The following guest post is from Victor Sequeira. Mr. Sequeira is Principal of VerisNRG LLC, a Houston based energy consultancy. He can be reached at victorseq [at] comcast [dot] net
Can GM’s Volt Provide a Jolt to the Electric Car Industry?
I remember my first trip to Bentonville, Arkansas to visit the WalMart corporate headquarters. As I looked at the offices of all the vendors who sell to WalMart, I remember thinking “being the world’s biggest retailer has its advantages.” So it is with the development of the electric car (EV). We root for companies like Tesla but, to move the market in a substantive way, you need to be big.
Most Americans have watched General Motors in recent years, hoping it will regain the fire that made it the largest car company in the world. A tanking U.S. economy, coupled with surging upstarts like Hyundai have made that task all the more difficult.
So it is particularly impressive that GM stuck to its guns in terms of the Volt rollout. Even in the midst of bankruptcy and jeering analysts asking “where is GM’s answer to the Prius ?!?”, GM methodically completed its testing and targeted rollout of the Volt.
Initial reaction from both industry analysts (2011 Motor Trend Car of the Year) and the public at-large has been enthusiastic. With 3,200 Volts on the road as of today, GM is doubling its initial production capacity to enable 20,000 units a year. Rob Peterson, GM Volt Spokesperson, recently told me in an interview “At this point we know that Volt owners are averaging 900 miles between refueling the 9 gallon gas tank (about once a month).” GM touts the Volt as a “no compromise, range-extended electric vehicle.” Meaning that Volt drivers should not concern themselves with range, given that the Volt has a gasoline engine that can both recharge the battery and drive the transmission.
Citing GM’s ability to predict how drivers would utilize the Volt, Peterson adds, “…two-thirds of these customers’ travels are all-electric.” To enhance their ability to brag about the number of all-electric miles driven, many Volt drivers have installed 240V charging stations in their homes. This option comes at a $2,000 cost on-top of Volt’s $40,000 price-tag and yet, Volt buyers are eager to upgrade.
So the Volt is a success and is the domestic answer to the Prius that the EV-market watchers have been asking for.
How the SmartGrid Can Aid the Rollout of Electric Vehicles
Enter the one company that can challenge GM in its connection to the American psyche, General Electric. In addition to owning media, manufacturing and technology behemoths, GE has been a leader in the power generation and power management industries for years now. GE tops the list of companies who can execute a global business strategy and do so with both quality and profit in-tact.
So when Onstar (wholly owned by GM) recently announced that it was partnering with GE to pilot a SmartGrid-based system to monitor the Volt’s usage and recharging needs, EV watchers took notice.
GE has agreed to buy 12,000 Volts through 2015 for its fleet customers. A portion of these will be used in the Onstar-SmartGrid pilot at a utility that has yet to be named. Onstar notes that “the initial pilot cars will be Volts,” hinting that GM may have another EV in the stable.
An Uphill Battle Displacing the ICE
So why do we care? It’s no secret that EVs have an uphill battle in displacing the internal combustion engine (ICE). Not just because the technology is imperfect (range limitations, performance issues), but the infrastructure that took 100 years to build which supports the combustion engine is valued in the trillions of dollars [sources: American Petroleum Institute (page 18 - .pdf), University of Michigan (page 6 - .pdf)]. Washington has spent its last trillion dollars and the check has come due. The government can help with tax incentives and forward-thinking energy policy but we don’t want the government in-charge of the development of the electric vehicle any more than we look to Washington to develop the next microprocessor.
The development of the EV, and the SmartGrid to support it, are inextricably linked. Which is to say, it is a BIG undertaking. So it will take a company of GE’s size to move that process forward in a purposed, profit-oriented manner if it is to occur anytime soon.
Lest we underestimate the task at-hand, here is the stark reality of the current national power-grid:
- The 100-year-old electric grid of today struggles to meet current demand. The 2003 blackout affected 8 states and parts of Canada.
- With 200,000 miles of high-voltage transmission lines in the U.S., the SmartGrid upgrade costs are in the hundreds of billions of dollars.
- With every new home built and every gadget sold, demand on the power grid increases.
- The first commercial-scale SmartGrid was started in Italy, not the U.S.
- Other than a handful of cities in Texas, Colorado and California there are no commercial-scale SmartGrid deployments in the U.S.
The statistics above are what happens (or rather what doesn’t happen) when development is left up to regulated entities. What we need, now more than ever, are companies like GM and GE to flex their significant muscles and think big. The economic impact of the billions of dollars invested and millions of jobs created from the development of the EV and a national SmartGrid is incalculable.
So count your lucky stars GM and GE. By being “too big to fail” you’ve survived the worst economic downturn in recent history and are in a strong position to excel. Now get to work and help build the cars and infrastructure that America will use for the next 100 years. This is the opportunity and responsibility that comes from being so big.
Note: GE did not respond for comment in time for publication.
Mr. Sequeira can be reached at victorseq [at] comcast [dot] net