This I Like

http://www.greencarcongress.com/2009/07/becker-20090714.html The conclusion of this paper (which I read and found persuasive) suggests that within 3 years electric cars will be fully cost competitive with conventional cars without subsidies. The condition necessary to achieve this cost competitiveness is that electrification of the fleet must occur through a battery switching model such as the one being implemented as we speak in Israel, Denmark, Australia and Hawaii by the company Project Better Place (which has already raised $400 million in venture financing) and its partner Nissan-Renault (which has a $600 million program to develop the cars). The idea is to have stations spread around the country that can quickly (3 minutes) switch out used batteries for new for those drivers who have signed up for this service in the form of a monthly payment plan. Drivers would therefore only have to pay up front for the electric car (which costs the same as a conventional car), but essentially lease the batteries through the company operating the switching stations (instead of paying for gas). This company, of course, has access to much cheaper financing than consumers, effectively making the battery cheaper. It makes electric vehicles vendable by solving the problem of their high upfront costs and the problem of limited range. There will also be public and private plug-in stations as a supplement to the switching option. The bottom line is that electric cars will be cheaper because their fuel (electricity) and maintenance costs are cheaper and this price advantage outweighs the disadvantage of building the switching stations and manufacturing the batteries. I think the key is the roll out, which will have to saturate one region at a time--otherwise there will be too few charging and switching stations in a given area to motivate consumers to buy electric. This is the plan: Israel first in 2010, then Denmark, then Australia by 2012. A 5-10% increase in electricity demand would result if the entire car fleet converted to electric.And this demand would be temporally flexible, a form of demand highly compatible with the intermittent production of electricity by renewable sources. Once this is demonstrated, other countries and other car manufacturers are likely to jump on the concept--especially given the relatively low investment cost the manufacturers would face to sign up. Israel might be the best place to start given how determined they are to escape the oil trap. Deutsche Bank's analysts concluded that this approach may represent a "paradigm shift." Considering the paper's conclusion that 64%+ of all vehicles sold in 2030 will be electric, that's an apt description. So shall we see. This is the kind of audacity the private sector flashes out at its best: it's too bad that many of the sources of greenhouse gases do not appear so amenable to a purely private sector approach. Government is slow, inefficient, and incompetent--but the tragedy of the commons scenario presented by climate change necessitates its involvement in many aspects of mitigation.