Vehicle costs likely to remain high, benefits modest for decades, so are they worth it?

WASHINGTON -- Costs of plug-in hybrid electric cars are high -- largely due to their lithium-ion batteries -- and unlikely to drastically decrease in the near future, says a new report from the National Research Council. Costs to manufacture plug-in hybrid electric vehicles in 2010 are estimated to be as much as $18,000 more than for an equivalent conventional vehicle. 

Although a mile driven on electricity is cheaper than one driven on gasoline, it will likely take several decades before the upfront costs decline enough to be offset by lifetime fuel savings. 

Subsidies in the tens to hundreds of billions of dollars over that period will be needed if plug-ins are to achieve rapid penetration of the U.S. automotive market. Even with these efforts, plug-in hybrid electric vehicles are not expected to significantly impact oil consumption or carbon emissions before 2030.

The report looks at plug-in hybrid electric vehicles that can operate on electricity for 10 or 40 miles. The PHEV-10 is similar to the Toyota Prius but with a larger battery. The PHEV-40 is similar to the Chevrolet Volt; it has a larger motor and a much larger battery than the PHEV-10. The lithium-ion battery technology used to run these vehicles is the key determinant of their cost and range on electric power. 

Battery technology has been developing rapidly, but steep declines in cost do not appear likely over the next couple of decades because lithium-ion batteries are already produced in large quantities for cell phones and laptop computers.

In the first generation of production, the PHEV-10 battery pack is estimated to cost about $3,300, and the PHEV-40 battery pack about $14,000. While these costs will come down, a fundamental breakthrough in battery technology, unforeseen at present, would be needed to make plug-ins widely affordable in the near future.

According to the committee that wrote the report, the maximum number of plug-in electric vehicles that could be on the road by 2030 is 40 million, assuming rapid technological progress in the field, increased government support, and consumer acceptance of these vehicles. 

However, factors such as high cost, limited availability of places to plug in, and market competition suggest that 13 million is a more realistic number, the report says. Even this more modest estimate assumes that current levels of government support will continue for several decades.

Most of the electricity used to power these cars will be supplied from the nation's power grid. If charged at night when the demand for electricity is lowest, the grid would be able to handle the additional demand for millions of plug-in hybrid electric vehicles, the report says.  However, if drivers charge their vehicles at times of high demand, such as when they get home from work, the additional load could be difficult to meet unless new capacity is added. 

Smart meters, which bill customers based on time of use, may be necessary in order to encourage nighttime charging. In addition, some homes would require electrical system upgrades to charge their vehicle, which could cost more than $1,000.

Relative to hybrid vehicles, plug-in hybrid electric vehicles will have little impact on U.S. oil consumption before 2030, especially if fuel economy for conventional vehicles and hybrids continues to increase past 2020. PHEV-10s save only about 20 percent of the gasoline an equivalent hybrid vehicle would use, the report says.

If 40 million PHEV-10s are operating in 2030, they would save about 0.2 million barrels of oil per day relative to less expensive hybrids, approximately 2 percent of current U.S. daily light-duty vehicle oil consumption. More substantial savings could be seen by 2050.  PHEV-40s, which consume 55 percent less gasoline than hybrids, could have a greater impact on oil consumption.

Plug-in hybrid electric vehicles emit less carbon dioxide than equivalent conventional vehicles, but not less than hybrids after accounting for emissions at generating stations supplying their electrical power, the report says.

Beyond 2030, assuming consumer acceptance, plug-in hybrid electric vehicles could account for significant reductions in U.S. carbon dioxide emissions, if electricity generation plants fired by fossil fuels were equipped with carbon capture and storage systems or replaced with renewable energy or nuclear-powered plants.

According to the report, a portfolio approach toward reducing U.S. dependence on oil is necessary for long-term success. This should include increasing the fuel efficiency of conventional vehicles and pursuing research, development, and demonstration into alternative strategies, including the use of biofuels, electric vehicles, and hydrogen fuel cell vehicles.

This study was sponsored by the U.S. Department of Energy. The National Academy of Sciences, National Academy of Engineering, Institute of Medicine, and National Research Council make up the National Academies.

They are private, nonprofit institutions that provide science, technology, and health policy advice under a congressional charter. The Research Council is the principal operating agency of the National Academy of Sciences and the National Academy of Engineering.  A committee roster follows.