The Quest: Energy, Security, and the Remaking of the Modern World

by Daniel Yergin

  The bankruptcies of General Motors and Chrysler and the multibillion-dollar bailouts by the federal government put the Obama administration in a strong position to advance the electric car. It applied the recession-battling stimulus spending to that same end. A road map had already been laid out by David Sandalow in two books he had written prior to becoming assistant secretary of energy in the Obama administration—Freedom from Oil and Plug-in Electric Vehicles: What Role for Washington. The legislation that came out of Congress to promote the adoption of the electric car followed the map closely. It included tax credits for manufacturing electric cars, tax credits for buyers of electric cars, tax credits for recharging stations—at home and in public spaces.

  In the new century, CARB, now much more focused on global warming, returned with an order requiring automakers to introduce zero-emission vehicles on a revised schedule: by 2012 automakers would be required to begin introducing ZEVs into the California market. The initial target was small and it would include fuel-cell vehicles, but the number was slated to ramp up very fast. This fueled a new urgency for automakers to find their way to deploy an all-electric car.

  But there was still the problem of the battery, which had defeated the ZEV the first time.

  The core of electric vehicles is the battery. The move toward electric cars would require a major technological advance in batteries. The basic lead-acid battery goes back to the second half of the nineteenth century. Other types of batteries were introduced subsequently, but the lead-acid battery remained the mainstay of the auto industry.

  However, in the 1970s and 1980s, researchers, beginning in an Exxon laboratory, were figuring out how lithium, the lightest of metals, could provide the basis for a new rechargeable battery. The oil crises of the 1970s and the fear of a lasting shortage of petroleum had sparked interest in reviving the electric car. In 1976, Congress approved funding for “Electric and Hybrid” research. That same year, Forbes reported that “the electric car’s rebirth is as sure as the need to end our dependence on imported oil.” A number of automobile companies were working on electric vehicles. In 1979, in the middle of the Iranian oil crisis, Fortune announced, “Here Come the Electrics.” But then the price of oil went down, it turned out that the world was amply supplied with petroleum, and the interest in electric cars once again faded away.

  But the work on lithium batteries could be put to very good use for another big need. In 1991, Sony took the lead and introduced lithium-ion batteries in consumer electronics. These smaller, more efficient batteries enabled laptop computers to run faster and longer on a single charge. And lithium batteries were decisively important for something else. They made it possible to shrink the size of cell phones enormously, and thus powered the cell phone revolution. In theory, the greater density of lithium batteries, combined with their lower costs, could make them a more viable and competitive battery for EVs—better than both the nickel-metal-hydride batteries used in the first hybrids and the lead-acid battery that is customary today in automobiles. But that was all in theory. No one had yet road-tested the idea.12

  ELECTRIC DRIVE

  While regulators were at one end of the spectrum in terms of promoting the electric car, at the other end were inventors and tinkerers and entrepreneurs and a small clutch of electric-car enthusiasts, many in California.

  Among the EV activists was Al Cocconi, who had been part of GM’s illfated EV1 program. Cocconi took the idea of the EV1 and turned it into an electric supercar called the tzero. It could go from 0 to 60 miles per hour in a blazing 4.1 seconds.

  In 2003 Cocconi came into contact with two Silicon Valley entrepreneurs straight out of the dot-com boom. One of them, Elon Musk, was a cofounders of PayPal. After selling it to eBay, Musk launched SpaceX, a commercial space shuttle business, which Musk intended to be a way station to his larger ambition—enabling people to colonize Mars. The other entrepreneur, Martin Eberhard, offered Cocconi $150,000 in investment for him to experiment with a different kind of battery: a pack composed of lithium-ion batteries, lots and lots of lithium-ion batteries. Cocconi took the money, made the modification, and the car hit 60 miles per hour in only 3.6 seconds.13

  Not long after, Eberhard and Musk joined forces and together licensed Cocconi’s technology. They saw the potential for electrification with lithium-ion batteries and wanted to move the electric car into the mainstream. The lighter weight and greater energy density of these lithium batteries meant they were a potential game-changer for the EV concept.

  But the electric vehicle simply could not compete on the basis of economics. However, Musk and Eberhard theorized that it could compete in an arena that mattered very much in California and certainly to their Silicon Valley peers—style, verve, performance, and hype. It would combine the values represented by a Prius with those of a sports car. Instead of something that looked like an oversize golf cart or an egg on wheels, they would build an iconic electric sports car. And they would call it Tesla in honor of the eccentric genius and inventor who in the nineteenth century had conceived the idea of alternating current, which George Westinghouse had used to achieve victory over Thomas Edison’s direct current.

  Based on a Lotus Elise chassis with additional customization, the twoseater Roadster was intended to be an expensive but dashing sports car, priced at a level that made it affordable only for people who didn’t care much about price. If all went well, it would be a stepping-stone to a generation of more sedate but more economically competitive electric vehicles.

  Building the Tesla would not be easy. It melded almost seven thousand offthe-shelf lithium-ion batteries of a laptop into a formidable superbattery. The engineering and design challenges for this new kind of car were enormous, and milestone after milestone was missed. “We hugely underestimated the challenge,” J. B. Straubel, Tesla’s chief technology officer, observed. “Almost every major system on the car, including the body, HVAC, motor, power electronics, transmission, and battery pack, had to be redesigned, retooled, or switched to a new supplier.” It was a hard slog for the Roadster both in terms of the technology and money.

  Still the Tesla was demonstrating something of signal importance to the auto industry: that the lithium-ion battery was adaptable to the car, and that made the EV a good deal more practical. This was, said Robert Lutz, the former vice chairman of GM, “the crowbar that helped break up the logjam.” The first Tesla was delivered in 2008. In 2009 Tesla won a $465 million loan guarantee from the U.S. government, and it subsequently brought in both Daimler and Toyota as investors and partners. In June 2010, it went public—in the first auto IPO in the United States since Ford went public in 1946—and in the aftermath of the IPO, its market capitalization was $2 billion. By that point Tesla had sold about a thousand of its Roadsters. Less than a year later, the company opened its showroom in Washington, D.C., a half dozen blocks from the White House.14

  The Tesla Roadster can be an exhilarating car to drive—0 to 60 in under four seconds—but its price point was not made for a mass market. The starting price was $109,000—or “only” $101,500 with the $7,500 tax credit from the federal government. Moreover, recharging the car with a standard 110-volt outlet would take about 32 hours. With a 220-volt outlet, it’s 4.5 hours, although fast charging is promised down the road. The Roadster is described as a “limited edition vehicle,” to be succeeded by Tesla’s luxury sedan, the Model S.

  Whatever Tesla’s ultimate commercial prospects, it did something notable. It demonstrated that the electric car could be something far more than an egg on wheels or a golf cart. A green car could also be a supercar.15

  Meanwhile, other entrepreneurs joined the fray, trying to find different niches through different business models. Coda, with one leg in California and the other in China, is seeking to come up with a modestly priced electric car that would be lost next to a Tesla Roadster but would be available to a lot more pocketbooks.

  Shai Agassi, a young software executive, launched his EV concept with a very different
business model. His company wouldn’t make the cars. Instead it would own the batteries that it would lease to motorists. It would also establish, in place of gas stations, new “battery stations” into which motorists would drive when the battery ran down. There an attendant would swap out the battery and replace it with a recharged battery.

  In 2007 Agassi officially launched his company Better Place. By 2010 the company had raised $700 million, and it was planning to launch recharging networks in both Israel and Denmark, in partnership with Renault, which had designed a new car to go with the system. One of many challenges, however, is lack of standardization in battery size. EVs and PHEVs are likely to compete on the size, weight, and range of their batteries. Standardization has still yet to occur for the lead-acid batteries that have been starting internal combustion engine vehicles for many decades now.

  In theory, however, the Better Place experience for motorists is intended to be the functional equivalent of pulling into a gas station and filling up. Except that, with the battery exchange, there will be no self-service.

  TAKING A LEAF

  Today all the major automakers are moving, with varying degrees of conviction, toward an electric-car offering. Certainly all car companies would be more than happy to find some way to blunt their vulnerability to high oil prices. But among the major international companies, none has been more fervent about the electric car than the Nissan-Renault alliance. And no one more outspoken than its joint CEO, Carlos Ghosn.

  Ghosn is about as international as an executive of a global company can be. Raised in both Lebanon and Brazil and educated further in France, he ran Michelin Tires in the United States, and then became a senior executive at Renault. After Renault formed an alliance with Japan’s Nissan, Ghosn set out to rescue Nissan, which was teetering on collapse with $20 billion of debt. He became famous for bringing Nissan back from the brink and ended up as the CEO of both companies.

  Toyota has its hybrid, Prius. Honda is the “engine company,” focused on the superior characteristics of a more-efficient internal combustion engine. By contrast, going “all-electric” gives Nissan a distinctive leadership. The opportunity emerged by accident out of the company’s financial wreck.

  When Ghosn arrived at Nissan in Japan in 1999, he slashed costs almost everywhere. But something about the battery program gave him pause. “Nissan had been working on the electric battery for 18 years,” said Ghosn. “I was really struck by those engineers when I met with them. They thought that an electric car could be feasible and affordable. I had no clue, but I was very impressed by their passion.” Despite Nissan’s perilous financial condition, that was one cut he did not make. “Sometimes you only connect the dots afterward,” he added.

  By 2002 Nissan had what it considered a breakthrough in lithium-ion technology. “After 2003, Nissan was out of turn-around,” said Ghosn. “But I was very surprised by the amount of criticism that we were getting for not having a hybrid. I asked myself why there was so much passion about this. I realized how strong were the public’s concerns around the environment. At the same time, the price of oil was going up. Also, very strong environmental regulations were coming out of California. We couldn’t fulfill them without some kind of new technology. We needed to think out of the box. We needed to jump-start the electric. That was the only solution. You can’t go from 850 million to 2 billion cars without an environmental car.” Nissan had what its engineers believed was the technology. Ghosn gave the go-ahead to go all-out for a new all-electric car.

  The reaction within the company was diverse. Some were puzzled. Why, they asked, didn’t Nissan try instead to build a competitive hybrid? Others were enthusiastic that the company was trying to take leadership in a new technology.

  While Nissan would also develop its own hybrids, Ghosn looked at it only as a bridge technology. “If you have an efficient battery for a hybrid, why not go all the way and go for electric cars?” he said. “It has the most zero emissions of anything.”

  And so if Nissan was going to spend several billion dollars to develop a new car, it would be for an all-electric car. “No tailpipe,” said Ghosn. Not a drop of gasoline. And it was not going to just be a car for the motor show. It was going to be an affordable car for the mass market.” In the autumn of 2010, Nissan went to market with the Leaf—which stands for Leading, Environmentally friendly, Affordable, Family car. It rolled into showrooms with a 600-pound pack of lithium-ion batteries and promised an average driving range of around 90 to 100 miles and a top speed of 90 miles per hour. Nissan is targeting that 10 percent of its sales in 2020 will be EVs. “The only thing that is missing is real scale, and to achieve that, we have to cut costs of the battery,” said Ghosn.

  “The race to zero emissions has begun,” he declared. For him, it was truly the world according to CARB. “This is not a bet,” he said. “The only question about zero emissions is, When? Do we do it do now or in five years? Our competitors may see it differently.” But Nissan believes “it is now.”16

  CHARGE IT

  For most of the previous two decades, the center of the advanced battery world has been in Asia, in Japan, and in South Korean. While the United States was pushing ahead, the Japanese and South Korean companies have redoubled their own efforts. After all, it was a Korean company, LG Chem, that made the Chevy Volt battery cells. In response to America’s new politics of electric cars, it hastened to open a plant in Michigan.

  Backed by strong government incentives, the U.S. industry is expanding rapidly. The Obama administration projects America to host 40 percent of the world’s advanced automotive battery manufacturing capacity by 2015, as opposed to 2 percent when Obama took office.17

  But the battery is only half of the equation; the other is charging—getting electricity into the car reliably and with speed and convenience. Japanese companies have formed an industrial consortium whose name is a pun on “Won’t you at least have some tea?” The idea is that charging time needs to be speeded up and that it should take no more time than having a cup of tea. Currently, a Chevy Volt requires four to ten hours to recharge—and that would be quite a number of cups of tea. But various researchers are trying to find the pathway that would reduce charging to something less than the time required to drink a hot cup of tea; that is, the time it takes to fill up with gasoline.

  WHERE WILL THE ELECTRICITY COME FROM?

  The current general theory of electric cars is that they would recharge overnight, when demand is at its lowest. This would create a new market for electric power companies and, at the same time, balance out the load. And it would be a very big market. Charging a car overnight would take about as much electricity as would be used by two houses over twenty-four hours. In other words, were EVs to become ubiquitous, electric power companies would be virtually doubling their residential load without the need to build much more capacity.

  Over the last few years, a compelling new vision has taken shape: Wind and solar will generate the new supplies of electricity. That electricity will then be wheeled long-distance over a much-expanded and modernized transmission system. And then, when it gets to dense urban areas, the electricity will be managed by a smart grid that will move it through the distribution system, into the household or the charging station, and finally it will be fed into the battery of an electric car. Some even take the vision further and imagine that cars will act as storage systems, “roving” batteries, which, when idle, will feed electricity back into the grid.

  But that is quite different from the electric system that exists today in which renewables provide less than 2 percent of the power. Lee Schipper, a professor at Stanford University, argues that many EVs will become what he dubs EEVs—“emissions elsewhere vehicles.” That is, the emissions and greenhouse gases associated with transportation will not come out of the tailpipe of the car but potentially from the smokestack of a coal-fired power plant that generates the electricity that is fed into the EV. So one also has to take into account how the power is generated. Is i
t uranium or coal or wind? Or something else? Will it be natural gas, with about half the CO2 emissions of coal and now a much more abundant fuel because of the breakthrough on shale gas worldwide? This last prospect also provides an alternative to burning natural gas in engines as a mass-market fuel. Natural gas would in effect become a motor fuel, but indirectly, by generating more of the electricity that ends up in the battery of an electric car.18

  How fast can an electric-vehicle future happen? On a global basis, estimates for new-car sales in 2030 of EVs and PHEVs, depending upon the scenario, range between 10 percent and 32 percent of total annual sales. Under the most optimistic of the scenarios, the penetration of such vehicles (in other words, the total number of EVs and PHEVs in the global fleet) would be 14 percent.19

  The policies of governments will be one of the critical determinants in the actual outcome. For it is such policies—regulations, incentives, and subsidies—that today are promoting the development of the electric car and on which the current economics depend. Innovation could change that calculus and drive down costs, just as Henry Ford did with the Model T. That is one of the primary arguments for the policies and incentives and subsidies: they are meant to stimulate greater scale and significant cost-cutting innovation. One critical question, therefore, is how stable will be those policies that are now aimed at making electricity the mainstay of the auto fleet? After all, energy policies have shown the recurrent characteristic of being “pendulumatic,” moving in one direction and then another, and then back again.