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Professor Elie Ofek and Research Associate Polly Ross Ribatt prepared this case. This case was developed primarily from published sources. The authors acknowledge the assistance of David Rosenberg, Prime Motor Group, in providing information contained in the section, “Selling HEVs.” HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2010, 2011, 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

E L I E O F E K

P O L L Y R O S S R I B A T T

“Plugging In” the Consumer: The Adoption of Electrically Powered Vehicles in the U.S.

As the first decade of the 21st century came to an end, the automobile industry was poised for a major change. For a century since the introduction of the first automobiles, virtually all had been

powered by an internal combustion engine (ICE) which ran on gasoline produced from fossil fuels.a In early 2010, it appeared that electricity was finally becoming a viable alternative means of powering vehicles; there were already a number of vehicles on the market that used electricity as a source of power, and several partially or completely electric-powered vehicles were expected to be rolled out in the coming years. For automakers and regulators alike, designing, manufacturing, and servicing this new breed of cars posed many challenges. Front and center was the extent to which consumers were ready and willing to switch to electric-powered vehicles.

The Internal Combustion Engine: 20th Century Domination

Cars were central to the United States economy and culture; to many Americans, they were both a symbol and source of freedom and individuality. They were also the second-most expensive purchase for most Americans (following a house) and consumed some 17% of their pre-tax earnings.1 In 1900, there had been 16,200 vehicles registered in the U.S.; by 2007, that number had grown to 247 million.2 In 2008, Americans owned an average of 2.28 vehicles per household.3

Under the hoods of nearly all these cars was a version of the original ICE, invented by German engineer, Nikolaus Otto, in 1860 and used in the mass-produced cars released by Oldsmobile and later by Ford in the early 1900s. Around this time, engines that ran on electricity were also developed in the U.S. and Europe, but the ICE quickly became the worldwide standard. The ICE ran on gasoline, a carbon-based fossil fuel created by pumping crude oil out of the ground, moving it (usually by pipeline and then tanker ship) to oil refineries, and converting it to gasoline before delivering it by truck to filling stations. ICE engines were powerful and became more reliable as time progressed, but

they were inefficient, using only 13% of every gallon of gas burned to move the vehicle.4

a Fossil fuels (such as coal, petroleum, and natural gas) are combustible organic materials (hydrocarbon deposits) that provided more than 85% of the energy consumed in the United States. Source: U.S. Dept. of Energy, “Fossil Fuels,” http://www.energy.gov/energysources/fossilfuels.htm, accessed February 2010.

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First Signs of Concern: Oil Shortages and Air Quality

As demand grew for gasoline, the U.S. became increasingly dependent on oil imports from the key oil-producing countries belonging to the OPEC (Organization of the Petroleum Exporting Countries) cartel, formed in Baghdad, Iraq, in September 1960. The extent of Americans’ reliance on foreign oil became apparent when OPEC initiated an oil-shipment embargo in 1973, leading to gasoline rationing, high prices, and long lines at gas stations. Beyond importer-induced demand spikes, there were more general concerns about when the world’s finite fossil-fuel supply would be depleted. While there was debate about the timing, most agreed that it would gradually become more difficult and expensive to extract what reserves remained (see Exhibit 1 for projections).

Americans’ concerns about gasoline were not limited to price and availability; pollution, a byproduct of burning fossil fuels, had emerged as a major issue. As early as 1947, the city of Los Angeles formed an air pollution control department to reduce smog (a mix of smoke and fog). In 1970, the federal government passed the Clean Air Act, requiring cars to have catalytic converters in their tailpipes to reduce pollutants. By the 1990s, improvements to the converter had reduced tailpipe

emissions by more than 95%.5 Yet, despite increasing air-quality awareness and the fact that the U.S. economy and household budgets felt the periodic strain of fluctuating oil prices, consumption of both domestic and imported oil continued to grow (see Exhibit 2 for U.S. gas consumption).

The Environment and Early Electric Vehicle Attempts

In the 1990s, climatologists increasingly reported that the average temperature of the Earth’s surface was rising, which they attributed to the rising levels of carbon dioxide (CO2) being emitted from the burning of fossil fuels. Voters in California were also concerned about emissions from automobiles, symbolized by the thick smog that could be seen hovering over Los Angeles. In 1990, California enacted a law requiring that, by 1998, 2% of all new cars sold must qualify as zero-

emissions vehicles.b Several automakers responded by launching research and development (R&D) projects for battery-powered electric vehicles (EVs). In 1997, General Motors (GM) released the EV1, a two-seat car that was powered entirely by electricity and had a three-hour recharge time—and no

emissions.6 GM refined the EV1 in several iterations, eventually increasing its range (the travel distance before it needed to be recharged) from 50 miles to 120 miles. Even so, Time placed the EV1 on its list of the “50 Worst” cars because of its limited range—despite conceding that the EV1 was a “marvel of engineering” that was “quick, fun, and reliable.”7

The EV1 was very popular among most of the 900 or so consumers to whom GM had leased it before halting production in 2003, having invested more than $1 billion in the model.8 When the leases expired, GM refused multiple offers from consumers to buy the EV1s, instead confiscating and destroying all but the few that ended up in museums. Criticized by some as premature, the cancellation of the EV1 was highlighted in the 2006 documentary film, Who Killed the Electric Car?

In the mid-1990s, Toyota had also developed an EV for lease in California, the RAV4-EV, by retrofitting its small sports utility vehicle (SUV), the RAV4. The RAV4-EV was only popular among a small segment of environmentalists and was eventually discontinued by Toyota, which claimed sales were not high enough to justify production costs. (See Exhibit 3 for EV1 and RAV4-EV photos.)

Because gas prices had remained relatively low during the 1990s and at the turn of the millennium, many Americans saw little incentive to switch to fuel-efficient cars. To the contrary, this

b The law was subsequently amended several times to relax this requirement.

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period saw the advent of the SUV, which replaced the station wagon as the vehicle of choice for the typical American family. Because SUVs were officially categorized as light trucks, they were exempt from the more stringent fuel-efficiency requirements for passenger cars. Some critics railed against the widespread American adoption of these so-called “gas guzzlers,” claiming they were neither fuel-efficient nor emissions-conscious. (See Exhibit 4 for vehicle purchases by type in November 2009.)

An Uptick in Environmental Awareness

Public concern over global warming and pollution from fossil fuels gained steam with the 2006 release of former Vice President Al Gore’s documentary film, An Inconvenient Truth, which focused on climate change and its causes. In one survey of viewers in 47 countries, 62% of respondents said the film “changed their mind” about global warming being a problem and 89% said it increased their

awareness of the problem.9 By summer 2008, 51% of respondents to a survey conducted in the U.S. said they were interested in a car that would reduce their emissions and fuel costs, in that order.10 (See Exhibit 5 for global energy consumption and CO2 emissions, Exhibit 6 for a survey on attitudes to global warming, and Exhibit 7 for a chart tracking CO2 concentration and the earth’s temperature.)

The Dawn of a New Era: Hybrid Electric Vehicles

In 1993, the Clinton administration launched an initiative supporting the development of more fuel-efficient cars by American car companies. Around this time, and in large part in response to the Clinton initiative, Japanese carmakers accelerated their development of hybrid electric vehicles (HEVs), which were powered by both electricity and gas. Toyota’s HEV-development program would ultimately produce the first widely adopted hybrid vehicle, the Prius. But even at Toyota, there was initially much doubt about the hybrid’s market potential. A Toyota marketing executive recalled that, when planners at Toyota Motor Sales were first informed about hybrids in 1995, “There was skepticism within the company about whether the hybrids were really cars.” Noted another executive, “It wasn’t clear that better fuel economy alone could drive premium pricing.”11

Toyota released the first-generation Prius to the Japanese market in 1997 and to the U.S. market in 2000. Instead of being recharged with a cord running from the car to an electrical outlet, as the RAV4-EV was, the Prius used a gasoline engine and the application of the brakes to charge its nickel metal hydride (NiMH) battery while the car was running. The seamless transitions back and forth from gas to electrical power, managed by an onboard optimization computer, gave the car better fuel mileage and lower emissions than any previous five-passenger, all-conditions, highway-worthy vehicle.

Honda also produced a hybrid car, the Insight, which was introduced in both Japan and the U.S. in 1999. In 2001, the engine was re-engineered to be smaller and was made available in several popular Honda models such as the Civic and the Accord. Even with the redesign, however, Honda’s HEV sales trailed Toyota’s. Many attributed the poor performance of the early Honda hybrids to product shortcomings (for example, the air conditioning could shut off while the car operated under battery power) and the strong brand image Toyota had been able to build around the Prius.

Selling HEVs

At its debut, the Prius was in demand with a relatively small set of consumers. David Rosenberg, president of Prime Motor Group, which had 20 car dealerships in the northeastern U.S., reflected on the first-generation Prius: “The cars came to us from Toyota by allocation and just sat on our lots. A small minority of consumers who were hyper-environmentalists strode into the dealerships right


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away to purchase the vehicle out of conviction. But they were still more expensive than a conventional power train and we had to put incentives together to sell them.” However, the U.S. market showed more interest in the Prius and other HEVs when gas prices rose considerably in the 2000s. From 1980 to 1998, the average price per gallon of gas (in real 2008 dollar terms) had ranged between $0.90 and $1.50 and had never risen more than 20% in any given year. After rising nearly 30% in 1999 and remaining steady through 2001, prices climbed again from 2002 to 2008, reaching a historic high of $4.12 per gallon in July 2008 (see Exhibit 8 for a chart of gas prices).12 In the U.S., where transportation accounted for nearly 30% of energy consumption and consumers drove 12,000 miles per year on average per car, gas-price increases had a major impact on many household

budgets, especially for large SUV drivers.13 Demand for hybrids grew while the SUV market weakened; some dealers had waiting lists of up to one year for the Prius and buyers were often

willing to pay thousands of dollars above the sticker price to obtain one.14 Rosenberg recalled:

Once gas hit $4.00 per gallon, we couldn’t keep the Prius in stock. We were forced to pay 20% over book in the secondary market to pick up used ones just to satisfy our customers. Concurrently, we had clients with SUVs coming in looking for a more fuel-efficient car and having to take less than 50% of book value on their trade-in. I believe that, even with gas prices lower now than they were in 2008, consumers have not forgotten the near-panic reaction to prices at the pump and the difficulty of unloading their fuel-inefficient SUVs that summer.

In response, Toyota ramped up production of the Prius. “Now we can start to satisfy consumer demand,” said the president of Toyota North America in 2007, adding, “Obviously, what we’re trying to do is to bridge from the vehicle that was attractive to environmentally conscious customers

to the mainstream.”15 Yet, demand for the Prius and other hybrids softened when gas prices dipped, as described in a December 2008 article: “You know things are grim in American car showrooms

when Toyota has a problem selling its once-hot Prius. . . . Cheap gas seems to be to blame.”16

From 2001 to the end of 2009, Americans bought 1.6 million HEVs, one million of which were

Priuses.17 (See Exhibit 9 for hybrid sales and Exhibit 10 for top-selling hybrids in November 2009.)

Expansion Markets and Next-Generation HEVs

The success of the Prius led Toyota to launch a similar powering system in some of its premium Lexus-brand cars and SUVs, thereby showing high-end consumers that performance and environmentalism could coexist. Ads for the first Lexus hybrid began appearing in early 2007 and, by November, U.S. sales of Lexus’s RX 400h SUV hybrid rose to 21% of all RX 350/400h models (standard and hybrid) sold that month. Toyota also released an HEV version of its Highlander SUV, sales of which accounted for 21% of total Highlander sales in November 2007, up 55% from the year

before.18 In April 2009, more than 13,000 U.S. consumers expressed interest in Toyota’s Estima brand hybrid minivan (available only in Japan) and signed an online petition asking Toyota to “bring its

hybrid minivan to America.”19 As early as 2008, there was speculation that Toyota would be releasing a larger hybrid, potentially its Sienna minivan model.20 The hybrid version of the seven-passenger Chevrolet Tahoe SUV was already on the market, but its $51,000 starting price was too high and sales were lackluster. Despite the broadening selection of hybrids, the Prius remained the unrivaled leader.

Competition was also increasing in the small-car market, as Toyota and Honda redesigned the Prius and Insight, respectively. Television advertisements for the Insight emphasized its affordability, pointing out that it cost thousands of dollars less than the Prius. In one ad, “Beach,” released in March 2009, Honda tried to appeal to consumers with a more active lifestyle.


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In 2009, the third-generation Prius hit the U.S. market, touting even lower emissions and greater fuel efficiency—50 miles per gallon (mpg) on average, 10 mpg more than the first-generation Prius. Commercials for the 2010 Prius, based on the marketing theme “Harmony between Man, Nature, and Machine,” featured a landscape that seemed to awaken in the presence of a Prius: As the vehicle drove through the scene, a bare white landscape gave way to a natural world made up of brightly costumed actors swaying together to form trees, blooming flowers, rippling streams, and hovering clouds. In addition to running television and social media ads to promote the 2010 Prius, Toyota announced plans for “Harmony Installations” in six major U.S. cities, which would consist of flower sculptures, seating, electrical outlets, and free wireless Internet (WiFi) spots in public parks.21 Prius sales outpaced Insight sales by almost seven to one, despite marketing investments by Honda.

Ford’s hybrid version of its popular Fusion model also received attention from industry observers. One of the fastest-selling cars in the U.S. during the summer of 2009, the 2010 Ford Fusion was an affordable mid-size car with an upscale interior, excellent safety rankings, and all-wheel drive availability. Among other awards, the model had been named the Motor Trend Car of the Year and a Consumer Guide Best Buy. Ford’s overall sales rose 24% from January 2009 to January 2010, in large part due to the success of the Fusion; this jump in demand helped Ford return to the number-two

spot in U.S. sales behind Toyota.22 The HEV version of the Fusion could travel 47 mph in electric-powered mode, had a fuel efficiency of 41 mpg in city traffic, and could travel more than 700 miles on

a single fill-up of its 17.5 gallon fuel tank.23 (See Exhibit 11 for pictures of selected HEVs.)

Not all attempts at hybrids were popular with consumers, however, including some so-called “mild hybrids.” Mild hybrids usually required gas power to move the vehicle from a standstill and

only used electric power for acceleration and other ancillary functions.24 Less reliant on electric power than typical HEVs, mild hybrids also generated fewer environmental benefits. Starting in 2007, GM released mild hybrid versions of three models—the Chevy Malibu, Saturn Aura, and Saturn Vue—in the U.S., but announced plans to discontinue their production in 2010 due to low sales.25

Plug-in Vehicles: Powered by the Electric Grid

The variety of HEVs, either available or in development, suggested that most car producers were committed to investing in an alternative fuel strategy in which electricity was at least part of the equation. It seemed that, in the decade from 2010 to 2020, consumers would be able to choose between several types of fuel-efficient vehicles, including future-generation HEVs such as the Prius, plug-in hybrid electric vehicles (PHEV), and single-fuel all-electric vehicles (EV).

Plug-in Hybrid Electric Vehicles

PHEV models used much of the same technology as the HEV, running on either electricity or gasoline and transitioning seamlessly from one to the other. However, the PHEV differed from its predecessor in two ways. First, it used a lithium-ion (Li-Ion) battery (typically found in laptops and cell phones) rather than the nickel-cadmium (Ni-Cad) and NiMH batteries used in HEVs such as the Prius. The Li-Ion battery allowed greater range and speedier recharge. Second, the batteries for PHEVs could be charged by plugging into an electrical outlet. Thus, PHEVs could run on electricity exclusively until the battery ran out of power and could then start running on gasoline. Seven PHEV models from Chevrolet, Build Your Dreams (BYD), Fisker, Ford, and Toyota were due to launch from 2010 to 2012 (see Exhibit 12 for model details and Exhibit 13 for pictures of selected PHEVs).

Most models nearing introduction used a traditional three-prong plug and could be fully charged in six to eight hours using a 110-volt line. They could charge more quickly (usually in two to four


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hours) using a dedicated 220-volt line or at a dedicated charging station. (Common U.S. household appliances usually plugged into 110-120-volt outlets, while larger appliances such as washers and dryers used 220-240 volts.) The average cost of electricity across the U.S. in 2009 (January to October)

ranged from $0.04 to $0.33 per kilowatt-hour and was usually lower during off-peak hours.26 Thus, the savings achieved by charging PHEV vehicles would vary according to local electrical costs and the time of recharging. In advance of a potential spike in electricity demand resulting from EV and PHEV adoption, utility companies and policymakers were exploring ways to manage the added strain on power grids. Without such intervention, some regions with older grid systems might have to limit the number of rechargeable vehicles to one per five or six houses.27

GM reported that recharging the soon-to-be-released Chevy PHEV, called the Volt, would cost “less than purchasing a cup of your favorite coffee.” GM reported that driving the Volt cost just $0.02 per mile when running solely on electricity and that it could achieve 230 mpg in the city and travel up to 40 miles on a single charge. It could also generate its own electricity using a gasoline generator and continue running for hundreds of miles on a single tank of gas.28 Volt owners could charge their vehicles with a standard 110-volt household outlet or could have a 220-volt charging station installed inside their garage. Based on 2007 U.S. average electricity prices, the Volt would cost about $0.85 per

recharge.29 Chevrolet began running advertisements for the Volt during the 2008 Summer Olympics, even though it did not plan to introduce the vehicle in showrooms until 2010 at the earliest.

There was also growing excitement over Toyota’s plug-in Prius, expected to be released in 2011 at a price the company promised would be affordable.30 The plug-in Prius could travel 12 miles per

charge before gas power took over and it charged in one to two hours using a 220-volt outlet.31 In addition, Fisker Automotive, which had been focusing on developing “green” luxury sports cars in the U.S., planned to launch a plug-in hybrid sports sedan towards the end of 2010. Fisker predicted it

would release 15,000 cars annually, with prices starting at $87,900.32

With several PHEV models hitting the market, consumer research groups explored interest in the new format. In a 2008 survey of 2,500 adults, a baseline of 42% of respondents claimed there was “at least some chance that they would buy a plug-in electric hybrid sometime in the future.” They were asked this before being told that 75% savings were predicted. The survey found that respondents had assumed savings would be approximately 25%.33 In their subsequent responses, survey participants indicated a distinct price-benefit trade-off: The proportion who claimed there was some chance they would buy a PHEV decreased significantly as the cost premium for the car increased (see Table A).

Table A Survey Responses Regarding Likelihood of Buying a PHEV with Fuel Savings of 75% Achieved over 5 to 10 Years.

Some chance of buying PHEV (%) Cost Premium 46% $2,500

30% $5,000

14% $10,000

Source: Richard Curtin, Yevgeny Shrago, and Jamie Mikkelsen, “Plug-in Hybrid Electric Vehicles,” University of Michigan website, 2009, p. 8, http://www.ns.umich.edu/Releases/2009/Oct09/PHEV_Curtin.pdf, accessed February 2010.

Some consumers expressed concern about the day-to-day burden of operating a plug-in car. Some questioned the durability of Li-Ion batteries in cold or hot temperatures; for example, one cyclist in Alaska reported to an online community that he could not recharge his headlamp in the winter. One

industry resource recommended an acceptable charge range of 0° to 45° Celsius.34 Some engineers worried that, because the batteries generated heat while running, there could be a risk of overheating


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in very warm climates. In 2006, Dell Computers had been forced to recall 4.1 million laptop computers after several Li-Ion batteries burst into flames from overheating.35

Single-Fuel Electric Vehicles: Giving Up Gasoline Altogether

Despite abandoning its EV program in the late 1990s, GM had by 2010 rekindled its interest in marketing a truly emissions-free vehicle, as had other automakers. Some in the auto industry were unimpressed by PHEVs, claiming they were only a slight tweak on the existing HEV technology; they advocated for a car powered solely by electricity, with zero tailpipe emissions. Skeptics pointed to the major downside of all-electric vehicles compared to PHEVs: In the case of a depleted battery, there was no alternative means to power. Nevertheless, 11 new highway-rated EVs were expected to be introduced in the U.S. market from 2009 to 2011 (see Exhibit 14 for EV model details). While charging EVs with a 110-volt outlet could take as many as 20 hours for some models, charge time depended on many factors, including battery type and available power voltage, and could be reduced to eight or

fewer hours; new high-voltage charging innovations promised even shorter times.36

In 2009, automaker Tesla delivered 500 two-seater Roadster EVs to the U.S. market at a starting price of $109,000. The Roadster was powered by a Li-Ion battery which could be recharged in four

hours by a 220-volt outlet and had a range of 240 miles on a single charge.37 At the Detroit Auto Show in January 2010, Tesla announced that it had sold its one thousandth Roadster.38 Tesla also planned to

introduce the Model S sedan, which would seat five adults and retail for a price of just over $50,000.39

Chinese car manufacturer BYD was also producing an EV model, the E6. BYD had been a producer and seller of Li-Ion batteries for cell phones and computers before transforming itself into a car company. The BYD E6 had a range of 205 miles on a single charge.40 In December 2009, the Chinese government announced plans to offer subsidies to consumers buying EVs in five Chinese cities, a move applauded by BYD executives, who claimed that adoption of electric-powered vehicles

in China had been stymied because the technology was too expensive.41 BYD planned to release the

E6 in the U.S. in 2010 at a price of about $40,000.42

Nissan also planned to enter the EV market in 2010 with the Leaf, a model the company believed

would appeal to the 80% of Americans who drove fewer than 62 miles per day.43 The Leaf had a 100-mile range and could recharge in eight hours from a 220-volt outlet44 and it would be affordable, with

a sticker price of approximately $30,000.45 Nissan, which had released only one hybrid car, had decided to bypass substantial investment in the HEV and PHEV space to focus instead on the EV

market.46 In January 2010, Nissan received a $1.4 billion loan from the U.S. government to retrofit a Tennessee plant to make EVs (the Leaf) and Li-Ion batteries. (See Exhibit 15 for photos of EVs.)

Another automaker, Norway’s Th!nk, had begun producing EVs in the early 1990s under the name Pivco. Th!nk was hit hard during the economic downturn in 2008 and was denied a request for an estimated $15-$30 million in bailout funds from the Norwegian government. At the time, Th!nk had been working toward a U.S. and European launch of Th!nk City, a zero-emission car that could reach 65 mph and travel up to 110 miles per charge.47 In August 2009, Th!nk secured $47 million in

funding from new investors and emerged from bankruptcy to resume production of Th!nk City.48

Consumer Reaction to the EV Concept

Because EVs were set to launch not long after PHEVs, it was possible that consumers would simply choose to wait for EVs and bypass PHEV technology altogether. However, some consumers had mixed reactions, as reflected in the feedback posted on a website describing a new EV model:


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Nice idea, but it’s strictly a commuter’s car. My friend lives 65 miles away, so I can’t make it round trip without re-charging. I’d have to recharge at his house and it would be on his utility bill. . . . Is this sort of car really governed by miles or some combination of miles and time? What if your commute is 80 miles total, under the 100-mile limit. But you encounter terrible traffic and it takes you an extra hour to get home. Shut off the radio? Hope it doesn’t get dark and you don’t need the lights? Don’t get me wrong. It’s great to see this sort of car coming to the dealers. Too many EV’s have been top end race cars and nothing for the family guy. I hope

that this is a good step towards another EV with greater range and quicker recharges.49

Perhaps surprisingly, some environmentalists were skeptical about the merits of electric-grid-dependent PHEVs and EVs. According to a study released in November 2008, there were many parts of the U.S. in which driving an EV powered by electricity generated in a coal-burning plant rather

than driving an ICE vehicle would not reduce CO2 emissions at all.50

However, proponents of electric grid-dependent cars saw them as a path to lowering CO2 emissions because, in many cases, the electricity would be generated by lower-emitting processes and their adoption would encourage renewable-energy investments by the power industries. Supporters of grid-reliant vehicles also included advocates of reduced American dependence on outside sources of energy. While a large portion of U.S. spending on gas benefited foreign oil-producing countries, dollars spent powering EVs and PHEVs would more likely be spent on established U.S. industries such as coal mining and nuclear power and on emerging renewable-source industries such as solar and wind farms.51 (See Exhibit 16 for U.S. energy production by source in 2008.)

To explore the potential demand for EVs, consulting firm McKinsey identified target customer segments based on four “driving missions” (see Table B for McKinsey’s segmentation). Based on its research, McKinsey recommended that automakers abandon the one-size-fits-all approach to EV batteries, as consumers in the “driving around town” cohort would be burdened with buying more battery than they required. Battery customization, claimed McKinsey, could reduce the cost of EV operations and thus boost consumer interest.

Table B McKinsey Customer Segmentation by Driving Mission

Driving Mission Average miles (per trip) Frequency (per year) Driving around town 13 700

Delivery 24 500

Commuting 33 450

Driving by typical sales representative 48 600

Source: Nick Hodson and John Newman, “A new segmentation for electric vehicles,” McKinsey Quarterly, November 2009.

Alternatives to Electric Power

Although many of the largest automakers were investing in HEVs, PHEVs, and EVs, they continued to explore other technologies—particularly with an eye toward reducing the fuel consumption and emissions levels in larger, more powerful vehicles.

Diesel: No Longer a “Dirty” Fuel

Audi and several other European car producers were developing improved diesel engines. After a group of German manufacturers succeeded in producing a “cleaner” diesel engine with lower


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emissions, the technology was installed in several Volkswagen (VW) models. In November 2009, VW sold 3,667 units of its clean-diesel technology engine across four vehicle models, compared to 19,334

hybrids sold in the same period.52 Looking forward, VW was betting on the success of its redesigned Golf Twin Diesel, a hybrid car fueled by an electric-charged battery and by diesel gasoline with a clean-technology exhaust system. Audi also planned to introduce diesel engines in 45% of its large

Q7 SUVs,53 which would reduce CO2 emissions from 289 grams per kilometer (g/km) to 234 g/km and improve the Q7’s range from 512 miles per tank to 697 miles per tank.54

There were several obstacles facing diesel automakers in the U.S. Although diesel engines were much more fuel-efficient, getting 30% to 35% more miles per gallon than comparable gas-powered

cars,55 a gallon of diesel was often more expensive than a gallon of gasoline and there were fewer diesel filling stations. Diesel was rarely discussed in U.S. public policy circles as a means of decreasing carbon emissions. Over half of all new cars produced in Europe contained diesel engines, but in the U.S., state taxes on diesel made diesel-fueled vehicles unaffordable for many consumers. This was partially due to a negative perception of diesel, which was heavier and oilier than gasoline; Americans had long associated it with black, dense smoke. In addition, environmental organizations such as the National Resources Defense Council had issued warnings on the potential health risks associated with diesel exhaust, and organizations such as the Partnership for Clean Fuels and Vehicles lobbied governments to reduce their countries’ output of the lead and sulfur found in diesel.

Fuel Cells

Fuel cells were often cited by energy innovators as a viable answer to the conundrum of creating clean, renewable, domestically sourced energy. Fuel cells consisted of stacks of electrodes and electrolytes that generated a constant supply of electricity, typically using hydrogen fuel and oxygen from the air.56 Fuel-cell vehicles (FCVs) powered by pure hydrogen had zero emissions from the tailpipe (except for heat and water). Although fossil fuels were sometimes used to produce hydrogen for powering FCVs, emissions from this process were far less than those produced by fossil-fuel-powered cars. Supporters argued that FCVs reduced dependence on foreign oil because hydrogen could be produced using sources available in the U.S., such as coal and natural gas.

In 2002, the George W. Bush administration launched the Cooperative Automotive Research (CAR) plan, which by 2008 had funneled more than $1 billion of R&D funding into hydrogen-fueled FCVs. But even in the late 2000s, numerous hurdles remained before FCVs would be viable for consumers on a large scale; these included issues with the large, heavy, and expensive hydrogen-storage systems in FCVs; the uncertain durability of fuel-cell systems (for example, in extreme temperatures); the lack of infrastructure for producing, transporting, and dispensing hydrogen to consumers; and the overall high price of FCVs compared to other options on the market.

Chevrolet had launched a test fleet of its hydrogen-powered Equinox FCV SUV in California, New York, and Washington, DC in 2008. The Equinox FCVs, which could travel 190 miles per hydrogen fill-up,57 were not for sale, but rather for test drive through a program called “Project Driveway.”In July 2008, Honda delivered the first of 200 Clarity FCXs, a mid-size passenger FCV with a driving range of 240 miles per hydrogen fill-up,58 to dealers in Southern California, the region with the most extensive (though still limited) fuel-cell service and refuel infrastructure. Honda was offering three-year leases for $600 per month.59


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Infrastructure

Widespread adoption of non-ICE vehicles would require changes to the existing power infrastructure. For instance, some PHEV and EV users would want to install 220-volt power lines in their garages or parking spots, and it would be necessary to have recharging stations for longer trips. To meet that need, companies such as California-based Coulomb Technologies were developing a network of EV charging stations. Coulomb offered charging infrastructure targeted to municipalities, vehicle fleets, retailers, and corporations.60 Charging stations were available at various power levels

and in various designs, including units mountable on poles or walls.61 In 2009, Coulomb and power provider Green Fuel Technologies entered a deal to develop a network of 4,000 charging stations throughout Phoenix, Arizona (for example, near shopping centers and municipal buildings) by the end of 2010. One report noted that the small charging units, weighing about 40 pounds, would cost $3,000 to $6,000 each.62 While public charging stations would provide supplemental power during, for example, a trip to and from work, drivers would still charge their EVs and PHEVs primarily at home. Coulomb was also co-developing larger, more powerful (480-volt) charging stations.63 These larger stations, similar in size and configuration to a standard gas pump, cost approximately $40,000, plus $20,000 for installation.64 Among other payment options, Coulomb provided drivers with a

special “ChargePass” card so they could be automatically billed for electricity at recharging stations.65

California-based Better Place conceived a two-pronged approach that used both recharging spots and battery-switch stations, the latter designed to extend a vehicle’s range by providing supplemental battery power for longer trips without the inconvenience of waiting several hours to

recharge.66 The battery-switch platform was automated: A driver would pull into a lane and, as the vehicle moved along a conveyor belt, a robotic system replaced the vehicle’s battery with a fully charged one. The original battery was then recharged at the station and eventually installed in another vehicle. Drivers could remain in their vehicles throughout the process, which the company claimed was faster than refueling at a gas station.67

In 2008, Better Place entered a partnership with carmaker Renault-Nissan and the Israeli government to introduce EVs and roll out a comprehensive recharge infrastructure system (including battery-switch stations and charging spots) in Israel by 2011; the company had a similar project underway in Denmark.68 Israel and Denmark were ideal markets for EV adoption. Both countries

were geographically small—90% of Israeli car owners drove fewer than 70 km per day69—and had

policies encouraging energy efficiency, such as high gas taxes.c Moreover, both markets appeared culturally inclined to favor EVs: Israel was committed to becoming energy-independent, Denmark was among the world’s most environmentally progressive nations, and both countries had alternative-energy investments that could help supply the EV market.70 The partnership was designed to solve the “chicken and egg” hurdle of justifying investment in infrastructure before demand for EVs materialized. As Better Place rolled out an extensive charging network, Renault was spending $600 million to develop cars with exchangeable batteries and the Israeli and Danish governments were offering tax breaks and other incentives, such as free parking for EVs in

downtown Copenhagen, to encourage consumer adoption.71 The battery-switch systems were

estimated to cost around $500,000.72 In Israel, for example, it was estimated that 150,000 charge spots and 100 battery-switch stations would be installed at an estimated cost of $200 million.73

c In December 2009, the price of gas (including taxes) in Denmark and Israel was $7.05 and $6.51 per gallon, respectively. Source: Joel Lou, “Weekly Retail Premium Gasoline Prices (Including Taxes),” U.S. Energy Information Administration, updated February 18, 2010, http://www.eia.doe.gov/emeu/international/gas1.html, accessed February 2010.


11

To assuage consumer concern about the higher up-front cost of EVs compared to ICE vehicles—due in large part to the EV’s expensive battery—Better Place sought to improve affordability through

a subscription service.74 According to this model, after purchasing a vehicle, drivers would buy contracts, similar to mobile-phone plans, giving them access to Better Place’s battery-switch and charging network and to the batteries themselves; Better Place would retain ownership of the

batteries, thus reducing the cost of the vehicle to consumers.75 Mileage plans would be available at different prices and at both variable and fixed rates.76

Better Place piloted its first recharging spots in Israel in 2008 and had similar sponsored projects in early stages of development in Australia, Canada, Japan, Hawaii, and California. In January 2010, the company announced it had received $350 million in financing from a group of investors led by global banking giant HSBC. According to one article, “The agreement marks one of the largest clean tech

investments in history, and puts the value of Better Place at $1.25 billion.”77

Fuel-Cell Infrastructure

Fuel-cell power had its own unique refueling burden. There were only 78 operational hydrogen

filling stations in the U.S. and Canada in 2010—27 in California alone.78 Converting a gas station to supply hydrogen would cost an estimated $2 million and there were 162,000 gas stations across the U.S. that might ultimately need converting.79 In addition, energy experts estimated that the creation, transportation, and storage of the compressed hydrogen that FCVs needed would be more expensive than gasoline. 80 Hydrogen could be difficult to procure and, once isolated, had to be pressurized. Furthermore, it was more explosive than gasoline.

In 2009, the Obama administration abruptly ended funding to Bush’s CAR program,81 claiming there had already been much progress in hybrid and plug-in EVs, that the infrastructure investment requirement for hydrogen fueling stations was too great,82 and that fuel cells delivered little cost

benefit to the end-consumer.83

Regulation and Government Intervention

In many countries, gasoline was heavily taxed in order to encourage lower consumption and reduce emissions. (See Exhibit 17 for selected countries’ gas prices and taxes in 2008.) In 14 European countries, consumers paid an additional tax on CO2 emissions. In the United Kingdom, for example, not only did drivers pay a 161% tax on gasoline, but new-car buyers also paid a levy tax that increased in conjunction with the vehicle’s CO2 emission rate. The CO2 tax consisted of an expensive

payment when buying the car and a recurring annual penalty.84 Since the implementation of these additional taxes, in conjunction with other controls, CO2 emissions per person had decreased (see Exhibit 18). In France, Finland, and Canada, consumers faced a similar three-tiered tax and incentive plan. Those who bought cars with CO2 emissions over 160 g/km paid a polluter tax, while those who bought cars with CO2 emissions below 130 g/km received a rebate.

While there had been some attempts in the U.S. to regulate gasoline consumption, there was greater support for allowing market forces to control prices and consumption. Over the years, the U.S. government had attempted to promote fuel efficiency by imposing Corporate Average Fuel Economy (CAFE) standards on automakers (see Exhibit 19), but this had not reduced national reliance on imported oil, as had been intended. One commonly criticized aspect of CAFE was the exemption of vehicles certified as light trucks and SUVs from the more stringent standards imposed on passenger vehicles. Critics argued that the standards were outdated because they had been enacted before SUVs soared in popularity.


12

In virtually all cases where the new alternative-fuel vehicles had sold well, some government incentives had been offered. In China, sales of BYD’s first HEV were low until the government began offering subsidies and rebates. In the U.S., federal tax credits (and, in some cases, state government incentives) were made available for HEVs and qualifying diesel-powered cars. The credits ranged from $500 to $3,500 and were available to all models purchased until sales reached a certain volume,

at which point the credit was phased out; this helped Toyota sell its millionth Prius in May 2008.85

In addition to promoting HEV adoption, the federal government tried to reduce emissions and fuel consumption through the 2009 Car Allowance Rebate System (CARS), dubbed the “Cash for Clunkers” program. As part of an economic stimulus plan, the federal government set aside $3 billion to purchase inefficient used cars from people who bought fuel-efficient new vehicles. 690,000 cars were taken off the road and replaced with new, more fuel-efficient ones—mainly ICE cars. The University of Michigan estimated that the program improved the average fuel economy of all

vehicles purchased by 0.6 mpg in July 2009 and 0.7 mpg in August.86

The Obama administration initiated a plan to encourage development of EVs, calling for a $2.4

billion investment with a goal of having one million PHEVs and EVs on the road by 2015.87 A federal tax credit of up to $7,500 would be offered with the purchase of plug-in EVs such as GM’s Volt and

Nissan Leaf.88 In addition, Obama announced revised fuel-efficiency standards in May 2009. The new policy, crafted by the White House, state governments, and the auto industry, called for each company to achieve, by 2015, a 39-mpg minimum averaged across all the new cars it sold and 30 mpg across all the new trucks it sold.89

In January 2010, Americans paid federal, state, and other taxes on gas averaging about $0.47 per gallon (the federal portion was $0.18 per gallon). Gas taxes were highest in the western U.S., at nearly $0.60 per gallon.90 Some observers called for heftier taxes on gasoline, hoping such measures would encourage lower fuel consumption and stimulate a transition to alternative-fuel vehicles.

The Road Ahead

In the upcoming years, consumers would have many new car choices. How would they react? Would they be willing to make the lifestyle trade-offs required for PHEVs and EVs, such as recharging their cars daily and planning ahead for long trips? Although many Americans saw the switch from ICE vehicles as inevitable—accepting that the supply of oil would eventually run out—it was unclear how quickly this switch would occur. Would a near-term shift towards non-ICE vehicles require government intervention? (Could a change so fundamental occur without it?) What could firms do to stimulate demand for hybrids and electric-powered vehicles? What kind of marketing incentives might firms use to encourage the adoption of these new fuel-efficient models?

As the race to convince consumers to adopt alternative-fuel cars heated up, the firms that could answer these questions most accurately and promptly stood to gain tremendously.


13

Exhibit 1 Fossil-Fuel Supply Projections

Source: Stanley Reed, “Endless Oil,” BusinessWeek (online) citing Cambridge Research Associates, January 7, 2010, http://www.businessweek.com/magazine/content/10_03/b4163046952385.htm, accessed February 2010.

Exhibit 2 U.S. Gas Consumption in the Latter 20th Century

Source: U.S. Department of Energy Information, Petroleum Navigator, June 29, 2009, http://tonto.eia.doe.gov/dnav/ pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS2&f=A, accessed February 2010.


14

Exhibit 3 Pictures of EV1 (Left) and RAV4-EV (Right)

Sources: “General Motors EV-1,” Wikipedia.com, http://en.wikipedia.org/wiki/EV1; and “Toyota RAV4 EV,” Wikipedia.com, http://en.wikipedia.org/wiki/Rav4-ev; both accessed February 2010.

Exhibit 4 U.S. Vehicle Purchases by Type, November 2009

Monthly U.S. Sales

November 2009 HEVs HEV Share

Cars 378,154 16,068 4.2%

Pickup Trucks 97,263 0 0.0%

Crossover 159,221 2,018 1.3%

Minivan 42,928 0 0.0%

SUV 69,362 1,248 1.8%

Total 746,928 19,334 2.5%

Source: Adapted from www.motorintelligence.com, accessed December 2009.

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Exhibit 6 Changing Opinions about Global Warming, Survey Results, April 2008 and October 2009

Fewer Americans See Solid Evidence of Global Warminga

Is there solid evidence the earth is warming

April 2008 (%)

October 2009 (%) Change

Yes: 71 57 -14

Because of human activity 47 36 -11

Because of natural patterns 18 16 -2

Don’t know 6 6 0

No 21 33 +12

Mixed/Don’t know 8 10 +2

100 100 How serious a problem?

Very serious 44 35 -9

Somewhat serious 29 30 +1

Not too serious 13 15 +2

Not a problem 11 17 +6

Don’t know 3 3 0

Source: “Modest Support for ‘Cap-and-Trade’ Policy: Fewer Americans See Solid Evidence of Global Warming,” The Pew Research Center for the People & the Press, press release (Washington, DC, October 22, 2009), http://people-press.org/reports/pdf/556.pdf, accessed December 2009.

a Figures may not add up to 100% because of rounding.

Exhibit 7 Carbon Dioxide Concentration and the Earth’s Surface Temperature, 1880–2010

Source: NASA-GISS, CDIAC, NOAA-ESRL

CO2 Concentration

Temperature Change

http://www.c2es.org/docUploads/co2-temp.jpg


17

Exhibit 8 U.S. Pricea of Gas per Gallon, July 2007-January 2010

Source: Measuring Worth website, citing U.S. Energy Information Administration; http://www.measuringworth.com/ uscompare/#, accessed January 2010.

a Chart uses price of a gallon of leaded regular from 1949 to 1976, price of both leaded and unleaded from 1977 to 1990, and unleaded thereafter.

Exhibit 9 U.S. Hybrid Sales, Specific Models and Total, 1999-2009

Source: “July 2009 Dashboard,” Hybrid Cars website, August 6, 2009, http://www.hybridcars.com/hybrid-sales-dashboard/july-2009-dashboard.html, accessed December 2009.

Note: Total U.S. passenger and light-truck sales for each year from 2004 to 2009 were: 16.9 million, 16.9 million, 16.5 million, 16.2 million, 13.2 million, and 11.1 million. Sources: “Global Automotive Industry Outlook 2009: Impact of Economic Slowdown on the Future of Auto Sales and Production,” Frost & Sullivan, March 2009, p. 27; and Efraim Levy, “Autos & Auto Parts,” December 20, 2007, Standard & Poor’s Industry Surveys via NetAdvantage, accessed April 2010.

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24

Exhibit 16 U.S. Primary Energy Production by Source, 2008 (quadrillion BTU)a

Source: Compiled from U.S. Energy Information Administration, “Annual Energy Review 2008,” Table 1.2, June 26, 2009, http://www.eia.doe.gov/emeu/aer/pdf/pages/sec1_7.pdf, accessed February 2010.

a BTU stands for “British Thermal Unit,” a measure used to describe energy content.

Exhibit 17 Comparative Gasoline Prices and Taxes, 2008 (US$ per gallon)

U.S. UK Germany France

Retail Price $3.25 $7.53 $7.72 $7.53

Fuel Price $2.84 $2.88 $2.86 $2.96

Tax ($) $0.41 $4.65 $4.86 $4.57

Tax (%) 14% 161% 170% 154%

Source: Adapted from Robert Pirog, “The Role of Federal Gasoline Excise Taxes in Public Policy—Table 1,” Congressional Research Service, September 11, 2009, http://assets.opencrs.com/rpts/ R40808_20090911.pdf, accessed February 2010.

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20

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25

Exhibit 18 U.K. Carbon Emissions per Capita (metric tons per person)

Year Metric Tons per Person

1960 11.1

1970 11.5

1980 10.3

1990 9.9

2000 9.3

2005 9.1

2008 8.5

Notes: New CO2 taxes applied to cars first registered on or after March 1, 2001.

Source: Compiled from World Bank Data Finder, http://datafinder.worldbank.org/co2-emissions?cid=GPD_27, accessed September 2009, and Wikipedia http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions_ per_capita, accessed June 2012.

Exhibit 19 CAFE Standards and Fuel Economy, 1975-2007

Source: U.S. Department of Transportation, “Summary of Fuel Economy Performance,” December 9, 2009, www.nhtsa.dot.gov, accessed February 2010.


26

Endnotes

1 Bureau of Labor Statistics, “Consumer Expenditure Survey 2008,” http://www.bls.gov/cex/, accessed February 2010.

2 U.S. Dept. of Transportation (DOT) Federal Highway Administration (FHA), “Highway Statistics 2007—Licensed Drivers, Vehicle Registrations, and Resident Population,” http://www.fhwa.dot.gov/ policyinformation/statistics/2007/dlchrt.cfm and http://www.fhwa.dot.gov/policyinformation/statistics/2007 /pdf/fi200.pdf, accessed February 2010.

3 “New Study Shows Multiple Cars Are King in American Households,” TheAutoChannel website, February 12, 2008, http://www.theautochannel.com/news/2008/02/12/077438.html, accessed February 2010.

4 “Advanced Technologies & Energy Efficiency,” Fuel Economy website, http://www.fueleconomy.gov/ FEG/atv.shtml, accessed February 2010.

5 U.S. Environmental Protection Agency (EPA), “Automobile Emissions: An Overview,” August 1994, http://www.epa.gov/reg5oair/mobile/auto_emis.html, accessed February 2010.

6 Bijoy Kumar, “The Millennium Cars—Part 1,” Business Standard, July 30, 1999, via Factiva, accessed February 2010.

7 Waldo Proffitt, “Electric Car Lives in Spite of GM,” Sarasota Herald-Tribune, May 17, 2008, via Factiva, accessed February 2010.

8 “Newscast: General Motors Removes its EV1 Electric Car from the Market,” CBS News: The Early Show (transcript), March 12, 2003, via Factiva, accessed February 2010.

9 “Global Consumers Vote Al Gore, Kofi Annan, and Oprah Winfrey Most Influential to Champion Global Warming Cause: Nielsen Survey,” Nielsen press release (Jakarta, July 7, 2007), accessed February 2010.

10 Richard Curtin, Yevgeny Shrago, and Jamie Mikkelsen, “Plug-in Hybrid Electric Vehicles,” University of Michigan website, 2009, http://www.ns.umich.edu/Releases/2009/Oct09/PHEV_Curtin.pdf, accessed February 2010.

11 Alex Taylor III, “Toyota: The Birth of the Prius,” Fortune via CNNMoney.com, February 21, 2006, via Business Source Complete, accessed February 2010.

12 Measuring Worth website, http://www.measuringworth.com/uscompare/#, accessed February 2010.

13 U.S. DOT FHA, “Highway Statistic 2007—Annual Vehicle Distance Traveled in Miles and Related Data…,” http://www.fhwa.dot.gov/policyinformation/statistics/2007/vm1.cfm; and U.S. Energy Information Administration (EIA), “Annual Energy Review 2008—U.S. Primary Energy Consumption by Source and Sector, 2008,” June 26, 2009, http://www.eia.doe.gov/emeu/aer/pecss_diagram.html; both accessed January 2010.

14 Micheline Maynard, “Waiting List Gone, Incentives are Coming for Prius,” New York Times, February 8, 2007, via Factiva, accessed February 2010.

15 John LeBlanc, “Cheaper Gas Dampens Sales of Priuses; Toyota Delays Hybrid’s Plant in U.S.; Chrysler Kills Small Car Plans; Z4 to be Hardtop Roadster,” Toronto Star, December 20, 2008, via Factiva, accessed February 2010.

16 LeBlanc, “Cheaper Gas Dampens Sales of Priuses.”

17 “US Sales as Reported by the Manufacturers,” HybridCars website, http://www.hybridcars.com/hybrid-sales-dashboard/december-2009-dashboard.html, accessed February 2010.

18 “Hybrids Post Strong US Sales in November; Up 82% Year-on-Year,” Green Car Congress website, December 6, 2007, www.greencarcongress.com/2007/12/nybrids-post-st.html, accessed February 2010.


27

19 “Get Toyota to Bring its Hybrid Minivan to America!” Care2 website, http://www.thepetitionsite.com/ takeaction/479837782, accessed February 2010.

20 “Toyota Sienna Hybrid,” Newcarpark website, posted by site administrator November 10, 2008, http://www.newcarpark.com/blog/?p=121, accessed February 2010.

21 John Voelcker, “2010 Toyota Prius Marketing Theme: Harmony Between Man, Nature, and Machine,” “All About Prius” website, May 11, 2009, http://www.allaboutprius.com/blog/1020596_2010-toyota-prius-marketing-theme-harmony-between-man-nature-and-machine, accessed February 2010.

22 Chris Isidore, “Auto Sales Up—But Not for Toyota,” CNNMoney.com, February 2, 2010, http://money.cnn.com/2010/02/02/news/companies/auto_sales, accessed February 2010.

23 “2010 Fusion,” Ford website, http://www.fordvehicles.com/cars/fusion, accessed February 2010.

24 “Lexus Hybrid Drive—Frequently Asked Questions,” Lexus website, http://www.lexus.eu/hybrid/ faqs.aspx, accessed February 2010.

25 San Abuelsamid, “GM to Discontinue Mild Hybrid Malibu, Vue, Aura for 2010 Model Year,” Autoblog.com, June 11, 2009, http://www.autoblog.com/2009/06/11/gm-to-discontinue-mild-hybrid-malibu-vue-aura-for-2010-model-y/, accessed February 2010.

26 U.S. EIA, Form EIA-826, “Monthly Electric Sales and Revenue Report with State Distributions Report,” January 15, 2010, http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_b.html, accessed February 2010.

27 Joseph R. Szczesny, “As Electric Cars Arrive, Where Will They Plug In?” Time (online), Nov. 18, 2009, http://www.time.com/time/business/article/0,8599,1940117,00.html, accessed February 2010.

28 Peter Valdes-Dapena, “GM Debuts the Chevy Volt,” CNNMoney.com, September 16, 2008, http://money.cnn.com/2008/09/11/autos/volt_official_reveal/?postversion=2008091614, accessed February 2010.

29 “2011 Volt—Electric Car,” Chevrolet website, http://www.chevrolet.com/pages/open/default/future /volt.dol; and “Chevy Volt: Reasons for Use and Cost of Operation,” http://gm-volt.com/chevy-volt-reasons-for-use-and-cost-of-operation; both accessed February 2010.

30 Tony Borroz, “Toyota Promises an ‘Affordable’ Plug-In Prius in 2011,” December 14, 2009, http://www.wired.com/autopia/2009/12/toyota-plug-in-prius-2011/, accessed February 2010.

31 Miho Nagano, “GM, Toyota Plug-in Electric Cars Put a Charge into LA Auto Show,” Investor’s Business Daily, December 7, 2009, via Factiva, accessed May 2010.

32 “Karma by Fisker Automotive,” Fisker website, http://karma.fiskerautomotive.com/pages/preorder, accessed February 2010.

33 Curtin, Shrago, and Mikkelsen, “Plug-in Hybrid Electric Vehicles.”

34 Posted on MBTR website, http://forums.mtbr.com/showthread.php?t=557218, accessed February 2010.

35 Robert Mullins, “Fire Hazard Prompts Gigantic Dell Laptop Battery Recall,” PCWorld website, August 14, 2006, http://www.pcworld.com/article/126735/fire_hazard_prompts_gigantic_dell_laptop_battery_recall.html, accessed February 2010.

36 Michael Totty, “The Long Road to an Alternative-Energy Future,” Wall Street Journal, February 22, 2010, via Factiva, accessed May 2010.

37 Tesla website, www.tesla.com, accessed February 2010.

38 “Detroit 2010: Tesla Model S Electric Luxury Sedan Coming in 2012,” January 2010, http://www.autoguide.com/auto-news/category/manufacturers/tesla-manufacturers, accessed February 2010.


28

39 Tesla website, www.tesla.com, accessed February 2010.

40 BYD website, http://www.byd.com/showroom.php?car=e6, accessed February 2010.

41 Norihiko Shirouzu, “Will Green-Car Incentives Clear Path for BYD?” Wall Street Journal (blog), December 10, 2009, via Factiva, accessed February 2010.

42 Martin LaMonica, “China’s BYD to Bring Electric Cars to U.S. in 2010,” CNET News.com, August 24, 2009, via Factiva, accessed February 2010.

43 Nissan website, www.nissan.com, accessed February 2010.

44 “Answers: Charging,” Nissan website, http://www.nissanusa.com/leaf-electric-car/faq/view/12#/leaf-electric-car/faq/view/12, accessed May 2010.

45 Steve Parker, “Nissan Leaf EV: One Man’s Vision, Now Reality,” Huffington Post, August 4, 2009, http://www.huffingtonpost.com/steve-parker/nissan-leaf-ev-back-story_b_250642.html, accessed February 2010.

46 “Nissan Will Steer Clear of Hybrid Look for First EV,” Automotive News, May 25, 2009, via Factiva, accessed February 2010.

47 “Electric Car Darwinism: Th!nk Falters,” HybridCars website, December 2008, http://www.hybridcars.com/news/thnks-falters-electric-car-darwinism-25348.html, accessed February 2010.

48 Todd Woody, “Is Think Still a Norwegian Car Company?” Green blog, New York Times, August 2009, http://green.blogs.nytimes.com/2009/08/27/is-thnk-still-a-norwegian-car-company/, accessed February 2010.

49 Comment posted in response to “Ford Focus EV,” HybridCars.com, http://www.hybridcars.com/ vehicle/ford-focus-ev.html, accessed February 2010.

50 Eric Williams, “Plug-in and regular hybrids: A national and regional comparison of costs and CO2 emissions,” Nicholas School of the Environment at Duke University, CCPP 09-04, November 2009.

51 Michael Kintner-Meyer, Kevin Schneider, and Robert Pratt, “Impacts Assessment of Plug-in Hybrid Vehicles on Electric Utilities and Regional U.S. Power Grids,” Pacific Northwest National Laboratory, November 2007, http://energyenvironment.pnl.gov/publications/publications_grouplist.asp?id=14, accessed February 2010.

52 “Volkswagen of America Announces November Sales,” Volkswagen press release (Herndon, VA, December 01, 2009), http://media.vw.com/index.php?s=43&item=533, accessed January 2010.

53 Mark Gillies, “Diesel: Audi Says It’s the Way of the Future (Again),” Car and Driver, December 15, 2009, http://blog.caranddriver.com/diesel-audi-says-it%E2%80%99s-the-way-of-the-future-again/, accessed February 2010.

54 Capacity of 100 l/21.98 imperial gallons w/MPG-imperial 23.3 non-diesel and 31.7 diesel, as shown in “The New Audi Q7, Pricing and Specification Guide, Valid from December 2009,” http://www.audi.co.uk/ content/dam/audi/production/PDF/PriceAndSpecGuides/q7.pdf, accessed February 2010.

55 “Model Year 2010 Fuel Economy Guide,” U.S. Department of Energy and U.S. Environmental Protection Agency, 2010, p. 21, http://www.fueleconomy.gov/feg/FEG2010.pdf, accessed February 2010.

56 “How Fuel Cells Work,” http://www.fueleconomy.gov/feg/fcv_PEM.shtml, accessed February 2010.

57 “Recently Tested Vehicles,” http://www.fueleconomy.gov/feg/fcv_sbs.shtml, accessed February 2010.

58 “FCX Clarity FAQs,” Honda website, http://automobiles.honda.com/fcx-clarity, accessed February 2010.

59 “FCX Clarity,” Honda website, http://automobiles.honda.com/fcx-clarity/, accessed February 2010.

60 “Solutions—Overview,” Coulomb Technologies website, http://www.coulombtech.com/solutions.php, accessed April 2010.


29

61 “Products—Charging Stations,” Coulomb Technologies website, http://www.coulombtech.com/products -charging-stations.php, accessed April 2010.

62 Chris Casacchia, “An Electrifying Development,” Portfolio.com website, December 29, 2009, http://www.portfolio.com/business-news/2009/12/29/coulomb-technologies-to-install-electric-car-chargers-throughout-southwest/, accessed February 2010.

63 Sebastian Blanco, “Coulomb’s ‘Gas’ Pump ChargePoint Ups the Ante with 30-minute Electric Car Refills,” Autobloggreen website, January 16, 2010, http://green.autoblog.com/2010/01/16/coulombs-gas-pump-chargepoint-ups-the-ante-with-30-minute-ele/, accessed February 2010.

64 Ibid.

65 “Drivers—FAQ,” ChargePoint website, http://www.mychargepoint.net/faq.php, accessed May 2010.

66 “The Solution—Charging,” Better Place website, http://www.betterplace.com/solution/charging/, accessed April 2010.

67 Ibid.

68 “Israel Partnership,” Better Place press release (January 21, 2008), http://www.betterplace.com/global-progress/israel/, accessed April 2010.

69 Ibid.

70 Ibid.; and “Better Place Announces Denmark Agreement,” Better Place press release (November 19, 2008), http://www.betterplace.com/global-progress/denmark/; both accessed April 2010.

71 Justin Bergman, “Denmark Leads Europe’s Electric Car Race,” Time (online), February 14, 2010, http://www.time.com/time/world/article/0,8599,1960423,00.html; Steven Erlanger, “Israel is Set to Promote the Use of Electric Cars,” New York Times, January 21, 2008, http://www.nytimes.com/ 2008/01/21/world/middleeast/21israel.html; and Clive Thomson, “Batteries Not Included,” New York Times, April 16, 2009, http://www.nytimes.com/2009/04/19/magazine/19car-t.html; all accessed April 2010.

72 Justin Bergman, “Denmark Leads Europe’s Electric Car Race”; and Nelson D. Schwartz, “In Denmark, Ambitious Plans for Electric Cars,” New York Times, December 1, 2009, http://www.nytimes.com/ 2009/12/02/business/energy-environment/02electric.html; both accessed April 2010.

73 Chris Squatriglia, “Better Place Unveils an Electric Car Battery Swap Station,” Wired.com, May 13, 2009, http://www.wired.com/autopia/2009/05/better-place/, accessed May 2010.

74 Anouk Lorie, “Shai Agassi: One Man’s Mission to Turn All Cars Electric,” CNN World website, April 19, 2010, http://www.cnn.com/2010/WORLD/meast/04/19/electric.cars.agassi.israel/index.html, accessed April 2010.

75 “Better Place Model—Frequently Asked Questions,” Better Place website, p. 1, http://www.betterplace.com/ images/uploads/BetterPlace_FAQs.pdf, accessed April 2010.

76 Martin LaMonica, “Q & A: Better Place’s Electric Car Plans, Brilliant or Nuts?” CNET Australia website, April 24, 2009, http://www.cnet.com.au/q-a-better-place-s-electric-car-plans-brilliant-or-nuts-339296126.htm, via Better Place website, http://www.betterplace.com/news/P180/, accessed April 2010.

77 Tony Borroz, “Better Place Gets $350 Million Funding,” Wired.com, January 25, 2010, http://www.wired.com/ autopia/2010/01/better-place-gets-350-million-funding/, accessed February 2010.

78 National Hydrogen Association, Hydrogen Fueling Station Database, http://www.hydrogenassociation.org/ general/fuelingSearch.asp, accessed February 2010.


30

79 Greg Blencoe, “Hydrogen Fueling Station Cooperatives: The solution to the hydrogen infrastructure ‘chicken and egg’ problem,” January 27, 2009, www.fuelcells.org/Blencoe_Chicken&EggSolution.pdf, accessed February 2010.

80 National Hydrogen Association, Hydrogen Fueling Station database, accessed February 2010.

81 “FCX Clarity,” Honda website, http://automobiles.honda.com/fcx-clarity/, accessed February 2010.

82 David Biello, “R.I.P. hydrogen economy? Obama cuts hydrogen car funding,” Scientific American (online), May 8, 2009, http://www.scientificamerican.com/blog/post.cfm?id=rip-hydrogen-economy-obama-cuts-hyd 2009-05-08, accessed February 2010.

83 David Welch, “Obama’s $2.4 Billion Electric Car Bet,” Business Week (online), August 5, 2009, http://www.businessweek.com/autos/autobeat/archives/2009/08/obamas_24_billi.html, accessed February 2010.

84 “New Road Tax Prices—2009 Guide,” Auto Trader website, http://www.autotrader.co.uk/ EDITORIAL/CARS/FEATURES/new_road_tax_prices_2009_guide.html, accessed February 2010.

85 “New Energy Tax Credits for Hybrids,” http://www.fueleconomy.gov/Feg/tax_hybrid.shtml, accessed February 2010.

86 Michael Sivak and Brandon Schoettle, “The Effect of the ‘Cash for Clunkers’ Program on the Overall Fuel Economy of Purchased New Vehicles,” University of Michigan Transportation Research Institute, September 2009, p. 1, http://deepblue.lib.umich.edu/bitstream/2027.42/64025/1/102323.pdf, accessed February 2010.

87 Welch, “Obama’s $2.4 Billion Electric Car Bet.”

88 “Introducing Chevrolet Volt,” Chevrolet website, http://www.chevrolet.com/pages/open/default/ future/volt.do, accessed February 2010.

89 Bryan Walsh, “Obama to Tighten Fuel-Economy Standards,” May 19, 2009, Time (online), http://www.time.com/time/health/article/0,8599,1899534,00.html, accessed February 2010.

90 “Gasoline Taxes—January 2010,” American Petroleum Institute website, http://www.api.org/statistics/ fueltaxes/upload/January_2010_gasoline_and_diesel_summary_pages.pdf, accessed February 2010.

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