Automotive analysts – including this one – have been predicting a comeback for diesel cars in the United States for several years.  Demand in the United States has indeed been steadily rising in recent years.  According to the HybridCars Dashboard, sales rose from just over 58,000 in 2009 to 125,522 in 2012, a compound annual growth rate of 29%. Despite these rising sales, though, diesel’s share of total passenger car sales has persistently remained well below 1%.  In 2010, diesels captured 0.7% of U.S. passenger car sales, while in 2012, diesels captured 0.87%.  So why the hype over clean diesels in the United States?

First, the reality is that all alternatives to conventional gasoline cars are but a tiny portion of the total U.S. car market.  Hybrids are selling around 3 times the number of diesel cars – which means that, more than 15 years after the Prius was introduced, hybrids still only capture 3% of the market.  Plug-in vehicles are receiving a huge amount of attention, as they represent the potential to be a disruptive technology.  However, while we’ve seen a significant uptick in sales in the United States, from roughly 18,000 in 2011 to 53,000 in 2012, PEVs are an even smaller percentage of the U.S. car market than diesels.

Annual Sales of Clean Diesel and Hybrid Passenger Cars, United States: 2009-2012

(Source: HybridCars Dashboard)

Second, as has been discussed in this blog, automakers must come up with an array of fuel-efficient options to meet the stringent federal Corporate Average Fuel Economy (CAFE) standards for 2017 and beyond.  While automakers will primarily focus on modifications to conventional gas cars, diesels may well appeal to a different demographic than small, fuel-efficient gas cars.  The diesel Chevrolet Cruze, to be introduced for model year 2014, offers an example.  The diesel Cruze gets 42 mpg on the highway.  While this is the same highway mpg as the gasoline-powered Chevrolet Cruze Eco, the Eco is equipped with a manual transmission, and U.S. drivers are not big fans of manual transmissions.

Volkswagen (VW) just released the results of a survey that found that the likely clean diesel customer is also different from the average hybrid customer.  VW’s survey indicated that, while both groups are concerned with fuel efficiency, diesel buyers tend to be more concerned about torque and acceleration, while the hybrid drivers are more motivated by the car’s eco-friendliness.  These results suggest that the soon-to-be-introduced hybrid Jetta will not compete with the diesel Jetta – the best-selling diesel in the United States – but will expand VW’s appeal to a different type of efficiency-conscious consumer.  This survey will be heartening to automakers as they marshal a combination of diesel, hybrid, start-stop, plug-in technology, and other options to meet the CAFE standards.

Automakers in the United States, Asia, and France have been at the forefront of plug-in electric vehicle (PEV) development since the vehicles hit the mass market reality.  Tesla, Chevrolet, Nissan, Mitsubishi, Renault, and a slew of Chinese automakers have led the charge since 2008, but no German automaker had placed a PEV in a major market until March.

German companies have been hard at work placing hundreds of PEVs in lease-only test fleets and car share programs in the United States and Europe.  The three major German automakers, Daimler, Volkswagen, and BMW, along with their subsidiaries, all announced deployment schedules last month for their long awaited PEVs.

The first German PEV to hit the mass market was Daimler’s smart fortwo ED, which went on sale in March for $25,000.  The ED is the smallest and cheapest highway-capable PEV available in the United States.  Close behind the ED is BMW’s i3, which will have a range of around 100 miles.  BMW has done much to assuage any potential range anxiety by connecting the vehicle’s infotainment system to analyze road topography and real-time traffic data to provide the most accurate range estimate possible.  Buyers of the i3 will also have an option for a small gas engine to accompany the vehicle’s all-electric range, giving it an extra 80+ miles.

Risk & Reward

In 2014, Mercedes, another Daimler company, will deploy the B-Class E-Cell, which has a drivetrain designed by Tesla and a range of around 115 miles.  Germany’s biggest automaker, VW, and its subsidiaries Audi and Porsche will also launch their respective models in 2014: the VW e-up!, the Audi A3 e-tron, and the Porsche Cayenne e-hybrid.  The VW e-up! is a compact battery electric vehicle (BEV) and will be compatible with the SAE DC Combined Charging System, a.k.a. the combo connector.  The Audi A-3 e-tron will be the first German plug-in hybrid (PHEV) and is expected to have an all-electric range of more than 30 miles.  The Cayenne e-hybrid, also a PHEV, will be a crossover and is expected to have an all-electric range of at least 15 miles.

The hesitation by the German automakers to market their vehicles until now carries risks, as the first entrants to the fuel efficiency market have historically retained their market dominance (e.g., the Toyota Prius).  The hesitation, though, might pay off because real world deployments of PEVs have resolved much of the uncertainty concerning PEV acceptance.  March sales of PEVs in the United States were nearly 200% higher than March 2012 results.

The Washington, D.C. area’s bike share program – Capital Bikeshare – is frequently cited as one of the best in the country.  This is a minor claim to fame, considering that programs in Canada and Europe are far more developed than ones in the United States.  However, it’s refreshing for the nation’s capital to be cited as a leader in urban planning, since it’s frequently in the news for less desirable reasons.

Since Washington is actually a small city, the Bikeshare program has grown through partnerships with neighboring municipalities.  With a population of about 600,000 within the city limits, Capital Bikeshare would struggle without the participation of three neighboring jurisdictions: the city of Alexandria, Virginia’s Arlington County, and Montgomery County in Maryland.  Capital Bikeshare continues to work to enlarge the service area and broaden its appeal, which helps secure its position in D.C.’s transportation network – unlike SmartBike, a similar service in the District that finally failed in 2011.

Battery Powered

Capital Bikeshare doesn’t specify what type of battery is used in its stations, just that the stations need at least 4 hours of sunlight to charge each station’s “solar battery.”  These batteries, together with the solar PV at each station, are used to power the locking and release mechanisms that secure the bikes, as well as the computerized system that allows users to rent bikes.  In all likelihood, the battery in each station is something like the “solar” series of lead-acid batteries from East Penn.

Capital Bikeshare has over 175 stations in the D.C. metro area.  Bixi, the company that manufactures the bikes and the stations, also operates in Montreal (the original pilot project launched in 2008), Toronto, Boston, Pittsburgh, and New York.  All told, Bixi likely has between 1,100 and 1,400 stations in operation.  If all these follow the same formula as the stations in D.C., that’s up to 1,400 battery storage installations in urban centers across North America.

Other cities with successful bikesharing programs include Barcelona (420 stations), London (570+ stations), and Paris (estimates range between 1,200 and 1,450 stations).  Of the non-Bixi programs, it isn’t clear which use solar (and consequently batteries) to power stations.

This isn’t to say that integrating small solar PV for bikesharing stations will be the next big market for energy storage.  However, anything that helps consumers to understand what storage can do for solar PV (and vice versa) – even at bikesharing stations – will eventually help those same consumers understand the benefits of storage in their homes, businesses, and transportation networks.

It’s clear that fuel economy remains an important part of the purchase decision for a vehicle, but it doesn’t appear to be the greatest driver of innovation in this arena.  In 2011, about eight in ten people we have surveyed say that fuel economy is either “important” or “extremely important” in their purchase decision.  While this points to market demand today, the industry is focused on developing technology to meet new corporate average fuel economy (CAFE) requirements that won’t take effect until after model year 2017.

At the Automotive Megatrends conference in Dearborn, Michigan, the looming fuel economy and zero emission vehicle (ZEV) requirements dominated the powertrain discussions that I participated in.  For example, the panel on alternative drivetrains focused heavily on technology that can meet the CARB’s zero emission vehicle (ZEV) requirements.

ZEV Reality Check

Some argue that this sort of government intervention in the market is unrealistic, when ultimately the free market will decide.  This was made clear in Toyota’s presentation during the alternative drive panel, in which Tom Stricker, Vice President of Technical & Regulatory Affairs and Energy & Environmental Research, pointed out that hybrids have achieved 6% of the market in California in the past 13 years.  The question he essentially asked was: is it realistic to think that the market will reach 2.5 times that share for ZEVs within the next 13 years?

The answer is likely no, but the circumstances are certainly different than they were a decade ago.  Rising fuel prices are pushing greater interest in reduced petroleum fuel consumption.  There’s greater product support, with six ZEV models in showrooms (seven if you were to count CODA) only 2 years after introduction, compared to half that number of hybrids 2 years into their launch.  Not only are the vehicles available, but they are clearly cars customers want and customer satisfaction is high.

Of course, the challenges for ZEVs remain.  Public recharging infrastructure isn’t yet ubiquitous.  Our survey found a large disconnect between the expected and actual price of electric vehicles.  Finally, consistent range throughout the year remains a challenge.  Even so, 13,916 ZEVs sold nationwide last year.

To meet the upcoming mandates, I expect that we’ll see some additional experimentation in the coming years, in battery leasing, price reductions, and perhaps even different battery size options.  Of course, legal battles and delayed regulations aren’t off the table either.