For the past few years, PHEVs have become a major focus at the
society of Automotive Engineers' annual hybrid conference in San
Diego. This year, several long-time doubters continued to raise
questions about the benefits and paybacks of PHEVs. Here's Jack
Rosebro's report in Green Car Congress. It's followed by over 60
comments, many of which are worth reading. Go to
http://www.greencarcongress.com/2008/02/to-phev-or-not.html to scan
them and follow the links in the story.

To PHEV or Not To PHEV (At Least in the Near-Term)
17 February 2008

CAPTION: Menahem Anderman's value analysis for advanced vehicles.
Anderman argues that because the benefit delta between HEVs and
conventional vehicles is larger than that of the jump between HEVs
and PHEVs, and because PHEVs carry a much larger negative impact, the
appropriate near- to medium-term focus is on building the HEV market.

Two of the consistent threads in the discussions and presentations of
the 2008 SAE Hybrid Vehicle Technology Symposium last week in San
Diego were (a) explorations of the near- to -medium-term technical
viability of plug-in hybrid electric vehicles (PHEVs)--which mainly
(although not entirely) means the viability of the lithium-ion
battery technology--and (b) the desirability of pursuing PHEVs now,
versus alternatives such as focusing on broadening the conventional
HEV market and treating PHEVs as a longer range solution.

Looming over both threads was the question of market demand and
behavior: would a sufficient number of consumers buy PHEVs to make
the effort required to develop and to produce them financially and
environmentally worthwhile?

On the OEM side, the most forceful proponent of a plug-in approach
was GM, as Pete Savagian, Engineering Director, Hybrid Powertrain
Systems Organization, outlined some of the market rationale driving
GM's decision to push hard on the Volt Extended Range Electric
Vehicle (E-REV), as well as describing some of the company's recent
analysis of real-world benefits. (Earlier post.)

Although both Chrysler and Ford have PHEV trial projects underway
(the Sprinter PHEV for Chrysler and a plug-in version of the Escape
hybrid for Ford), their presentations reflected the lower level of
shorter-term commercialization commitment those companies currently
have made to the plug-in platform, compared to GM.

In his presentation outlining Ford's next-generation hybrids (earlier
post), Sherif Marakby, Ford's Chief Engineer for Sustainable Mobility
Technologies, said that PHEVs represent a potential opportunity to
reduce petroleum fuel consumption, essentially buying society time by
closing the gap until more advanced technologies and renewable fuels
become readily available.

Ford is collaborating with Southern California Edison a set of
research Escape PHEVs. The Escape PHEV is based on a 10kWh Li-ion
battery pack developed in partnership with Johnson Controls-Saft
(earlier post), and are getting as much as 120 mpg in testing,
according to Marakby. The Escape PHEV powertrain operates in three
distinct modes: electric drive (ED) mode, blended mode (a combination
of engine operation and charge-depleting electric drive), and
conventional hybrid mode. Ford and SCE are also exploring V2G
applications of the PHEV platform.

Chrysler's Gary Oshnock, Environmental and Energy Planning, while
spending more time describing his company's upcoming two-mode hybrid,
noted that the test fleet of Sprinter PHEVs will give Chrysler the
opportunity to develop lithium-ion battery technology which will
complement its future hybrid, fuel cell and pure electric systems.

In his presentation describing Nissan's work with its next-generation
lithium-ion batteries (earlier post), Toshio Hirota noted that the
company sees plug-in hybrids as a potential mechanism to reduce CO2
output in the shorter term., but that it has concerns that include
battery cost, market demand, and the CO2 intensity of electricity.

None of the three more engineering-oriented presentations from Honda
or Toyota dealt with the PHEV topic. Toyota described the evolution
of its motor design as implemented in the Lexus LS600h and LS600hL
luxury hybrid transmission. Honda described its model-based approach
to hybrid-electric vehicle design, as well as a concept Rankine-cycle
system coupled with a hybrid drive. (Earlier post.)

However, John German, Manager of Environmental and Energy Analysis
for Honda and one of the organizers of the SAE symposium, took an
unscheduled opportunity to present a few slides calling into question
the near-term benefit of plug-ins.

While acknowledging that "plug-ins are likely to be one of the
alternatives to fossil fuels," German said that given the projected
near-term economics, a premature focus on plug-ins might deliver less
benefit than focusing on expanding the market share of conventional
hybrids. In his remarks, German referenced economic payback analysis
from the American Council for an Energy Efficient Economy (ACEEE), as
well as a detailed May 2007 study by Matthew Kromer and John B.
Heywood at MIT on the prospects for electric powertrains in the US.

The plug-in hybrid offers a striking opportunity to reduce petroleum
consumption to a level half of that offered by the hybrid vehicle. In
addition, while the plug-in hybrid's business-as-usual GHG emissions
do not project a significant benefit, they offer a continuous path
for incremental improvement through decreased carbonization of the
power sector--an opportunity that does not exist for the hybrid vehicle.

>...At the same time, the PHEV is a less cost-effective way to reduce
>petroleum and greenhouse gas emissions than the hybrid (particularly
>in the near-term); and, due to its higher upfront cost, it will have
>a harder time penetrating the market. The plug-in hybrid also faces
>greater technical and infrastructure risk than the HEV: while the
>hybrid has already enjoyed market success, the plug-in hybrid still
>requires significant improvements in battery technology to meet the
>rigors of an automotive duty cycle. And while the infrastructure for
>supporting hybrid vehicles is already mature, deploying the plug-in
>hybrid at scale will require regulation to ensure that off-peak
>generation capacity is used; depending on geography, it could also
>require capacity expansion. While the infrastructure issues
>represent a relatively low barrier to deployment, the technical
>challenges will delay the time-to-market for the plug-in hybrid.
>
>Taken together, the long time to market penetration and the lower
>cost-effectiveness of the plug-in hybrid suggest that the HEV offers
>a higher leverage, lower-cost path to reducing petroleum and GHG
>emissions in the near-term. However, given the upper bound on the
>HEV's effectiveness, the plug-in hybrid offers a mid- to long-term
>path to continued reductions.--Kromer and Heywood (2007)

At the conference, Menahem Anderman of Total Battery Consulting would
develop aspects of that argument more fully in his presentation on
prospects for the lithium-ion battery market.

Anderman, a consultant to the automotive energy storage industry who
also organizes the annual Advanced Automotive Battery and
Ultracapacitor Conference, publishes an annual report on the
industry. The 2008 report will be published later this year, but
Anderman presented some updated results on the 2007 report.

Based on his interviews with automakers, integrators and cell and
battery pack developers, he anticipates the entire market for hybrids
to hit about 1.1 million units in 2010, with about 750,000 of those
being from Toyota. Those HEVs will predominantly use NiMH packs, with
Panasonic EV being the dominant provider, and Sanyo in the number two
position.

The lithium-ion battery market, by contrast, is much more volatile,
and still faces a technology shake-out in terms of cathode and anode
chemistries, cell design and packaging, manufacturing, safety and
cost. There are more than 20 providers who say they expect to be in
the market in 5 years, according to Anderman.

>If I believed what everyone says about the viability of other
>cathodes [than their own], there would never be a lithium-ion
>automotive battery. --Menahem Anderman

Anderman projects that lithium-ion cells batteries will represent a
market of about $300M by 2012, and begin their ramp-up in 2013. That
means, he noted, a major shift to Li-ion for hybrid platforms around
2014. Lithium-ion will be the preferred technology for hybrids "at
some point in the future," he said.

However, a PHEV, he said, due to the requirements of battery size,
drive system and vehicle design, is too expensive for the value.
Anderman projected a cost of $600/kWh for the pack. (In an earlier
presentation, Ric Fulop from A123Systems projected $500/kWh.) "I
don't like it, but it is. Not liking it will not solve the problem."

>The environmental and societal benefit in moving from HEVs to PHEVs
>is smaller than that of moving from conventional vehicles to HEVs,
>but there is a much larger negative impact on consumer value. In
>moving from a PHEV to fuel cell HEVs, there is no additional
>benefit--and maybe even less. But the negative impact on consumer
>value is much higher. With battery electric vehicles, there is more
>benefit, but also more negative impact. The PHEV may be a long term
>solution. --Menahem Anderman

Anderman's current take is that PHEVs are unlikely to reach
commercial volumes in the next seven years, and that while it is not
ready for commercial introduction now, the business risk in pursuing
the platform now is "tremendous".

PHEVs are, however, he noted, considerably more realistic than fuel
cell vehicles in the 10-20 year timeframe. In the longer
term--assuming much higher cost of fuel or government policies--a
PHEV in a blended control strategy could become attractive.

PHEVs are a detour and not a step forward, Anderman said, if:

* For the sake of the PHEV, car and battery companies dilute their
efforts to expand conventional HEVs and to introduce li-ion batteries
into the market;

* If governments miss the opportunity to provide incentives for
conventional HEVs, "the only electrified vehicle technology that can
make an impact on the environment in the *

* If the PHEV is rushed to market by bypassing prudent automotive
engineering design, verification, qualification and supplier
management standards.

PHEVs are a step forward, he said, if fuel cell vehicle development
resources are redirected toward PHEVS.

Anderman's conclusions about the economic viability of PHEVs were
vigorously questioned by Dr. Mark Duvall from EPRI (Electric Power
Research Institute), who had just preceded Anderman on the dais with
a presentation on the impact of PHEVs on emissions and on the utility
industry.

>I'm gratified to see $600/kWh cost figure. At $600/kWh there are
>many highly likely near-term scenarios where PHEVs can pay back.
>What I'm saying is that we did a cost study, we think it's
>credible...and it disagrees dramatically with you...There is greater
>leeway to discuss this. We can't assume the negative impact on
>consumer value. We have to look at entire value equation of the
>vehicle.--Mark Duvall

The transportation sector has to do much more than plug-ins, Duvall
noted. His most optimistic projections show plug-ins pulling up to
500 million tons of GHG out of the sector. "The transportation sector
has to do way more." Noting that HEVs would only deliver a very small
portion of the total reduction required, Duvall said that to say we
should develop the HEV market fully and then pursue other avenues
wasn't viable.

In one of the opening presentations of the symposium, Tom Turrentine,
an anthropologist with the PHEV Research Center at the University of
California Davis presented his research that indicates that contrary
to what some in the auto industry may think, consumers tend not to
calculate paybacks.

>Consumers don't calculate paybacks, but they want better mpg. The
>dual fuel nature of the PHEV is a primary market feature for
>consumers...they can choose. It's the meanings which motivate
>buyers. Motivation is driven by emotions. --Tom Turrentine

For its part, the California Air Resources Board (ARB) has a number
of initiatives under way to support a more rapid development and
deployment of PHEVs, as ARB's Craig Childers described in his presentation:

* In the more immediate term, the $1.6M Alternative Fuel Vehicle
Incentive Program (AFVIP) provides grants of up to $5,000 to
qualified individuals, businesses, public agencies and entities, and
non-profit organizations that purchase or lease an eligible AFV. PHEV
drivers will receive the full $5,000, although the PHEV must be
ARB-certified and have at least a 10-mile equivalent all-electric
range. PHEVs are the only flexible-fuel vehicle that qualify;
conventional hybrids do not.

* California's AB 118, signed into law in October 2007, is a
seven-year program funded by vehicle license fees that will provide
around $205 million each year to be applied in clean air, fuel and
vehicle technology.

* And ARB staff has proposed amending the Zero Emission Vehicle (ZEV)
regulations to create a "New Path" that would provide a strong
incentive for the development and deployment of PHEVs in the period
from 2012-2017). (Earlier post.)

After a presentation by Lee Slezak from the Department of Energy that
outlined the breadth of the DOE support activities for the
development of PHEVs--development research on power electronics and
electric machines (PEEM), research on energy storage, modeling &
simulation, and testing & validation--Michael Duoba from Argonne
National Laboratory (ANL) provided a more detailed update on the
development of revised SAE J1711 test procedures--used to measure the
exhaust emissions and fuel economy of HEVs--to accommodate PHEVs.

>Test procedures are not something you think about at the end of a
>development project. You need to think about it in the beginning.
>PHEVs are significantly different from the conventional and hybrid
>vehicles and thus require a new testing paradigm. Since OEMs have
>announced production PHEV plans, the need for a revised J1711 has
>become urgent. --Michael Duoba

ANL PHEV testing is supporting the J1711 development--and also helps
the fine-tuning of PHEV systems development as well. A slide used by
Ric Fulop in his presentation used data provided by Duoba and his lab
showing the progression of three-generations of the Hymotion PHEV
conversion pack as it went through successive tweaks to address
successfully the emissions issue caused by the conversion. (Earlier post.)

Duoba also noted that ANL has made public basic data from the
dynamometer testing of hybrids and PHEVs via the Downloadable
Dynamometer Database "D3".

Resources: Matthew A. Kromer and John B. Heywood (2007) Electric
Powertrains: Opportunities and Challenges in the US Light-Duty
Vehicle Fleet (LFEE 2007-03 RP)