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New Study: How Soon Can We Expect Wide Benefits from Plug-In Hybrids?

Shannon Arvizu | Wednesday December 16th, 2009 | 0 Comments

plug-in-hybrid-car-phevWith GM’s Volt and Toyota’s Plug-In Prius coming to the market within the next two years, how soon can we expect plug-in hybrids to deliver on their social and ecological benefits? A new study by the National Academy of Sciences projects significant fuel savings and emissions reductions by 2030.

Is this soon enough? Some say this is a pessimistic, though realistic scenario. I believe, however, that the study makes some flawed assumptions and that it is still too early to predict market acceptance behavior.

According to the study, the main reason we should not expect significant penetration of plug-in hybrid vehicles before 2030 is the price differential. A plug-in hybrid with a 10-mile all electric range, such as the Toyota Plug-In Prius, is expected to add $6000 to the sticker price. A plug-in hybrid with a 40-mile all electric range, such as GM’s Volt, is expected to add $18,000 to the sticker price. Given current fuel prices and government support, the study projects 13 million plug-in hybrids by 2030 (out of 300 million vehicles).

There are some fundamental assumptions in this study, however, that I believe detract from the validity of this prediction. First of all, the study assumes that the price of oil will remain below four dollars a gallon in the United States up to  2030. This is highly unlikely, considering the recent volatile oil price hike of over four dollars a gallon in 2008.

The study also assumes that government support for plug-in vehicles will remain the same until 2030. Again, this is highly unlikely considering that government support has increased considerably for plug-in vehicles even within the last year. We should also keep in mind that current subsidies for the oil industry total $10 billion a year. Given the need for domestic energy security now and in the future, it is reasonable to foresee more of the oil subsidy funding going towards technologies that increase renewable electric generation and usage here in the United States.

So what is the more likely scenario for plug-in hybrids? To be honest, I believe that the price of oil (which is affected by global demand) will be the key determinant for market behavior towards plug-in hybrids. We have seen this to be the case with hybrid electric vehicles in the past. Within the past five years, Toyota has experienced demand for the Prius exceed supply during times of high oil prices.

It should also be noted that the authors of this study are also strong supporters of hydrogen fuel-cell electric vehicles. They argue that a portfolio approach, which includes biofuels, hydrogen fuel, and plug-in vehicles, offer the most potential for achieving fuel and emission savings. If this is the case, then the same obstacles for plug-in vehicles, sticker price and the need for more government support, also exist for biofuel and hydrogen fuel-cell vehicles.

Rather than singling out one technology for not having more near-term potential, it would have been wiser to look at the alternative vehicle technology sector as a whole. We have a new future ahead of us. We have a new generation of drivers who want more than just cheap mobility from a dirty energy source. This is the first time in automotive history that we have options to the highly inefficient internal combustion engine. Even if we only have 13,000,000 plug-in vehicles by 2030, I believe that is a remarkable achievement. It is the beginning of a more significant future for the automobile’s place in our society.

Shannon Arvizu is a Ph.D. Candidate in Environmental Sociology at Columbia University. You can find more cutting-edge analysis of the clean tech transportation field  at www.misselectric.com.


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