Past Experience Doesn’t Make One Optimistic, But Times Are Changing.
Plug-in electric cars had record sales this past year, jumping 84 percent from the previous year’s sales and hitting almost 100,000 in sales. They’re selling better than hybrids did after their introduction more than a decade
100 years of progress, but it doesn’t happen quickly
ago. Optimists expect the trajectory to continue; pessimists point to the waning of incentives from government to offset the increased prices of EVs and the lack of automakers ability to continue the fire-sale tactics that dominated the 2013 market.
As is always the case at the end of one calendar year and the beginning of another, predictions for the future of new technologies abound. Some representative headlines:
- Nissan announced it will have autonomous cars for sale in 2020.
- Eight governors pledged to get 3.3 million more zero emission cars on the roads by 2025.
- Three quarters of vehicles sold worldwide by 2035 will have autonomous features.
- By 2022 there will be nearly 1.9 million natural gas-powered trucks and 1.9 million natural gas buses globally.
But experience tells you to step back and take a breath when you read this kind of prognostication. President Obama in his 2011 State of the Union address called for the country to put a cumulative one million electric vehicles on the road by 2015. In that total he included range-extended versions such as the Chevy Volt. Of course, it was not to be since that total was built on the expectation of GM selling 120,000 Volts a year in 2012 and 2013 (as well as 50,000 Leafs and 10,000 Ford Focus Electrics in 2013). Not to mention the expectation that the Fisker Nina would be produced and sold along with the Think City, Fisker Karma and Ford Transit EV. Of course it didn’t anticipate all of the plug-in cars that have some on the market in the past two years, but the cumulative numbers will be nowhere near the expected million.
It reminds me of the Yogi Berra quote: “The future ain’t what it used to be.”
Ford On Fuel Cells
Hyundai steps up to retail its fuel cell cars this year
I found an interesting story and quote from less than 13 years ago. Bill Ford, then chairman (now executive chairman) of Ford Motor Company. “I believe fuel cells could end the 100-year reign of the internal combustion
engine.” He then predicted that Ford would offer fuel-cell-powered Focus by 2004.
Well, here we are a decade later and its Hyundai, not Ford, who is putting a fuel cell vehicle on sale (the Tucson FCEV goes on sale this spring at California dealerships). Of course Honda, Mercedes and GM have put limited numbers of fuel cell cars in consumers’ hands, but this is the start of the retailing of this technology.
FedEx’s Pledge & Reality
Another illustrative story comes from FedEx, a leader in adopting new technology. In 2004 they joined with the NGO Environmental Defense and Eaton Corporation pledging to replace its 30,000 medium-duty trucks
FedEx moves slower than expected
with hybrid trucks over the coming years to reduce both pollution and greenhouse gases. It seemed like a win-win with environmental advances also paying off in a better bottom line for FedEx because of increased efficiencies.
Well, again, here we are a decade later and FedEx has deployed 408 electric and hybrid (either gasoline-electric or diesel-electric) trucks. The good news is FedEx’s leadership has led to another 1,400 hybrid delivery trucks hitting the roads with other companies. As FedEx acknowledged, government incentives will continue to play a critical role in rollout of advanced technology vehicles.
These Things Take Time
These things do take time. Wishful thinking won’t get us there. Government money can help, but ultimately it can only play a minor role if the goal is the transformation of a fleet. Cars and trucks that are better alternatives to gasoline ones in every way will be the only way to make it happen. That’s the way gasoline won out over electricity and steam 100 years ago. That’s why diesel won out over gasoline in Europe 15 years ago. That’s why the Toyota Prius is the 10th best-selling car of 2013.
In spite of all of the predictions, 2014 could be one of those years where we see some real change. We at Clean Fleet Report will be here to chronicle it.
What the future may hold
Story & Photos by Michael Coates
Posted January 3, 2014
Other related stories you might enjoy:
Top 10 Best-Selling High-MPG Cars of 2013
Hydrogen Fuel Cell Cars Go On Sale in 2014
Cars and Technology of the Future
When you join one hundred others in your community to order online, the 100 of you saved 100 trips to nearby stores and to distant malls. You saved hours of driving and gallons of gasoline from distant oil fields. You reduced emissions that smog our air and trap heat for 100 years fueling more draughts and wildfires.
As we increasingly work, shop and take action online, we free productive hours and help our nations energy security. Our nation’s use of oil peaked 6 years ago before we went into a recession. We are getting smarter and more efficient.
Your orders may trigger products that are delivered by FedEx, UPS, and postal trucks traveling a well-organized route. Your orders also now include services that were once physical goods as you read a magazine online, download music, and watch streaming video. Small iPads are replacing big stereos and digital content is replacing bulky goods, allowing more packages to fit in each delivery vehicle.
4.5 Million Delivery Trucks Start to Go Electric
Delivery trucks are increasingly hybrids that sip diesel and gasoline instead of gulping. Thousands of trucks are now all-electric. The potential is huge. As the Electric Vehicle Coalition points out, 4.5 million vehicles in the U.S. are short-haul delivery vehicles. Although it would be impractical to get a big long-haul truck across the nation on electricity, it can be practical to charge 100 short-haul delivery trucks at the warehouse where they load. Half of these delivery trucks are Class 1 and 2, no bigger than a Ford F150. Delivery vehicles create a major opportunity for the U.S. to shift from oil dependency to using our electricity that is increasingly produced from natural gas and renewables.
FedEx just added 34 all-electric vehicles to its SF Bay Area delivery fleet, bringing its global total to 130 all-electric vehicles. The 100 mile range of the electric trucks, made by Navistar and Smith Electric, exceeds the 88 mile average of FedEx trucks in urban routes.
Since 2005, FedEx has improved fleet efficiency in planes and trucks by over 16 percent. FedEx has also experimented with extending electric range using fuel-cell vehicles. For now, it is going with all-electric and hybrids, and not using plug-in hybrid or fuel cell. Some of FedEx’s 364 hybrid-electric vehicles use innovative Eaton hydraulic hybrid drive systems to achieve 40 percent fuel savings.
In New York City, the Postal Service has had 30 electric 2-ton vehicles on the street since 2001. They were recently joined in Long Island, NY, by two 2-ton hybrid electric vehicles. The USPS uses medium-duty hybrid electric vans from Eaton Corporation and Azure Dynamics. They join the 10 existing Hybrid-Electric Ford Escape vehicles currently in the fleet. USPS Fleet
Not all delivery vans are big 2-tons designed for hundreds of packages. The smaller Ford Transit Connect Electric is the best size for many locations. AT&T, Southern California Edison, Xcel Energy, DTE, Johnson Controls, New York Power Authority, and Canada Post use this delivery van. As Ford continues to expand its electric vehicle offerings, the new Ford C-MAX Energi will also be used by companies big and small.
Large Electric Trucks for Port and Local Demands
Some of the goods that we order start their U.S. journey when cargo ships dock in our ports. Current diesel-powered port trucks in California emit significant amounts of toxic pollutants and greenhouse gas emissions and consume thousands of gallons of fuel. New battery-powered heavy-duty trucks reduce diesel fuel consumption and pollution. The Port of Los Angeles has been using 20 Balqon electric container terminal tractors, hostlers, and 5 electric drayage trucks. The 60-mile electric range of the truck fits with the constrained demands of port work.
For example, for the Port of Los Angeles, TransPower took 2 heavy-duty trucks, formerly with diesel engines, and retrofitted with electric motors and other electronics powered by lithium ion batteries for greater efficiency and reduced emissions. The vehicles are both Class 8 truck tractors designed to haul loads up to 80,000 pounds. They are the Navistar International Pro-Star on-road tractor and a Kalmar Ottawa off-road tractor; both converted to operate as battery-powered, zero-emission vehicles.
Not every delivery requires ships, trucks, and long distances. Sometimes I pedal my bicycle to a farmers market where local growers bring in fresh produce. I taste, buy, and load my backpack for the ride home. Unfortunately, these San Francisco hills keep getting steeper and I’m thinking of buying an electric bike.
A growing number of under 100-mile daily urban delivery demands are excellent fits for e-bikes to electric vans to massive electric trucks. The electrification of 4.5 million short-haul vehicles has the potential to lower annual fuel costs by billions and create a shift from oil dependency to using U.S. natural gas and renewable energy.
On September 24, Congress approved a $25 billion bailout for GM, Ford, and Chrysler. “It seemed like a lot when we first started pushing this,” says Democratic Sen. Debbie Stabenow of Michigan, one of the bill’s sponsors. “Suddenly, it seems so small.” The three troubled automakers are already back in Washington D.C. asking for another $25 billion.
A couple of weeks ago, GM said that the future of our nation depended on it getting added billions so that it could buy Chrysler. GM has changed its mind. It just wants taxpayers to give the Detroit three another $25 billion. The problem is that the total of $50 billion is paid by taxpayers like you and me.
Congress would do well to have some national goals for the $50 billion, not goals set by auto lobbyists. Goals include America’s need to become competitive with the world if we hope to create more jobs and end this recession. Workers need help by either keeping their jobs or by getting new jobs. Americans need cars that cost less at the pump and better alternatives to always using a car. America needs to be energy secure, not desperately dependent on oil. To meet these goals, several alternatives are being considered:
- Another $25 billion with no strings attached.
- Let GM reorganize under Chapter 11 bankruptcy.
- Boost consumer auto purchases with tax credits for buying vehicles with excellent fuel economy.
- Invest the $25 billion in rail and transit.
When Chrysler got its 1980 loan guarantee, Lee Iacocca cut his annual salary to a dollar and slashed the wages of other top workers by 10 percent. The tax payers never paid a cent. It was a $1.5 billion loan guarantee.
This time around, Chrysler will be fine. Chrysler President Jim Press, when talking in September at a Western Automotive Journalist meeting, stated, “We need a new business model based on one word – Reality.” The new management team at Chrysler inherited a 4 million car per year overhead with sales falling to one million per year. Chrysler is privately owned by Cerberus Capital Management. Chrysler has been actively downsizing to be smaller, agile and profitable.
Ford is also moving to a business model that matches the name of its best selling car – Focus. In recently discussing its third quarter results, Ford stated that it remains on track to achieve $5 billion in cost reductions in North America by the end of 2008 compared with 2005. After a quarterly pre-tax loss of $2.7 billion, Ford had overall liquidity of $29.6 billion. The company promised shareholders further cost cuts and cash improvements.
In his November 17 Wall Street Journal article, Michael Levine discusses why Chapter 11 bankruptcy is the best option for GM. Chapter 11 would allow GM to be more competitive with Toyota, which now has now the world leader in market share. Over the years, GM has lost about two-thirds of its market share. Only with bankruptcy can GM be free of restrictions that prevent it from being competitive. It has 7,000 dealers compared to Toyota’s 1,500 successful dealers. GM has enormous pension and health care costs that add thousands to the cost of cars. The burden is so great, that GM needs SUVs to make money and sees no margin in fuel efficient cars. Yet, it is fuel efficient cars that customers are now buying. If GM reorganizes under bankruptcy, creditors will be forced to give it breathing room and paralyzing restrictions will be removed.
Robert Reich, former Labor Secretary, wrote on November 11, “When a big company that gets into trouble is more valuable living than dead, there used to be a well-established legal process for reorganizing it – called chapter 11 of the bankruptcy code. Under it, creditors took some losses, shareholders even bigger ones, some managers’ heads rolled. Companies cleaned up their books and got a fresh start. And taxpayers didn’t pay a penny. In exchange for government aid, the Big Three’s creditors, shareholders, and executives should be required to accept losses as large as they’d endure under chapter 11, and the UAW should agree to some across-the-board wage and benefit cuts.”
Al Gore, in his November 9 NY Times Op-Ed identifies a major opportunity, “We should help America’s automobile industry (not only the Big Three but the innovative new startup companies as well) to convert quickly to plug-in hybrids that can run on the renewable electricity that will be available as the rest of this plan matures. In combination with the unified grid, a nationwide fleet of plug-in hybrids would also help to solve the problem of electricity storage.”
Now law, the Emergency Economic Stabilization Act of 2008 gives tax credits exceeding $7,000 for the purchase of plug-in hybrids. President-elect Obama, when campaigning, favored expanded use of tax credits to speed the transition to a competitive auto industry that makes clean cars. Consumer vehicle spending could be boosted now by expanding the offering to include a $2,000 tax credit for vehicles getting over 35 miles per gallon and up to $10,000 for zero-emission vehicles. Auto industry sales would immediately jump without a $25 billion give away.
In the seventies, I left my job with a major Detroit corporation, Burroughs, then the second largest computer firm. At the time, all makers of mainframe computers were in trouble, including IBM. If the government had done a massive bailout and protected their businesses, the United States would not have transitioned into the global giant of information technology. Lacking a bailout, IBM reinvented themselves into a global leader in IT services with a deep new patent portfolio. Burroughs became Unisys. Honeywell redefined itself. GE exited the computer field. An industry thrived instead of died. The transition made the United States the global leader in the Internet and technology innovation, creating millions of jobs.
Big corporations resist change, yet change they must. To grow and be profitable, the United States transportation industry must be innovative and responsive to customers.
Car customers are voting with their pocketbooks. The average car owner spends $8,000 on their car. The average household with two cars spends $16,000. People are demanding fuel economy. They have stopped buying vehicles with lousy mileage. They want hybrids that deliver over 40 miles per gallon. There is a pent-up demand for millions of electric vehicles and plug-in hybrids.
Only a smaller innovative customer-oriented GM can create permanent jobs. Yes, a GM bankruptcy reorganization could lead to the short-term loss of over 100,000 jobs at GM, its suppliers, and some of its dealers. These laid-off workers, however, could be part of a million new workers. Federal government tax credits could be given to any company hiring laid-off auto workers. Community colleges could be funded in Michigan and other states to retrain workers for jobs of the future.
$25 billion invested in public transportation would create over one million new jobs in the United States. The America Public Transportation Association has learned that every $1 billion invested in public transit capital projects generates 30,000 jobs, and the same amount invested in transit operations generates 60,000 jobs.
U.S. citizens want better public transportation as ridership soars to 11 billion this year. This November, voters across the country in 16 states approved 23 measures out of 32 state and local public transit ballot initiatives, authorizing expenditures approximating $75 billion. Clean Fleet Report
Senate Majority Leader Harry Reid plans to move forward with a bill that would give the auto industry access to the $700 billion Troubled Asset Relief Program set up by the government in October to help ailing banks and other financial firms.
As Ben Franklin observed, “Great haste makes great waste.”
Congress may release the total $50 billion by Thanksgiving. Such haste sends all taxpayers a message, “Enjoy this turkey. You can pay for it later with interest.”
John Addison publishes the Clean Fleet Report.
California is moving ahead with an 800-mile high-speed train system serving Los Angeles, the San Francisco Bay Area, Sacramento, the Central Valley, the Inland Empire, Orange County and San Diego. High-speed trains will be capable of maximum speeds of 220 miles per hour, covering San Francisco to Los Angeles in 2 hours and 40 minutes. The system is forecast to carry over 100 million passengers per year by 2030.
California voters approved the bond measure that commits state funds of almost $10 billion only when matched by $10 billion of federal funds and another $10 billion of public-private partnership funds. Congress and the new president are likely to support matching federal funds for high-speed rail. In this tight economy, high-speed rail will get better results for less money than using federal funds to widen California’s freeways.
Last May, President-elect Obama said. “We are going to be having a lot of conversations this summer about gas prices and it is a perfect time to start talking about why we don’t have better rail service. … [I]t works on the Northeast corridor. They would rather go from New York to Washington by train than they would by plane. It is a lot more reliable and it is a good way for us to start reducing how much gas we are using.”
Public-private partnership funding is also likely, because the rail system will be profitable. Build-own-operate models are popular in transportation with those that are likely to bid on building the system and providing the equipment. The McKinsey Quarterly in February 2008 reported that the world’s 20 largest infrastructure funds now have nearly $130 billion under management.
Support for rail and public transportation is nationwide, not just in California. Voters across the country in 16 states approved 23 measures out of 32 state and local public transit ballot initiatives, authorizing expenditures approximating $75 billion. For example, in Los Angeles, a $40 billion measure passed that will finance new and existing bus and rail lines. In the Seattle area, people voted to expand commuter rail and express bus service and to create a 55-mile light rail system by approving $17.8 billion.
Will Californians park their cars and ride the rails? Last year, LA Metro carried 64 million riders. In the Bay Area, BART carried 104 million riders. The new California High Speed Rail will link both these systems and 25 multi-modal public transportation systems in total. The forecast of 100 million passengers per year by 2030 may be conservative.
Because the rail will be powered by electricity, it is valuable to look at the power sources. In California, by law, 20 percent of the electricity will be from renewables by 2010. By 2020, it must be at least 33 percent. California is subsidizing one million solar roofs that include net metering. Pacific Gas and Electric is installing 800 megawatts (MW) of utility scale solar photovoltaics (PV). For 20 years, Kramer Junction has been delivering 350 MW of concentrating solar power. Added megawatts of wind, geothermal, and biogas projects are being added. By law, utilities must be 33% renewable by 2020. With California’s implementation of greenhouse gas emission cap and trade, renewables are likely to be the low cost source of electricity by 2030.
Using renewable energy, California’s High-Speed Rail is likely to be zero emission before 2030, saving over 20 billion pounds of CO2 annually and over 12 million barrels of oil annually.
In addition to 160,000 construction jobs over the next two decades, high-speed trains will generate 320,000 permanent jobs by 2030, growing to 450,000 jobs in 2035, according to the business plan.
For the LA to SF travel, train fares are expected to be 50 percent of an airline ticket. In 2030 LA-SF travel is forecasted at high-speed trains will carry 45%, air transportation 26%, and the automobile 29% of the total transportation market between the two biggest metropolitan areas in California. This will keep intra-state air travel constant and avoid an airport overcapacity crisis.
California High-Speed Rail builds on the success of other systems around the world.
The 456-mile Northeast Corridor (NEC) which links Boston, New York and Washington D.C. is a successful rail corridor which is vital to the economy of the northeastern United States. It currently carries well over 200 million rail passengers. There are over 500 passenger trains per day in and out of New York City, 400 commuter trains, and 100 Amtrak trains.
Amtrak’s Acela service which operates on the NEC between Boston, New York City and Washington, D.C. is the only passenger rail service in the United States that approaches high-speed standards traveling at maximum speeds up to 150 mph on about 35 miles. In comparison with high-speed trains operating in Europe and Asia, the Acela service would be considered a conventional rail operation. For example, Acela trains make the 226-mile trip between New York and Washington D.C. in about 2.75 hours, traveling at an average speed of about 80 mph.
In years past, I conducted many workshops on the east coast. It was always faster and easier to take Amtrak from Washington D.C. to Philadelphia and on to New York, than to fly. The stations are conveniently connected to public transportation, rental car service, and car sharing.
For 40 years, Japan, has been the role model in high-speed rail. The entire Japanese high-speed train network of 1,350 miles currently carries over 335 million passengers a year.
In France the TGV network, consisting of over 1,160 miles of new interconnected high-speed lines, carries over 100 million passengers each year. Spain and Germany continue to expand high-speed rail. London to Paris can be pleasantly traveled in 2 hours and 15 minutes. Eventually most of the European Union will be seamlessly integrated.
Twelve countries around the world take advantage of high-speed rail – from the United States to China. Soon the number will be 20 countries as Mexico, Russia, and others add their systems.
Oil usage in the United States and many other countries has peaked. At the moment, this is largely thanks to drivers’ reacting to high oil prices and a recession by replacing solo drives with employer commute programs and public transportation. Oil usage is likely to continue declining as efficient multi-modal transportation systems are linked together with high-speed rail – a cool solution for a heating planet.
A record number of Americans are saving thousands per year by using public transportation from one day per week to living car free. In 2007, a 50-year record was set of 10.3 billion transit trips per year, saving over 4 billion gallons of car gasoline use. 2008 will set a new record that may approach 11 billion trips as more commuters leave their cars parked to brave standing-room-only train and bus rides.
Public transportation and corporate commute programs have helped America finally reduce its dependency on oil, with vehicle miles traveled reduced for the first time. Now, our financial crisis is putting this in jeopardy.
Although public transportation is rescuing Americans, will Americans rescue public transportation? Record ridership, shrinking tax revenues, frozen funds, and fuel prices are overwhelming transit budgets. Where more routes and buses are needed, cutbacks are instead being made.
This Tuesday votes in 33 states will make decisions about the fate of transit funding. In California, decided will be the fate of California’s High Speed Rail.
The American Public Transportation Association (APTA) called on Congress on October 29 to pass economic stimulus legislation that includes funding public transportation projects to create new jobs. APTA has identified 559 public transit “ready-to-go” projects, worth $8 billion, from Chicago to Atlanta, and from NY to LA.
Testifying before the House Committee on Transportation and Infrastructure, APTA Chair Dr. Beverly Scott, who is also general manager and CEO of the Metropolitan Atlanta Rapid Transit Authority (MARTA), testified, “We simply must get our economy back on track, and the most important way to do that is to create new jobs, and give our citizens the tools they need to find jobs and keep working.”
Dr. Scott continued, “Not only do transit systems need assistance for capital projects, transit providers also need help to maintain their current services. Transit systems across the United States are being forced to choose between raising passenger fares or cutting service to make up for shortfalls in local funding and the increased cost of diesel fuel this past summer. The burden is so great that 35 percent of public transportation providers who responded to another recent APTA survey have been forced to cut or plan to cut the level of passenger service they provide in spite of the growing demand. Transit needs to be part of the solution to – not the victim of – the current economic crisis. This could not happen at a worse time. Public transportation ridership has grown dramatically this year, and we need to continue that growth.”
Even the collapse of AIG is having a devastating effect on transit. Dr. Scott as testified, “From the early 1990s to 2003, the Federal Transit Administration urged transit systems to enter into innovative financing deals known as Sale-in/Lease Out and Lease-In/Lease Out (SILO/LILO) transactions. These transactions helped transit systems finance large, capital intensive projects by selling their assets to investors and leasing them back. The transit agencies received up-front one time payments in consideration for future tax benefits for the investors, until these transactions were prohibited in 2003. To secure these transactions, sale proceeds in the form of Treasury securities were placed into an account that AIG and a small number of other insurers guaranteed. Under the terms of the contracts, transit agencies are responsible for replacing the guarantors of the secured assets if they fail to maintain a certain bond rating- often ‘AAA’ status. Unfortunately, because AIG and the other insurers have lost their ‘AAA’ rating, and there are no available financial institutions to replace them, the equity investors are able to find the transactions in default. Under this scenario, through no fault of their own, transit agencies could be forced to pay hundreds of millions of dollars in fees to make the investors whole. The banks have the opportunity to gain 100 percent of the tax benefits that have been disallowed, which would in turn devastate transit agencies, which will be required to pay more than $2 billion to the banks immediately.” Congressional Testimony
Will we keep America moving, our will be go back to being stuck in our cars in gridlock, burning billions of dollars of extra gasoline from countries that are glad to take our money?
John Addison publishes the Clean Fleet Report.