In his January 2011 State of the Union speech, President Obama called for ”more research and incentives” so that America could ”become the first country to have 1 million electric vehicles on the road by 2015.” In yesterday’s Washington Post, Carol Leonnig and Joe Stephens report that the Obama Administration “has poured roughly $5 billion dollars in taxpayer funds into the electric car industry, offering incentives to manufacturers, their suppliers and even car buyers who might want to go green.” This included $2.4 billion in Stimulus support to develop advanced batteries for all-electric and plug-in hybrid vehicles.

How’s it all working out — will America have million electric vehicles on the road by 2015? It’s doubtful we’ll see anything close to that.

A million vehicles may sound like a lot, but it’s actually just 1/234th of total light-duty vehicles (passenger cars, SUVs, pickups, vans) registered in the United States in 2009. Nonetheless, sales are not on track to reach the 1 million goal. According to Leonnig and Stephens, sales of electric vehicles this year “stand at 16,800 — roughly two-tenths of 1 percent of 2011 domestic auto sales.” Sales would have to increase almost 60-fold over the next four years to reach the 1 million vehicle goal by 2015.

From the Post article:

Obama predicted in 2008 that green cars would create thousands of new U.S. jobs as demand soared. But in recent months, production lines and sales expectations have been dramatically scaled back.

A123 Systems, a battery maker that received $380 million in government support, announced recently that declining orders had forced layoffs. Instead of up to 3,000 new Michigan jobs as Obama and the company had predicted, it now has 690 employees.

Battery maker EnerDel, recipient of a a $118 million federal grant, took a hit when its key customer, electric-car maker Think, declared bankruptcy this year. Johnson Controls, which received a $299 million stimulus grant, opted to build one factory instead of two because of lower-than-projected demand, a company official said, and that one is now operating at half capacity.

California electric-car maker Aptera announced it was shutting its doors because of problems raising capital. And General Motors — whose moderately priced Volt was supposed to drive Obama’s push for 1 million alternative vehicles by 2015 — revealed last week that it would fall roughly 38 percent shy of its goal of selling 10,000 Volts this year.

Costco is removing its electric vehicle (EV) charging stations, citing lack of consumer demand, reports Jim Motavalli in the New York Times. Plug-In America, an EV advocacy group, has issued an “action alert” urging its members to email Costco CEO James Sinegal and ask him to maintain and upgrade the charging stations.  From Montavalli’s article:

Costco, the membership warehouse-club chain, was an early leader in offering electric-vehicle charging to its customers, setting an example followed by other retailers, including Best Buy and Walgreen. By 2006, Costco had installed 90 chargers at 64 stores, mostly in California but also some in Arizona, New York and Georgia. Even after General Motors crushed its EV1 battery cars, the Costco chargers stayed in place.

Yet just as plug-in cars like the Nissan Leaf and Chevrolet Volt enter the market, Costco is reversing course and pulling its chargers out of the ground, explaining that customers do not use them.

“We were early supporters of electric cars, going back as far as 15 years. But nobody ever uses them,” said Dennis Hoover, the general manager for Costco in northern California, in a telephone interview. “At our Folsom store, the manager said he hadn’t seen anybody using the E.V. charging in a full year. At our store in Vacaville, where we had six chargers, one person plugged in once a week.”

Mr. Hoover said that E.V. charging was “very inefficient and not productive” for the retailer. “The bottom line is that there are a lot of other ways to be green,” he said. “We have five million members in the region, and just a handful of people are using these devices.

Why is consumer demand for EVs – hence for charging stations – so low?

Most consumers cannot afford a battery electric car or a plug-in hybrid. The biggest part of the expense is the lithium-ion batteries that power EVs.

Three recent studies by the Boston Consulting Group (BCG) shed light on this formidable barrier to consumer acceptance.

The Comeback of the Electric Car? How real, how soon, and what must happen next (2009) estimates that even if battery prices drop from about $2,000 per kilowatt hour (kWh) in 2008 to $700 per kWh in 2020, “a 20 kWh battery, which is needed for a driving range of 80 miles (about 130 kilometers) would still cost $14,000.” Absent tax rebates or other consumer subsidies, the five-year fuel savings would not offset the cost of the battery unless oil hits $280 a barrel.

Batteries for Electric Cars: Challenges, Opportunities, and Outlook to 2020 (2010) estimates that, excluding subsidies, consumers paid $1,400 to $1,800 per kWh for EV battery packs in 2009. The report projects that costs will fall to between $570 and $700 per kWh by 2020. However, that would still be more than twice the 2020 commercial viability cost target of $250 per kWh set by the United States Advanced Battery Consortium.

Most consumers won’t purchase an EV unless the reduction in fuel costs offsets the higher vehicle cost within three years, BCG’s 2010 study goes on to say. For U.S. purchasers of EVs in 2020 to break even in three years, some combination of the following conditions would have to obtain: “an oil price increase from $100 per barrel (the forecast price) to $300 per barrel; a 200 percent increase in gasoline prices caused by higher oil prices, higher taxes, or both; or $7,500 in government incentives available per car purchased, consistent with currently approved electric-vehicle incentives.”

The study projects that automakers will sell about 1.5 million fully electric vehicles and 1.5 million plug-in hybrids worldwide in 2020, capturing 3-5% of the passenger car market in developed countries. That’s not trivial, and maybe a decade from now Costco could operate EV recharging stations at a profit. But as of August 2011, only 8,000 EVs were sold (or delivered to showrooms?) in the USA – about 0.1% of total light duty U.S. vehicle sales in 2011.

Powering Autos to 2020: The Era of the Electric Car? (2011) contains, among other information, the results of survey research BCG conducted.

• Only 6% of U.S. and 9% of EU respondents in the survey were willing to buy a “green” car that costs more over the life of the vehicle.
• 38% of U.S. respondents were willing to pay $3,900 more on average for a “green” car if they can break even via fuel savings over time.
• A whopping 56% were not willing to buy a green car even if they could break even.
• Of those willing to spend more for a green car if fuel savings offset the higher purchase price, 71% expected a maximum payback time of 1-3 years.

The bottom line: EVs may some day be a smart choice for cost-conscious consumers, but a mass market is unlikely to develop in the next decade. From which I conclude that Costco understands its customers better than its green critics do.

‘Clean-tech’ advocates depict China as a model for U.S. policymakers, because Beijing subsidizes the manufacture of wind turbines, solar panels, and electric vehicles.

In February, China announced plans to manufacture 1 million electric vehicles by 2015. To make green cars affordable, Beijing would pay automakers to cut the price of a battery car by $8,785 and a plug-in hybrid by $7,320. Of course, the announcement did not mention that millions of Chinese people who are still too poor to own cars would be taxed for the benefit of their wealthier brethren.

Not to be outdone by this visionary plan, President Obama, in his State of the Union Address, also called for incentives to put 1 million electric vehicles on the road by 2015.

Neither prognostication is likely to come true.

As Jonathan Watts reports in today’s UK Guardian:

But hopes that the country will also become a pioneer in the shift towards “clean car” technology have suffered a setback as the Chinese show little sign of interest in electric and hybrid vehicles despite ambitious government plans. Last year, Toyota managed to sell only one Prius – the world’s most commercially successful hybrid car – in the fastest-growing market. Sports utility vehicle sales, by contrast, are surging.

Of 13.8 million new motor vehicles sold in China in 2010, a whopping 850,000 were SUVs, and 425 were Hummers.

It’s not even clear that the one Prius sold was purchased by a consumer:

 It is not known who made that solitary purchase – industry analysts said it was unlikely to be an individual as there is little technical support for the model. “It may be a domestic rival that bought the hybrid to strip it down and see how it works,” said one industry observer who did not want to be named.

What do Beijing’s Reds and U.S. greens have in common? They refuse to learn that if a technology is commercially viable, no government support is needed, and if it is not commercially viable, no amount of government support can make it so.

Major automakers’ production plans for electric and plug-in hybrid electric vehicles (EVs and PHEVs) “are far below sales targets set by countries,” announced the International Energy Agency (IEA) in a press release accompanying the agency’s newly updated Electric Vehicle Roadmap report.

Major manufacturer production plans add up to 0.9 million units by 2015 and 1.4 million annually by 2020. In contrast, governments have set sales targets of 1.5 million units by 2015 and 7 million annually by 2020.

Evidently, policymakers have mis-underestimated (as a former President might say) market demand for EVs and PHEVs. The gap between production plans and political targets would be larger still without political props for those vehicles such as a federal tax credit up to $7,500 and billions in federal R&D support.

IEA believes more incentives and R&D — including coordinated federal, state, and local support for re-charging infrastructure — will do the trick. Now there’s a big surprise!

In his speech earlier this week, President Obama took a brave and unprecedented stand against our nations reliance on foreign petroleum imports:

Now, here’s a source of concern, though. We’ve known about the dangers of our oil dependence for decades. Richard Nixon talked about freeing ourselves from dependence on foreign oil. And every President since that time has talked about freeing ourselves from dependence on foreign oil. Politicians of every stripe have promised energy independence, but that promise has so far gone unmet.

I talked about reducing America’s dependence on oil when I was running for President, and I’m proud of the historic progress that we’ve made over the last two years towards that goal, and we’ll talk about that a little bit. But I’ve got to be honest. We’ve run into the same political gridlock, the same inertia that has held us back for decades.

That has to change. That has to change. We cannot keep going from shock when gas prices go up to trance when they go back down — we go back to doing the same things we’ve been doing until the next time there’s a price spike, and then we’re shocked again. We can’t rush to propose action when gas prices are high and then hit the snooze button when they fall again. We can’t keep on doing that.

The United States of America cannot afford to bet our long-term prosperity, our long-term security on a resource that will eventually run out, and even before it runs out will get more and more expensive to extract from the ground. We can’t afford it when the costs to our economy, our country, and our planet are so high. Not when your generation needs us to get this right. It’s time to do what we can to secure our energy future.

Richard Nixon wasn’t the only one. As Jon Stewart pointed out last summer, the last eight administrations have warned against the alleged dangers of importing petroleum and provided a number of solutions to massively restructure the economy, none of which were successful. Stewart comments, “Fool me once, shame on you. Fool me twice, shame on me. Fool me eight times, am I a ****ing idiot?”

And yet we appear to be idiots, and more money will  be spent chasing pipe dreams with taxpayer money. The New York Times, today, congratulated Obama’s willingness to take on such a tough challenge and blamed the lack of progress on, wait for it, Republicans:

Beset by rising gas prices and Middle Eastern turmoil, Mr. Obama, like other presidents, decried the nation’s dependence on foreign oil. He also said there were no quick fixes and that a nation with only 2 percent of the world’s reserves cannot drill its way to self-sufficiency.

He then offered a strategy aimed at, among other things, reducing oil imports by one-third by 2025, partly by increasing domestic production but largely by producing more efficient vehicles and by moving advanced biofuels from the laboratory to commercial production.

These are achievable goals. Reducing oil imports by one-third means using 3.7 million fewer barrels a day. The fuel economy standards set last year by the Environmental Protection Agency and the Department of Transportation will yield 1.7 million of those barrels; the next round of standards, now on the drawing boards at the E.P.A., will yield another 1.7 million barrels. Advanced biofuels and improved mass transit could get us the rest of the way.

None of these goals will be reached if the Republicans who dominate their party have their way. One particularly destructive amendment to the House’s irresponsible budget bill would strip the E.P.A. of its authority to regulate greenhouse gases from vehicles and stationary sources.

It would be great if biofuels and mass transit could get us all the way there, but they can’t. Despite decades of subsidies, corn ethanol has been unable to match the price of gasoline. The U.S. has yet to see even a fraction of 1% of our annual vehicle fuel consumption come from the *insert other hypothetical alternative fuel here* craze, but I’m sure an economically viable breakthrough is right around the corner. Electric vehicles might become the hybrid vehicle of the future, but don’t expect Americans to be convinced unless the range, charging capability, and price issues are solved. High speed rail isn’t thought to pass the cost-benefit test in most areas of the United States.

Republicans are certainly responsible for political gridlock right now (a great thing, one might argue), but plenty of attention has been paid towards these technologies by both sides of the aisle in past years.

“Can electric vehicles change the game?” That’s the question Edison Electric Institute President Tom Kuhn poses this week on National Journal’s energy blog.  

I answer in the negative, pointing out, for example, that even if electric vehicle battery prices drop by 65%, the five-year fuel savings would not offset the additional up-front purchase price unless oil hits $280 a barrel (according to Boston Consulting Group).  You can read my response and those of other wonks and activists at NationalJournal.Com.

Here, I would like to share (with permission) the reaction of an industry expert who read the National Journal blog posts:

I think there are many problems with electric vehicles, we will find they are not any better than wind power.

They cost twice as much as equivalent gasoline vehicles. If customers won’t pay an extra 5k for a hybrid that gets 50mpg, why will they pay an extra $15-20k for an electric one?

Once we get past the first few buyers, the early intenders, we will see what true demand is.

Folks have to pay up to $2k for a home charging station if they dont want to wait 10-12 hours or more to charge it up.

A new malady will be created, range anxiety.

The volt is not a true electric vehicle, it is another form of hybrid, administration gave it the $7.5k credit anyway, which was wrong.

Cost of batteries does not go down with higher production due to the use of hard to find, expensive, rare minerals.

The concept is fine, but this is not really going to work, unless costs are similar to gas cars, range is increased to 200+, and recharge time is significantly reduced.