Former Intel CEO Andy Grove’s campaign to spur electric retrofits of US vehicles is gathering momentum. In tandem, Grove is advocating that the US rebuild its domestic battery industry.
Back in July, Grove authored an article in The American in which he argued retrofitting existing vehicles with plug-in electric engines should be a national priority. McKinsey & Co. several months ago commissioned Grove to further make his case for an upcoming January publication entitled, “What Matters.”
The article–based largely on Grove and Stanford Business School Prof. Robert Burgelman’s work with 2008 Bass Seminar students aimed at analyzing the “strategic inflection point” the US faces in terms of energy use and resources– was published last week.
Of Electric Vehicle Retrofits & Batteries
Among the various alternatives to retrofitting existing cars, SUVs and trucks, Grove and team come down in favor of replacing existing gasoline engines with smaller ones designed to generate electricity and recharge the battery, the approach taken by GM with the Volt.
They proposed a 1 million retrofit test case involving six to ten Chevy, Ford and Dodge models chosen based on two criteria: low fuel efficiency and large numbers of such models on the road. In addition, they advocated targeting government and corporate vehicle fleets, which would make it easier to retrofit a large number of vehicles at relatively few locations.
According to Grove, in a time of crisis in the US auto industry enacting such a program would stimulate development of a “electric retrofit aftermarket”: auto dealers and garage owners would have the incentive to launch their own, similar efforts.
The availability of batteries, or lack thereof, poses one of numerous hurdles, however. Lithium ion batteries used in computers and other consumer electronics are the most suitable but their availability is limited. Retrofitting one million vehicles would require doubling current output, Grove notes, which leads to the second leg of his advocacy campaign: rebuilding domestic battery manufacturing capacity.
Nearly all batteries are currently built in Asia, a legacy of consumer electronics markets becoming the domain of companies in Japan, South Korea, Taiwan and now China. To avoid becoming dependent on foreign sources for batteries, the US would need to foster and facilitate investment in battery manufacturing here at home. Grove believes that an achievable target would be to produce 50% of batteries for a one million vehicle pilot program domestically in three years.
A week after publishing Grove’s article, McKinsey also published reader responses. Readers challenged Grove on the environmental and emissions benefits of switching to electric vehicles, pointing out that coal continues to be the largest fuel source for producing electricity in the US. Grove response came in two parts. He pointed out that electric motors are 40% more efficient than their petrol powered internal combustion engine counterparts – which would yield substantial emission reductions right off the bat.
Secondly, he points out that switching to electricity would build fuel flexibility and resiliency into our personal, and part of our public, transportation system. Relying on electricity gives our transportation sector more resilience than relying on only one of these elements, petroleum. “Because electric cars rely on multiple sources of energy – which, by virtue of being converted into electricity, are fungible – we have more opportunity to respond to a disruption on any one,” he writes.
Readers raised other points of contention. Oil prices have collapsed along with prices of just about every type of asset imaginable in recent month. That’s brought gasoline prices down below $2.00 gallon, raising the specter of a repeat of the collapse of investment in the development of alternative and renewable energy resources, distribution systems and technology. In letters to the editor, readers asked Grove how politicians could support this type of initiative with oil at $45 a barrel.
Grove’s response: “This is the hardest question of them all. Oil prices have historically fluctuated much faster than the time to develop alternatives requires. But consumers and voters must accept the necessity to develop an energy policy that is capable of providing us with our standard of living when oil prices go up due to (in my opinion) inevitable peak oil condition. If we allow ourselves to start and abandon programs to do this in response to oil price fluctuations the result will be an inevitable energy catastrophe.”