The hybrid solution

I've been fairly dismissive of hybrids in the past.  After all, it appears to make no sense to have two engines in a car.  And eventually, battery prices will fall enough to make full-on electric the cheapest way to go.  But—the problem is that battery prices won't get cheap enough to give EVs an up-front cost advantage for 5 years (or more—see below).  Plus, the demand for batteries is so strong that there aren't enough to go round, as I discuss in The EV Bridge.  And there's the issue of range anxiety.  If you buy a Tesla, you'll have no problems.  But any other brand, here in Oz, at any rate, there are just too few chargers. 

So, while EVs are clearly the technology of the future, for the time being hybrids (whether serial or parallel, plug-in or not) are still cheaper and more popular.  And since we must cut emissions as rapidly as possible, we should encourage any electric car, hybrid (HEV) or plug-in hybrid (PHEV) or full-on electric (EV).

The price gap between hybrids and the un-hybrid version of a car model seems  to be low (see Toyota's biggest selling hybrid isn't the Prius)—just US$ 2,200.  And that will deliver a 30 to 40% cut in emissions. 

Here's the 2019 pricing of the Hyundai Ioniq in the US:

Hybrid                $22,400
Plug-in Hybrid   $25,350
EV                      $29,815

Let's assume there were a Hyundai Ioniq without an electric motor, an "un-electric" as it were.  Using the Corolla price gap, it would cost, say $20,000.  This means that the full-on electric would cost roughly 50% more than the un-electric, the plug-in hybrid 25% more.  Even though both the plug-in hybrid and the full electric will be cheaper to run than the un-electric, the sales of these cheaper electric versions of the Ioniq still wouldn't replace sales of the un-electric, because ppl have to find the up-front cost of the car, whereas the petrol costs are spread over its lifetime.  You can lease a car, but not everyone is able or willing to do that, and HP requires a deposit and the costs are still mostly up-front.

So, what to do?

Let's suppose we gave a subsidy of $2,500 to all electric cars.  Using the Ioniq as an exemple, that would remove the up-front cost disadvantage of the HEV, reduce it for the PHEV to where the HEV's is today, and reduce the cost premium of the full-on EV relative to the un-electric to 37% from 50%.  With a $2500 subsidy, rational consumers would buy electric.  At first, most would buy the simple hybrid, though some would buy plug-in hybrids, and a few would buy the full EV.  Emissions would fall by at least 40% as the car fleet transitioned.

I don't know how much the Ioniq EV's battery bank costs, but the petrol engine + gearbox + radiator + petrol tank must cost more than an electric engine—look at the small gap between the HEV and the un-electric, which represents the addition of an electric engine plus a small battery.  This means the Ioniq's EV battery bank costs, say, $12,000.  In five years' time, given that battery prices are falling by 20% per annum, it will cost just $4000, so the cost of an EV Ioniq will be close to the cost of the HEV, and below the cost of the PHEV ('cos you'll only need one engine).  At that point, the subsidy will encourage ppl to buy the 100% electric car instead of the HEV.

Eventually, the EV would be cost competitive even without subsidy.  On the Ioniq's current pricing, EVs will equal the cost of an un-electric in 8 years (longer than I had thought—I've been estimating 2023 or 2024, but this suggests 2028).  The trouble is, we haven't got 8 years to waste.  We must electrify our car fleet as soon as we can.

Instead of a subsidy, we could set rising targets for electric (of whatever kind) sales as a percentage of total sales, starting at 10% and increasing each year by 15%, so that by 2027 the EV/HEV/PHEV target would be 100% .   It works like this.  If a car wholesaler/manufacturer reached their target, there would be no penalty.  If they didn't, they would have to buy points from those who have.  Let's say the target is 10%, but they only reach 8%.  They'd have to buy points equal to 2% of their total car sales.  If they exceeded the target, they would have surplus points available for sale.  But unlike the Californian and Chinese schemes, under my scheme, the manufacturer would earn 1 point for each electric car, whatever its type, rather than 1/4 point for an HEV, 1/2 a point for a PHEV and 1 point for an EV*.

The Californian and Chinese EV targets encourage sales of EVs over PHEVs and PHEVs over HEVs, by giving more points to the EVs than lesser electric cars.  But that distinction is prolly unnecessary, and may slow the uptake of electric vehicles.  As EV costs decline, they will automatically be chosen over HEVs and PHEVs.  A target/subsidy which simply rewards buying an EV of whatever kind would lead to a much bigger take-up of electric cars than one which rewards EVs only, because hybrids are only a little more expensive than un-electrics.  As battery costs decline over the next 7 to 8 years, sales of full-on EVs would rise progressively, until 100% of electric sales are made up of EVs.  This would mean that we could start cutting emissions from transport now, not in 5 or 7 or 10 years while we wait for EVs to become cost competitive.

 If at first electric sales are mostly HEVs or PHEVs, it wouldn't matter, because each year emissions of 1/12 of the vehicle fleet (assuming a 12 year car life) would fall, by an increasing percentage, as the electric target bit deeper.  After 6 years, emissions of an additional 1/12th of the total car fleet each year would fall by 40%, rising progressively as EVs took a larger and larger market share.  This would mean that total car emissions would be falling by 3% per annum from 2025 onwards, and this decline would continue and accelerate as the percentage of EVs in the mix rises.  Over the first 10 years, the cut in emissions would come from hybrids, over the next 10 from a further step-by-step switch to EVs.

The world must, at a minimum, target a 3% per annum cut in total emissions if we are to avoid a climate catastrophe.  By being less purist about HEVs relative to EVs, we can rapidly reduce emissions from cars (and implicitly, lorries and busses) starting now.  Almost all manufacturers have one or other kind of hybrid in their line-up.  And they have them now.  The transition would be simple and easy.  And from 2026 onwards, we could take the next step: going for 100% electric.

Two reviews of the Ioniq:


Hyundai Ioniq Hybrid 2019 review

Hyundai Ioniq 2020 review: Plug-in Hybrid Premium

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* or rather 1 point for an HEV, 2 points for a PHEV and 4 points for an EV, which implies that the effective EV target is lower than the stated one.

EVs in California and China

Source

I mentioned in a previous post that China has a target of 8% EVs and PHEVs (plug-in hybrid EVs) by 2018 and 12% by 2020.  So how will this work?  It's a kind of cap-and-trade system.  Every manufacturer who achieves the targets gets points/credits, with 100% EVs getting the most points, PHEVs getting less, but more than hybrids without a plug, which in turn get more that petrol-engined cars which get zero points.  If your EV/PHEV sales percentage is less than the target, you have to buy credits from manufacturers who have achieved the target.  This will make your cars more expensive than the cars from producers who have achieved their target.

The Chinese scheme is modelled on California's ZEV (Zero Emissions Vehicle) scheme.  The California scheme has been adopted by nine other states (Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Vermont).

The ZEV program assigns each automaker “ZEV credits,” which represent the company’s sales of electric cars and trucks. Automakers are then required to maintain ZEV credits equal to a set percentage of non-electric sales. The credit requirement is 4.5 percent of sales in 2018, rising to 22 percent in 2025. 

For example, an automaker selling 100,000 cars in California in 2018 will need at least 4,500 ZEV credits, with at least 2,000 coming from battery-electric or fuel cell vehicle sales. However, this does not mean they’ll sell 4,500 electric cars and trucks, as most ZEVs generate more than one credit per vehicle (see below).

Automakers earn credits by selling zero emission cars and trucks. The credit per vehicle varies with drivetrain type and electric range. From 2018 onwards, plug-in hybrids—which only partially drive on electricity—receive between 0.4 and 1.3 credits per vehicle sold. Battery electric and fuel cell vehicles receive between 1 and 4 credits, based on range.

For example: the Tesla Model S, which boasts a range of more than 200 miles, is eligible for 3.3 credits, while the 84-mile range Nissan Leaf is credited at 1.8 ZEV credits per car sold.

Because not all vehicles receive a flat 1 credit per sale, the ZEV credit percentage does not directly reflect the EV sales percentage. CARB’s most recent assessment of the ZEV program estimates automakers will need to reach less than 8 percent ZEV sales by 2025 to meet the 22 percent ZEV credit requirement.    [Read more here]

It seems odd to me that you would give an EV 1.8 or 3.3 ZEV credits but only require 1 credit to cover the EV requirement for producers who make or sell no EVS.  As the article points out, this has led to a build-up of surplus ZEV credits.   Which reduces the pressure on ICE manufacturers to increase their own EV/PHEV sales (because it reduces the price of the credits).

They're doing something similar in China.

Last week, Chinese Premier Li Keqiang met privately with German chancellor Angela Merkel to discuss China’s proposal to require all manufacturers to sell more so-called new energy vehicles. After the meeting, Merkel thought she had an agreement that would allow German companies that manufacture cars in China a little breathing room before complying with the new rules. 

But a notification posted online this week by the Legislative Affairs Office, which reports to the Chinese cabinet, says otherwise. It indicates that all manufacturers will be required to generate EV credits that equal 8% of sales in 2018, 10% by 2019, and 12% by 2020. The rule applies to both foreign and domestic car makers. 

The credits are computed based on the level of electrification of the cars produced. Fully electric cars earn more credits than plug-in hybrid cars, for example. Plug-in cars that go further on battery power alone are rewarded with more credits than cars that have more limited electric range. [Read more here]

So the question is; is China's 12% target also in effect lower because of over-issuance of credits or do they mean 12%?  I looked for clarification but found none.  For what it's worth I reckon China means a real 8% and a real 12%.  But they might not actually achieve it because of supply constraints for components.  All the same, the pressure is on, and those traditional car manufacturers will have to move rapidly if they want to preserve access to the world's largest car market, which makes up 35% of global car sales.

Update (17/9/17):  The Chinese system will be more similar to the Californian ZEV system than I thought.  Here's CleanTechnica on it:

The new model is not a timid one, with a very ambitious mandate of “8%” of all vehicle sales that must be hybrid, plug-in, or electric vehicles for 2018. The goal steps up to “10%” for 2019, followed by another increase to “12%” in 2020. The percentages are in quotes because they aren’t exact percentages where one gas car equals one electric car. A fully electric car with long range (a certain battery size, most likely) will be counted as 4 cars; a fully electric car that doesn’t hit that minimum range/capacity will count as 2 cars; and a plug-in hybrid will count as 1 car.

[Read more here]

Given that many Chinese EV sales are "city" cars with a small range or PHEVs, the actual required percentage targets are higher than they would be in California.