To a vice president of R&D, a chief financial officer looks like Oscar Wilde's cynic--someone who knows the price of everything and the value of nothing. So it is probably a good thing that those financial officers are not in charge of determining most companies' R&D agendas. If they were, their cost analyses would condemn the majority of projects as unlikely to meet the companies' desired return on investment, and the world might be without such modern marvels as disk drives and cell phones.
Sometimes, however, the bean counters get it right, as with the battery-powered cars built by General Motors Corp., the EV1, and Toyota Corp., the RAV4 EV. Both companies have discontinued manufacturing those "pure electric" (powered by batteries only) vehicles after investing nearly half a billion dollars in R&D and millions more in promotion and subsidies. The cars simply failed to find a market.
In contrast, the direct-injection diesel engine has revolutionized diesel (compression-ignition) engine technology, producing solid improvements in efficiency, cold weather starting, and noise reduction.
To invest, or not to invest, that is the question. R&D planning often comes down to discerning whether a new technology will create a revolution or offer only a tiny improvement at too high a cost, wasting time and resources. While this analysis has no magic answer to the general question, it evaluates the outlook for three advanced electric vehicle technologies that are the subject of great hope and large R&D expenditures. The analytic approach provides insights for evaluating a wide class of new technologies so that auto manufacturers can determine the price and performance necessary to appeal to consumers or environmental regulators.
To lower emissions of pollutants and greenhouse gases and to improve the fuel economy of cars, automakers have been working on improving internal combustion engines (ICEs) as well as three electric vehicle (EV) technologies: battery-powered "pure" electric vehicles, hybrid electric vehicles, and vehicles powered by fuel cells.
Manufacturers have achieved steady progress on fuel economy and remarkable progress on emissions using conventional technologies, making it difficult for electric vehicle technology to compete. Battery-powered cars have three inherent limitations, plus the additional handicap of a skimpy charging infrastructure. First, because batteries store much less energy per unit mass than gasoline tanks do, EVs wind up being heavy vehicles with low payloads. Admittedly, electric drives make possible regenerative breaking and "zero" energy use at idle. They are also capable of rapid acceleration, but the General Motors EV1 offered motorists only 65-113 km of driving between charges, compared with the 550-650 km of range of current vehicles powered by ICEs. The EV1 and RAV4 EV cars attracted no more than a few hundred U.S. customers because of their limited range and the several hours required to refuel (charge their batteries). New battery technologies increase the range by about 50 percent, which is a meaningful improvement, but still not enough to put them on a par with conventional vehicles.
This is why the lack of charging infrastructure hurts. The cars' limited range would be mitigated to a considerable extent if owners could be confident of finding a charging station whenever they needed one. However, it would still take much longer to recharge the batteries than to refill a gas tank.
A second issue is cost. The manufacturing cost of these vehicles is perhaps twice that of a conventional ICE vehicle because of lightweight materials, special features, and low production volume. Large-scale production would lower manufacturing costs but increase demand for battery materials. For example, for nickel-metal hydride batteries, the large demand increase for nickel, and especially cerium, would push up prices, perhaps offsetting the manufacturing cost savings.
The environmental impact of the vehicles depends on the source of the electricity generation; for example, a coal-fired plant has much higher emissions than a hydroelectric dam.