidy would be justified by the future cost of diminishing oil, which nobody seems to take into account.
- Add plug-in outlets everywhere, to overcome the chicken-and-egg problem of having a PHEV but nowhere to plug it in. This is hardly a radical idea, he said, noting that outlets are already a ubiquitous feature of parking spaces in Canada, where drivers plug in during the winter to run heaters that keep their engine blocks from freezing. We already have parking meters with electric power supply in many places, he asserted, so adding plugs to them would be trivial and relatively cheap.
Frank has founded a company called Efficient Drivetrains, Inc. (EDI) to make an end-run around the big car companies and deploy PHEVs much more quickly. "GM and Ford are in the business of never buying or licensing anybody's technology," he said, and if they violate your patents, they'll say "so sue me," and you'll lose. So instead of even trying to talk sense into their thick skulls, he's focusing on the 400 other car companies in the world, supplying them with drivetrains and components, licenses to existing technology, and an open approach to collaboration.
His objective is bold and clear: "To see that the world moves toward electrification of the entire society in an integrated fashion to enable greater energy efficiency for higher improvement in productivity and lifestyle with a zero CO2 footprint."
He's not afraid of the Big Bad Three. And neither are we.
What's Hot—and Not
The Plug-in 2008 Conference concluded yesterday, the same day that Ford announced yet another sweeping restructuring as it staggered under an $8.7 billion loss for the quarter. CEO Alan Mulally, who's been struggling at the helm of the company for two years to turn its fortunes around, acted decisively. He issued new marching orders to retool three of its pickup and SUV factories to produce six models of the smaller, more efficient cars it currently makes in Europe. It's a good move for Ford, but for the moment, they're so Not hot.
But PHEVs? Nothin' but hot.
Jeff Siegel has long been in hot pursuit of the companies with the best designs for lithium ion batteries, the power pack of choice for the new generation of PHEVs, and has recommended several of them for Green Chip Stocks subscribers. The rest of the components that will enable the PHEV revolution, like new high-efficiency electric motors, innovative transmissions, and software control systems, are also on his radar.
PHEV technology has been around for 15 years, and all-electric cars have existed for over 30 years. It's mainly Detroit that has stood in the way of its progress, as many have learned from the documentary film Who Killed the Electric Car? But now, thanks to their own myopia, they're on the ropes.
Silicon Valley is about to snatch their crown. With a fertile ground of fresh ideas, plenty of VC, and a $130-a-barrel wind at their backs, the question is not if you will ever drive a PHEV or EV, but when.
Based on the presentations I saw at the conference, I'm expecting to be able to buy PHEV technology for myself within the next two years. Perhaps it will be a conversion from EDI, a standard production line Mitsubishi, the Prius "2.0," or a sleek all-electric Tesla.
But I don't think it will be a Chevy Volt.
Until next time,
Chris
P.S. Bridging the gap to using clean, efficient energy isn't going to happen overnight. That means investors like us now have a perfect opportunity to take advantage of the burgeoning interest in clean technology. If you're interested in learning more on how you can profit from these trends, feel free to take a look at the Alternative Energy Speculator.
Correction - July 26
Thanks to the readers who pointed out the incorrect numbers in the section on Dr. Andy Frank's talk. I'm not sure what happened there, but I suspect it was a typo in my notes. Unfortunately I was unable to find data that precisely matched what I thought he said. Running the calculations again and using data I located online, I made the smallest possible edit, to correct the replacement figure to 50% over 10 year. Here is a sample of the data I found:
According to the OICA, there were about 247 million registered highway cars and light trucks in the U.S. as of 2005. The U.S. makes about 11 million per year (a 4% per year replacement rate), but sales run about 17 million per year, according to the Automotive News Data Center. The definitions of what constitutes a "car" or "light truck" vary from source to source, and the numbers vary from year to year, so it's difficult to rationalize all the data. For example, according to ANDC, sales in the first half of 2008 were 834,000 lower than the first half of 2007, which when annualized would mean a 1.6 million decline. For the purpose of comparison to Dr. Frank's assertions, I assume he was working with slightly outdated data to come up with 200 M existing vehicles and a 15 M per year replacement rate, and that he assumed growth to about 300 million total within 10 years, resulting in a 50% replacement. So my original "in 10 years we could only replace about 5%" was probably a typo I made while taking notes during his keynote, which should have been 50%.
Looking at cars only: In 2005, OICA says the U.S. produced 4.3 M cars, where the total number of cars was about 136 M according to the Bureau of Transportation Statistics. This amounts to a 3% per year replacement rate, replacing 43 M cars over 10 years, or about 32% of the existing inventory.
—Chris
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Please, someone give them math lessons and calculators before it's too late!
No, Silicon Valley is not the NEW Detroit, Japan, Korea or anywhere else where they manufacture MOTOR vehicles. And YOU should know better, even if they don't. Chips and cars are mutually exclusive industries, no matter how they try to spin it. Just because they're mad that GM junked the EV-1, that's no reason to kill the of us.
Where is all this juice going to come from to power the PHEVs? Coal fired plants!
There are so many better solutions to this problem, yet we always think we have reached nirvana with a technology with so many inherent limitations.
Consumer's home solar panels must be allowed (and subsidised) to "feed back" electricty into the grids to create sufficent power for this additional water conversion (or used to run the home converter).
This is a much simpler model that fits with the current one (excuse the pun). Feel free to gove me a free subscription for this great information.
Please provide the correct arithmetic in the middle of this article. 15 million vehicles per year produces 150 million in 10 years, which is 75% of the fleet, NOT 5%.
Ken
There is an easier softer way:
aqueous fuel systems. We`re doing it. Try knocking down a John Player Mini cooper Special from high speed 11 litres per hundred to less than 1.
Easy to do, cheap. And yes, Detroit and Europen automotive are seriously looking at aqueous as the fastest way out of the bind. Those people have cars to sell.
Daimler tried a hybrid fuel cell A in california and it did not sell due to lack of infrastructure. Aqueous needs no new expensive infrastructure. And aqueous is available. Thanks to recent developments, we no longer need heat distilled water for eliminating scale formation. Other low energy input systems demineralize. Come on guys. Wake up. Aqueous is cheap. A winter proofed retrofit running 100 % aqueous can be brought in for under $ 3000. oo installed.
And one hundred percent running off plain ordinary tap water. Can any other system compete with it in price and operational costs.
Do try taking a look at the route.
Kent O. Doering
Doering PERPESYS Group, Intl.
n the article it is stated that electric cars have been around for 30 years. In1924, ten years old, I saw an electric car, a towering, glass-paned vehicle driven by an elderly lady at 14th and Broadway in Oakland, California.Some years later there was a Doble? steam-car owned by a cntender for the world heavyweight boxing title, Max Baer?
As far as the American people are concerned the big three have struck out. America needs this new innovation of the HYBRID Electric Vehicles, and they need someone that is going to act on this valuable potential right away. If it takes the youth of this country with their brillant minds to make this possible, so be it. Let them move on this project and have whatever resources available that they need with and including subsidies and tax breaks for these vehicles to be available ASAP. Addtionally preparations should be made to susidize, modify, and convert all existing vehicles to use alternate sources of power and prevent further liquid fuel consumption. We need relief from fossil fuel and this is one way that we may do exactly that. Speed is of the essence to reduce oil for transportation purposes, and let electric/solar power become our primary use of power source. The air will be cleaner, and the environment will be saved as a result of this huge switchover. If all the automobile manufacturers considered this their top priority, we would be less dependent on liquid fuels used for transportation a lot sooner than 2010. If the Automakers declared War agains the gas guzzlers as they should the new Hybrid Electric Vehicles would be on the road by the end of 2009. Team efforts are needed with their own styles and designs, but the ultimate goal should be Hybrid Electric Vehicles.
Sasol's processes do just fine for this, a few dollars a barrel if you have syngas cheap enough. Syngas is carbon monoxide and hydrogen.
Most of the cost is in making hydrogen; the carbon could come from relatively small amount of coal, biomass or even heating limestone for CO2 and reducing that to CO with hydrogen.
The hydrogen you get from electrolysis of water. It takes 48 kWh to make a kg of hydrogen--about twice what you find in a gallon of gasoline (~ 1 part in 7 is hydrogen).
If you can buy penny a kWh electricity, then on an industrial scale you can expect to make dollar a gallon synthetic gasoline.
Electricity, even in industrial quantities, is at least five times too expensive for this and we want *renewable* which makes solar the energy source of choice. Can we get solar power into this price range?
For 40 years, people have talked about solar power satellites. Based on an entire industry in space, it looks like they could deliver power for a penny a kWh or less. However, the complication of building up the industry and the long lead times are discouraging.
Done via a huge fleet of rockets hauling nearly a million tons a year to geosynchronous orbit, recent studies make a case for 5 cent per kWh, highly dependent on the cost of transportation into space at around $500/kg. The energy in rocket fuel is paid back in 40 days. It's the high cost of aerospace hardware that makes it expensive, not the energy.
A moving cable space elevator gets very close to the minimum energy to lift a kg, 14.6 kWh. The energy payback time is just over a day (30 hours). Alas, we don't have the nanotube cable yet, though progress is being made.
Laser propulsion isn't as well developed as rockets, and does not develop a lot of thrust but it is very efficient on propulsion mass while using a lot of laser power.
If we were willing to build an 8 GW laser (cost estimate $80 billion) we could use it and a low performance "pop up" rocket to 250 miles to push close to a million tons of construction materials out to GEO at a cost well under $100/kg. (The laser takes 15 minutes to accelerate the payload into orbit from a sub orbital trajectory.) The energy pay back is about two weeks.
This allows building power satellites for under $800/kW. The electricity could be sold for a penny a kWh or less and synthetic gasoline from the electricity sold for about a dollar a gallon.
On a crash program, we could be adding upwards of 500 GW of new power per year, in as little as seven years. That would be more than enough to compensate for the fall off in oil. Or as the military study concluded last year:
"Drill UP young man."
:-)
Keith Henson
hkhenson(at)rogers(dot)com