Navigant Research Blog

EVs Provide ‘Wheels-to-Workers’ Value

— October 3, 2011

When comparing a plug-in electric vehicle (PEV) to the venerable gasoline car, most of the talk surrounds the “well to wheels” comparison, which gauges the environmental impact of the vehicle and its fuel usage. This assessment, as well as the question about the return on investment for the car buyer, is a valid and complex topic to explore.

But what of the differences in job creation, or the “wheels to workers” value of shifting the fuel from largely imported fossil fuel to nearly entirely domestically supplied electricity?  Creating a job for their fellow citizen may not be on the mind of consumers when purchasing a vehicle, but when considering the national economic benefit, it deserves to be on the radar.

The Obama administration has bet heavily (with taxpayer dollars through the stimulus program) that the United States can compete in the manufacturing of PEVs and their most costly component, the battery pack.  Former Michigan Governor Jennifer Granholm recently spoke with Jon Stewart about the importance of this program in bringing jobs to her home state as nearly a dozen PEV battery companies have set up shop or expanded in Detroit and Indiana.

New companies such as Coda Automotive are also hiring workers to assemble the vehicles here.  You can argue that gasoline cars also require workers to build them, but how many internal combustion engine startups have launched lately?

However, looking at the jobs directly created during the manufacture of the vehicles is only a drop in the bucket.  PEVs are differentiated from their gas cousins because of the secondary job creation from the additional generation of power as well as the new infrastructure for delivering that power to the vehicles.

Most of the PEV charging equipment being installed here is manufactured (in part or in total) in the United States today, and those more than a million pieces of equipment that will be installed in the coming years will all have to be installed by electrical contractors as well as maintained.

Managing EV charging requires the building of new data centers, increased utilization of wired and wireless networks, and hiring of system operators who will monitor their status.  In coming years, utilities will have to hire software and communications engineers to integrate all of the data about EV charging into their networks, track all of the payments for the charging sessions, and hire new number crunchers to create algorithms to make sure that plugging in your Chevrolet Volt won’t cause a brown-out. 

Even the University of Delaware is hiring for the PEV industry thanks to a new company it is co-launching with NRG Energy to commercialize vehicle to grid (V2G) technology, which will be used to support the grid through ancillary services.

Finally, there’s all the extra juice that will have to be generated and sent across the wires to power the vehicles.  Just as there is a carbon benefit in swapping gas for electricity, replacing imported oil with domestic electrons is a net jobs creator.  While some folks may not be excited about the prospect of more coal miners at work, powering PEVs will enable an expansion of renewable power.

Solar going on rooftops (such as at car dealerships) will charge vehicles by day, and wind power will charge many them by night.  According to a 2009 study by the Berkeley Institute for the Environment and Vestas Wind Energy, renewable power creates more jobs than fossil fuel generation.

While not all investments in “green jobs” have panned out (hello Solyndra), we shouldn’t remain silent on the job multiplier around PEVs and their power consumption.  


Redesigning the Internal Combustion Engine

— September 28, 2011

Much of what you hear from Pike Research is focused on alternatives to the gasoline-fueled internal combustion engine (ICE).  Yet, as we often point out, gas-fueled ICE vehicles will remain the dominant vehicle through this decade and likely well into the next.  With hybrids and turbochargers, the efficiency of ICE vehicles will increase significantly.  However, the basic design of four-stroke engines with pistons pushing on a camshaft and valves for exhaust and air has remained relatively unchanged for decades.  I’m not saying this to shortchange the engineering work that has gone into improving these engines – that has been substantial – but the basic architecture is the same. 

Now, a couple of start-up companies are looking to change the design of motors in interesting ways.  Scuderi Group has designed what they call a split cycle engine.  In this design, the compression stroke and the power stroke are separated. Once these strokes are separated, the compression cylinder can be reduced in size which improves compression efficiency.  The air crossover tube provides air to the power cylinder.  The power cylinder sees greatly reduced temperatures post combustion which reduces nitrogen oxide (NOx) emissions in comparison to typical four-stroke engines.  The result is a four cylinder engine with two power cylinders and two smaller compression cylinders.

To improve efficiency, the Scuderi engine can still take advantage of a turbocharger.  But Scuderi claims that to truly improve efficiency, they can add a high pressure air tank between the compression and power cylinders (something they refer to as an “air hybrid”).  This air tank permits the engine to shut off the compression cylinders and use air from the tank to provide air to the combustion chamber.  It also allows the engine to shut off the fuel supply during idling or braking and use compressed air from the tank for the power stroke.  This turbocharged, air hybrid Scuderi engine has been tested to produce 65 mpg with 85g/km of CO2 emissions in a European high economy class vehicle, a 25% improvement in comparison to the average of 52 mpg and 104g/km of CO2 in this class.

Another design from EcoMotors transforms the engine to have two opposing cylinders with opposing pistons.  So, the pistons are essentially pushing against each other during compression.  The engine is still a four-stroke engine, but thanks to the moving pistons on each side of the cylinder, valves are no longer necessary, simplifying design of the engine.  EcoMotors claims up to 50% increase in fuel efficiency with their motors, with 50% fewer parts.  They have partnered with a Chinese firm, Zhongding Holding (Group) Company, Ltd., to manufacture and commercialize the engine.

When will we see these technologies in passenger cars on American roads?  With the high fuel economy rules coming, I would not bet against some special applications of these technologies.  However, car companies spend hundreds of millions of dollars to develop and test new engines over many years.  Even if one signed up today, I wouldn’t expect to see it in a vehicle prior to 2017 model year.  And other designs are competing for the R&D dollars in automotive firms, including rotary and turbine engines.

In my conversation with Sal Scuderi, he pointed out that of the 170 million engines sold per year, only 60 million of these are used in automotive applications.  The rest are power generation or other stationary applications.  Both Scuderi Group and EcoMotors are targeting this stationary market.  I believe this is logical first step since the safety and durability issues are more easily controlled in stationary applications.  New engine designs are more likely to be accepted in these markets.  But if the new designs prove as reliable, efficient, and cost effective as claimed in stationary applications (or in emerging automotive markets like China or smaller vehicles like scooters), expect to see movement towards non-typical designs in the automotive market, as well.



— September 28, 2011

As I write about energy storage on the grid, I also find myself thinking more about electric vehicles (EVs). Not only because EVs could participate in grid stabilization or destabilization, as the case may be, but also because nearly every lithium ion battery manufacturer building cells or packs for vehicles is also targeting grid applications. Lithium ion batteries and other electrochemical storage technologies show a great deal of promise for the grid storage market. In contrast, the success of EVs is more or less accepted as fact; the primary question is how quickly the market will grow.

One of the most compelling reasons to adopt an EV is to avoid high or unstable fuel prices by trading a gas tank for a battery. But, where will all these batteries for EVs come from? It turns out that of the 16 lithium ion battery cell manufacturers, most (and some of the largest) are based in Asia Pacific (APAC). Japan, South Korea, and China lead production. With the supply of a key component of EVs concentrated in a single region, what will the implications for the cost of lithium ion batteries be once vehicle adoption takes off and economies of scale are plentiful?

It’s unlikely that APAC would establish a formal cartel in the model of OPEC. Unlike petroleum, which is a natural resource, lithium ion batteries do not spring from underground battery deposits. Thus it’s difficult to imagine that the governments of Asia would manage battery supplies with as heavy a hand as the OPEC nations. Even so, lithium reserves are a natural resource and have been the object of more and more scrutiny lately.

For now, EV penetration is low enough that APAC market control is not an issue. In fact, estimates of the pace of EV adoption vary widely and there is a great deal of uncertainty regarding the decrease in the cost of lithium ion batteries over time and how the cost of the batteries will influence the adoption of vehicles. However, once EVs have reached a critical level of penetration, it will be anyone’s guess as to how the regional power dynamics might shift to reflect the changes in the automotive market.

Fundamentally, the batteries in electric vehicles are displacing petroleum; will we trade our dependence on one region for another?


Biotech Upstarts Spark Green Chemical Revolution

— September 28, 2011

Not only is it the basis for life on Earth, but carbon is also the center of the consumers’ universe. Just about everything we make, consume, exhale, and dispose of depends upon that six-electron molecule. Since the 1920s, our society has largely been based on petroleum-based products. Now however, chemical companies are capitalizing on advances in biotechnology and the results are electrifying the green chemistry sector.

The future of carbon-based products – think plastics, refrigerants, lubricants, fuels, or almost anything you use on a daily basis – looks green. While the chemical industry is led by established players, like DuPont, that have been around for as long as 200 years, exciting developments are coming out of startups that are applying their biotechnology innovation to the heart (or nucleus) of the traditional chemical industry. BioAmber,  Codexis, and Genomatica are all species of the industrial biotechnology world that have applied their production platforms to the chemical industry, using cleaner feed stocks (sugars and plants) in optimized processes to produce chemicals more efficiently. These biotech companies are targeting chemical production by making it more cost-effective to screen potential feed stocks or genetically modify them, generating competitors for petroleum-based feed stocks. Proprietary production processes can then run these feed stocks through in silico, or computer simulated, production processes which are optimized for efficiency and cost. In other words, they’re saving time and money by being green.

Mitsubishi Chemical, Cargill, and DuPont are all partnering with the firms like those listed above. Pike Research believes that alternative chemical production methods are likely to represent the fastest-growing segment of the chemical industry in the medium- to long-term. In a $4 trillion market, even small decreases in cost can result in significant gains.

In June 2011, the U.S. Environmental Agency acknowledged the innovation of Genomatica and BioAmber for advances in the Green Chemistry industry by bestowing the Presidential Green Chemistry Award on both firms. In addition to their partnerships with established giants in the traditional chemical industry, recognition such as this should help BioAmber and Genomatica pursue paths to market for their products. BioAmber is scheduled to begin commercial production this year, while Genomatica  – which filed for an IPO in August –anticipates production will begin in 2012.

 Pike Research forecasts that the green chemical market will grow at a compound annual growth rate of 48% over the next ten years.


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