Electric Cars Moving in the Wrong Direction?

A small (?) bad-news item about electric cars:

Electric cars face new scrutiny after a fire in a Chevrolet Volt prompted a federal investigation into lithium ion batteries, even after U.S. regulators said their own crash test likely led to the blaze.

And a big bad-news item about electric cars:

Accounting for more than half of the about 216,000 new cars sold sales in Israel by leasing to corporations, rental agencies are balking [at buying electric vehicles] because of uncertainty regarding the cars’ resale value. Mr. Bar said that he fears vehicles with switchable batteries might lose as much as 70% of their original value in four years instead of the typical 40% loss by gasoline-powered vehicles over the same period.

“It’s going to be a nice niche, a gimmick, for people who are environmentalists, and corporations who want to show they are saving the environment, but I don’t see a savings in costs,” Mr. Bar said.

This is about Shai Agassi‘s well-received Better Place startup in startup-centric Israel. Even more worrying:

It wasn’t supposed to be that way. The country’s lack of integration with its Middle Eastern neighbors renders it a traffic island, limiting driving ranges and lowering the investment necessary to construct the about 40 battery-changing stations and charging spots needed to cover the entire country.

Or do I perhaps have it backward, and is the small item the big one?

And who’s got a good-news story to share about electric vehicles?

Also: Levitt weighed in a while back on “the unappealing economics of electric vehicles” and the rare-earth conundrum.


Well, I don't know if this (yet) qualifies as a good-news story, but, I live in Israel and just last week happily paid my deposit to be amongst the first to purchase a car from Better Place.

Some reactions to the purchasing experience:

(1) The experience was somewhat unique to Israel - more akin to what you get in an Apple store in the US. VERY professional sales team and really dedicated to top-notch customer service; and

(2) Despite the fact that I don't drive a lot, from a financial perspective it made a LOT of sense. The cost was only slightly higher than what I'm paying to lease an inferior car, and I'd own the vehicle (even at 40% trade-in value that's 40% more than what I get from my lease). I acknowledge that that's at least somewhat due to attractive "early adopter" offers as they are clearly looking to build some decent market share coming out of the gate.

At least at Better Place, I think it will come down to the value that you assign to the "little things" - not having to worry about filling up for gas - the time and/or the worry aspect (even though the battery charge needs to be monitored BP handles that for you) - cheaper insurance costs since it's harder to steal and almost valueless to the thief if he/she cannot charge the battery, etc.


Joel Upchurch

I like the idea of electric cars, but the technology isn't there yet. I'm still waiting for the battery technology to catch up. Electric cars will make a lot more sense if they come up with a rechargeable lithium-air battery. The lithium-ion batteries just don't cut it for general purpose consumption.

Currently, in the United States, Compressed Natural Gas makes more sense. That would reduce our dependence on foreign fuels and has a lower environmental footprint than gasoline.

Paul Scott

I disagree with Joel. I've been driving EVs for 9 years now and the technology seems to be fine. My first electric vehicle, a Toyota RAV4 EV ran for 8.5 years and 91,000 miles with virtually no maintenance. I sold it for $18,000 a few months ago and it was still getting 100-120 miles range and ran exactly the same as when new.

My new EV, a Nissan LEAF, is even better. Packed with all the latest tools and toys, this car is both luxurious and fast. I get 100 miles per charge regularly, and there are lots of free charging stations being installed all over the LA region where I live.

I'd guess that at least 80% of Americans and probably a higher percentage of Israelis could rely on a car like this for all of their daily driving. That's pretty much the definition a technology being "there".


I don't think that's what he means by "there". For most Americans, a car is a huge investment. While an electric car will certainly meet my needs for driving to and from work, I don't have $20,000 for just that. Part of what I'm buying is the freedom to drive to the other end of the state, without any extra planning or worry.

For it to be there, it has to match gas step for step. Or it has to provide a clear advantage. And although CO2 is invisible, it isn't always clear to most Americans.


"I don’t have $20,000 for just that"

You do if you're a member of a two+ vehicle household, as very many are. (Unless your household needs to be able to drive two vehicles to the other end of the state simultaneously.)


Kind of silly to highlight the fire that occurred several hours AFTER the crash test. The side impact test cracked the LI battery unit, was then left unattended without the battery being drained, and it eventually caught fire. To think that this is a serious concern is kind of ridiculous.

In other news, most cars run on gasoline, which is also highly flamable.


Yeah. Anyone else remember the exploding pickup trucks story, where one of the major networks (NBC, IIRC) was found to have rigged pyrotechnics to make them burst into flames on command?

Basil White

Isn't vegetable oil carbon neutral?


In theory that is true. Plants extract carbon from the air while they grow, then release it as they burn. So, from that perspective, it is a carbon neutral process.

However, a lot of fossil fuel is needed to create vegetable oil. On average, the US uses about 10 calories of fossil fuels to create every 1 calorie of fool.

I don't know the ratio for vegetable oil, but assuming it is in the same neighborhood as ethanol, I am guessing it takes at least one calorie fossil fuel to create every calorie of vegetable oil.


The first one is cherry picking as gasoline-powered cars are routinely recalled for engine problems (and often catch fire), even after over 100 years of development.

I'm sure as an economist you can work out the reasons for the second news item - its obvious to me as an IT professional: rapid depreciation is the typical downside for early adoption of new or quickly advancing technology.


@Basil - actually, if you want to go that route, algae is the better carbon negative. Vegetable oil is only carbon neutral if you don't use any pesticides or fertilizers to grow the veggies -- which puts limits on production and taxes the top soil.

As for this article, I'd like to point out that Detroit has made every indication that they are completely in bed with big oil and they are going to fight 100% electric cars tooth and nail. So I find it suspect that Chevy should produce a "clean" car that will catch fire in an accident. Is this designed obsolescence?


Algae derived fuel is carbon neutral:
You'd think so at first, but in the articles I've seen on making this work in the real world, they've needed a source of CO2 to grow the algae fast enough, so you put your algae 'farm' next to a fossil fuel plant and use it's exhaust gasses. In this configuration, the algae lets you use the CO2 twice instead of once before it escapes to the atmosphere, which is good, but is not neutral. (Well, you can start arguing over definitions here. It is kind of neutral if you're comparing to the case of fossil fuel plant venting CO2 directly to atmosphere. But even if you allow this, you still need to consider the CO2 footprint of the energy used to run the algae farm and refinery.)

Of course, if they can make the algae farm work on atmospheric CO2, and supply their own running energy, then it really is carbon neutral.


I love the Volt. It's like floating in a dream cloud.

Eric M. Jones

Electric cars have always been the plaything of the rich.

For practical transportation we have high-mileage internal combustion cars like the model T. (It was only in 1982 or so that VW production surpassed the Model T!). Liquid fuels, even biosynthecised liquid fuels, and extremely efficient engines will always have a future.

But it would be a mistake to bet against electronics. In every area of technology, electronics have eventually won. Remember "Fluidics"? I didn't think so....


That is to be expected with any new technology, isn't it?
I mean, in the 90s, buying a computer will depreciate a whole lot within 2 years since new models would come up in that time that will be infinitely better. That is not true now that it has matured.
What would make "electric" successful or not is people want to buy/lease it now, not its resale value in 5 years.
The big enemy of "electric" is this deep recession, early adopters are suffering and an small new gadget is more tempting noways than a car.


I think what Mr. Bar is forgetting is that the batteries from the cars can be exchanged when the car is resold, that the old batteries can then be used for grid storage, and that gasoline will cost much more in five years. Mr. Agassi will need to promote the entire electric system as a solution not just the car.
As for the United States, I think most households will need a gasoline car in the near future. Air travel is too expensive and train travel too inconvenient here. However, as a second car an electric or hybrid makes great sense. I will be replacing my commuter car with a hybrid when the time comes myself.
Finally, lets remember how long it took cars to become the ubiquitous household item that they are today. It took well over forty years. We do not have forty years of affordable gasoline left in the world.
So, the good news story is yet to be told. It will happen when the news reports that US imports of oil have gone down for a few years, and when electric car sales hit double digits in more than one country.


Paul Scott

I can appreciate your desire to be able to "drive to the other end of the state, without any extra planning or worry.", but that freedom comes with a big price, a price not being paid by you or anyone buying petroleum-based fuel.

You say EVs need to "match gas step for step", but the problem is that the price of gas does not come close to its cost.

A recent RAND study found that we are spending about $80 billion in military costs, exclusive of the wars, to protect access to the world's oil. That works out to about 50 cents/gallon. The wars over oil have costs us north of $1.5 trillion, and counting. Thousands of dead soldiers and tens of thousands of seriously wounded soldiers.

When you buy gas, you pay for nothing for this.

The health costs of burning oil are tremendous. Most estimates are that well over ten thousand Americans die prematurely from the effects of pollution from internal combustion. The cancer rates adjacent to freeways and downwind from refineries are much higher than anywhere else. Children living in neighborhoods with heavy auto pollution suffer much higher from diminished lung capacity, asthma and other diseases.

When you buy gas, you pay nothing for this.

The environmental damage caused by leaks and spills such as the massive Gulf spill and the recent Montana spill cost us billions in lost jobs and cleanup.

When you buy gas, you pay nothing for this.

So, when you say that EVs need to match gas step for step, you should first assign some price for these external costs and internalize that price at the pump. Then, and only then, you can see whether EVs match up.



Why does the concern of low resale after four years affect EV sales? This will only cause the lease vehicle market to not partake. Since a recent study shows that people are keeping their vehicles longer than eight to ten years, I have a feeling that the resale value will increase with two major factors: oil price, and true cost of ownership. Remember EV don't require 3000 mile oil changes, and with some new chargers in development that reduce damage due to the charge/discharge cycle, the battery life of these vehicles could go well beyond a standard gas engine's life.