Hybrid Vehicles are Worth It!
Agreeing and disagreeing on the value of hybrid-electric vehicles as a tool for reducing air pollution
In March, IEEE Spectrum published an article examining the case for the hybrid-electric vehicle from an economic perspective ["Are Hybrid Vehicles Worth It?" by Lester B. Lave and Heather L. MacLean, March, pp. 47-50]. It concluded that hybrids were not economically worthwhile. Reader response to the piece was strong and almost universally negative.
As any long-time reader is aware, Spectrum has published many articles in favor of electric and hybrid-electric vehicles. Its editors still believe in their potential. But other points of view exist. The article by Lave and MacLean was published in the interest of exploring another side of the issue. In furtherance of that goal, a representative selection of the letters we received follows, along with a response from Lave and MacLean.
Flaws, Flaws, Flaws, Nothing but Flaws
I would like to take exception both to the premise and content of the article. The premise that vehicles should be produced solely in terms of the cost of production and the profits to the manufacturer is fatally flawed. If this were the only consideration, we would still be driving cars without seat belts or safety equipment.
The article is extremely flawed. The first error is in comparing the Prius with the Corolla. Both are fine cars, but, please, compare like vehicles. The Prius comes with antilock brakes, a CD player, lightweight wheels, and a 100 000-mile warranty on the drive train, and it is much quieter and more comfortable than the Corolla. A call to a local dealer gave me a price of US $17 369 for the Corolla, a $2626 difference as opposed to the $3495 quoted in the article. Thus the calculations begin with an $869 error.
The second error deals with performance. Since when is 0-60 mph [0-100 km/h] in 12.7 seconds "sluggish"? Maybe for sports cars, but certainly not for family vehicles. Most of the acceleration lag is in the first second or two of acceleration. Under passing and 20-55 mph [30-90 km/h] situations, the vehicle is very spirited. As a Prius owner, I have yet to encounter any situation where I felt hampered by lack of acceleration.
The third error has to do with the "social value" of abating emissions. Figures for social value are based on the negative, measurable effects of pollution on our economy and do not even take into account the social and health costs. Further, we are talking about pollution effects whose consequences are measured in hundreds of years, not something that is here today and gone tomorrow.
In my mind, lessening pollution is priceless. If you take an area such as Los Angeles, Denver, or New York City, the effect of thousands of Prius and Honda Insight vehicles would be dramatic.
Did the authors read their own data? Carbon monoxide emission is 36 times lower than the emission from the already low Corolla. Emissions of nitrogen oxides are 124 times less. These are real numbers that show pollution levels are an order of magnitude less than levels from today's small cars--and many times less than that when compared to the average commuter vehicle being purchased today or to the sport utility vehicles, or SUVs, fast becoming almost 50 percent of the passenger fleet in the United States. I would love to see an analysis of the cost of owning a Ford Expedition for commuting versus the same cost for a Toyota Prius.
Are hybrid vehicles worth it? Definitely! Hybrid vehicles are the best investment toward cost- and energy-efficient, ultralow-pollution transportation. Any other conclusion is based on a very shortsighted look at quick money, not at responsible transportation.
A Subsidy Is Warranted
The Prius-Corolla price difference of $3495 is not a valid difference. It is a measure of the premium people will pay for the perceived benefits of the HEV [hybrid-electric vehicle]. The waiting list for Prius buyers is two to four months long, but Corollas can be bought off the lot. Since buyers are willing to pay this premium, it is incorrect to take this to be a cost difference that must be made up by a subsidy if HEVs are to find a market.
Actually, the true cost difference between the Prius and the Corolla is a much larger number, because the loss taken by Toyota on each Prius sale is estimated at $9000-$20 000. Such a large difference clearly cannot be matched by the environmental benefits, so the basic thesis of the authors hardly warrants serious analysis.
What matters is the future difference in manufacturing cost, once engineering development is mature and economies of scale are brought to bear on HEV production. Will that future cost be low enough so that HEVs are competitive, or will subsidies have to supplement the consumer's voluntary price premium?
The societal benefit of each Prius is, by the authors' evaluation, as much as $639. Therefore, a subsidy of that size would certainly be justified. The authors' closing assertion that "Subsidizing HEVs...would not be in the public interest" is clearly invalid. The correct conclusion is that, if automobile buyers are willing to pay a $3495 premium for an HEV, and the societal benefits of the HEV warrant a government subsidy of as much as $639, then the future production cost of the HEV could exceed that of its gasoline equivalent by over $4000 and yet be competitive in the marketplace.
There are two sentences in the article worth repeating:
"Hybrid-electric vehicles (HEVs), such as the Toyota Prius, are a marvel of new technology that offer improvements in fuel economy and emissions--of both pollutants and greenhouse gases." [p. 49].
"... it is probably a good thing that those financial officers are not in charge of determining most companies' R&D agendas." [p. 47]
I look forward to Spectrum bringing us technical articles about the progress being made in electric cars, fuel cells, and batteries by engineers, not bean counters.
Like a Mid-Size Camry
Based on exterior body size, comparing a Prius to a Corolla as the authors do would be correct. But because of the internal flexibility that the hybrid affords the vehicle designer, the Prius actually has the interior cabin space of a Toyota Camry (that is, a larger and more expensive vehicle). EV Rentals, for example, the only car rental company in the United States that rents EVs and HEVs, rents the Prius as a mid-size car, comparable in other words to a Camry, not to a Corolla. That change alone would probably alter the economics enough to tip the scales toward the value of the hybrid.
Some other assumptions are also suspect. Gas prices might go down or hold steady at US $0.40/L for the entire life of the vehicle, but they might just as easily increase. Using and holding constant the range of currently existing abatement values is also suspect, because, again, social valuations of emissions abatement are only likely to increase over time as the environmental costs of those emissions grow.
But perhaps most important from an analytic perspective, Lave and MacLean do not consider the dynamic properties of the different technologies. Hybrid and internal combustion engine (ICE) vehicles exist at very different points in their developmental trajectories. Yes, today, the Corolla and the Camry are very efficient, well-optimized technologies, but they're also at the end of a 100-year technological trajectory. Yet the hybrid is more efficient today (ignoring price, for the moment) and also should gain from accelerating advances in the coming decades.
In addition, the Corolla is already being produced at or near minimum efficient scale (MES), so that per-unit production costs are near their theoretical minimum. But Toyota is nowhere near MES for the Prius (rough estimates are 50 000 units per year and may range as high as 100 000 units/year).
The authors further assume that the two vehicles operate in the same service environment. With increasing congestion and lower highway speeds predicted by all transportation experts, the "typical" auto use pattern may change over the course of the life of the two vehicles, tilting in favor of the hybrid, which delivers better performance in town and at slow speed than at highway speed.
Finally, the new 2001 Prius has just been released. In one U.S. model year, Toyota has made improvements that will surely dwarf whatever it can do for the Corolla in five years' time. With new battery technology, the new Prius electrifies 43 percent more miles than last year's model; its IC component has been upgraded, so there is no need to compensate with a "Perf-Prius," as the authors do. And interior space has been increased to boot.
Pollution Costs Are Key
The authors' social valuations of pollution abatement are surely unrealistically low. In the same issue's Spectral Lines ["More Heat On Global Warming Leaves Tech Agenda Unchanged," p. 9], there was a report on the United Nations' "Special Report on Emissions Scenarios" that predicted an impact on human populations sooner and worse "than anyone had originally imagined." Since the UN report was released just a couple of months ago, it is unlikely that the valuations used in "Are Hybrid Vehicles Worth It?" reflected the scenarios in that report.
Another point: Lave and MacLean analyze one vehicle, which does not justify a title that refers to an entire class of vehicles. General Motors in January announced it would be selling HEVs by 2004. Soon after, Ford Motor said that it would be selling HEVs by 2003. Both will target SUVs that now get about 15 mpg and could get 25 mpg [6.3 and 10.5 km/L]. Both say they will not reduce performance, and they expect a small price premium. I suspect they will be economically justifiable even with current valuations of pollution abatement.
Joseph M. Schachner
If the price of gasoline were artificially low, would people still consider a Prius? Check out Beijing on an average day. Do the authors really insist that people suffering from extreme pollution need to wait for fuel-cell technology to get relief? The technology is great, but it is not being sold yet in cars.
And do people buy cars based on marginal economic considerations? As I look out my office window, I see Porsches, Benzes, Beamers, and Jags filling the parking spots. Paying $3500 more for almost 80 percent better fuel efficiency is hardly extravagant compared to paying an extra $35 000 for a few extra seconds off the 0-60 chart for a top-end performance car. Do the authors not believe there is a market for people pushing the envelope of efficiency rather than the envelope of speed?
Why the attack on the most innovative Toyota on the market? Why hide behind the potential of fuel-cell technology while attacking hybrid benefits? One more fact: EV1s were not available to the public. The market rejected the EV1 because you just couldn't buy one!
No Future for "Big Iron"
I own a Toyota Prius and feel the article misses the point. The authors look only at the ability to accelerate to 60 mph [100 km/h]. By their standards I could drive a motorcycle that could out-accelerate any car and still get high mpg [mileage per gallon]. I could also pay $100 for a 1965 Oldsmobile that sucks gas and pumps massive amounts of pollution into the air. If it lasts a year, now there is some cost benefit for you!
The point is we are running out of resources and our city air is ghastly. General Motors and the others respond with new body types every year, but the underlying technology is old, old, old. This is strictly a bottom-line business for them. Look at the record: seat belts, air bags, emission reductions, and child safety locks were installed only when the auto companies were practically forced to.
For a major company to begin to move us into the future, some risks need to be taken. Enter the Prius. OK, it does not burn rubber, but would you want to in a commuter car? Buy a 400-hp rocket for that. A Prius won't haul a mobile home like the Ford Expedition can, but for a lone commuter it's fine. Taking into account fuel cost, insurance, and life span, it may not compare to other off-the-shelf cars, but it does advance the state of the art.
I love the car for what it is, a step in the right direction. I am not an "Earth First" radical. I have had SUVs and luxury cars--even two Harley-Davidsons--but I can see the future is not in the big iron.
I Love My Corbin Sparrow
As the authors see it, "Manufacturers have achieved steady progress on fuel economy..." I don't know what country they live in, but as best I can tell, the move to higher gas mileage has largely stalled.
Addressing electric vehicles, the article notes that "the lack of a charging infrastructure hurts." As a frequent driver of an EV (the Corbin Motors Sparrow, www.corbinmotors.com for details), I find the authors' contention false even for a pure EV. I have a 50-mile [80-km] daily commute, and charging stations are as close as the nearest 110-V outlet. The Sparrow employs conventional lead-acid batteries, which have a more than ample range to get me to the office, where I recharge while working. The effective charge time is a couple of minutes spent coiling and uncoiling the cord and plugging in.
I did not change my commuting habits one iota with the EV. I drive to work, spend several hours there, then return home, perhaps running errands on each trip to buy food or confer with those at other sites. For such use, no technology is needed beyond a fairly simple charger and a lead-acid battery pack.
The authors are effectively endorsing Detroit's position: that range is a fundamental barrier to adoption. This is more of a sociological question than a technical one, and I am always struck by the very different positions of those who have driven an EV on a regular basis and those that study them from afar.
Retail price of my Corbin Sparrow is $15 000, which would seem affordable by a great number of people. Again, the authors adopt the position of the major automakers that an EV should be just the same as any other car, other than the motive power. But a vehicle for moving a person from home to work and back is very different from one suitable for taking the family on a cross-country trip. The authors neglect other costs, caused by road congestion, parking shortages, etc., which a small vehicle like the Sparrow addresses very well.
In addition, while the authors do note that the pollutant analysis for EVs depends on the mix of types of power-generating plants, they not only assume that the current nationwide mix is fixed but that it is applicable. This is not so. California, for example has virtually no coal-burning generators (nor do the surrounding states that provide power). The authors contend as well that there are large unaccounted-for pollution sources in the manufacture of batteries. But many other studies support the contention that lead-acid batteries are recycled at efficiencies of well over 90 percent.
Keith H. Bierman
Palo Alto, Calif.
EV Breakthroughs Likely
Any vehicle powered all or in part by electricity awaits a breakthrough in one or more storage-, primary-, or fuel-cell technology--but no such breakthroughs are in the immediate future. However, this is not an issue of whether, but only of when. What is more, the solution will turn out to be appallingly simple.
As far as recharge time is concerned, that is merely a red herring. I do not carry an oil refinery in my vehicle, so why should I expect to carry a battery charger? If storage batteries prove to be the solution, they will be carried in cartridges that can be automatically removed and replaced in under a minute by the electric "pump." One will not even have to get out of the car, and certainly will not have to handle a smelly nozzle.
Kids, where are your imaginations?
Allen N. Wollscheidt
It's Propaganda, That's All
The article was a piece of propaganda by the sponsors of the so-called research.
It became obvious that something was fishy when the authors picked such a low number for the cost of pollution, and completely neglected the cost of defending overseas oil supplies. Some authorities put the cost of pollution and defense at over $10 per gallon ($2.5/L).
Also, in discussing electric vehicles, the authors used incredible numbers for the emission rates of pollutants from electric power plants. Such plants emit pollutants other than carbon dioxide at rates an order of magnitude below those of gasoline-powered vehicles.
It became obvious something was fishy when the authors picked such a low number for the cost of pollution and neglected the cost of defending overseas oil supplies. --Ed Stoneham
The authors' conclusion that "battery-powered cars lower environmental quality" is countered by Jim MacKenzie in his book, The Keys to the Car (World Resources Institute, Washington, D.C., 1994). MacKenzie cites at least four careful studies of the impact of battery electric vehicles on pollution. He concludes, "If large numbers of zero emission vehicles are introduced in the United States, oil consumption, air pollution, and greenhouse gas emissions will all drop."
I looked at the list of sponsors of the Carnegie Mellon "research" project mentioned with favor in the article and discovered Texaco and General Motors among them. These two companies are known to be waging a campaign against the acceptance of electric vehicles. It is no wonder, then, that the authors claim (as does General Motors) that the market for EVs proved extremely small, while all of us who have leased an EV1 know that there are year-long waiting lists of people trying to buy the vehicles. (Each of us knows at least a few people ready to sign for an EV1, if they were available. This market is ready to grow by 300 percent per year.)
Prius Not the Only System
A glaring error is the assumption that the Toyota Prius is the right model for hybrids. A report to be published shortly by the Electric Power Research Institute [Palo Alto, Calif.] will show that other system concepts can be much less expensive and simpler and that customer benefits can outweigh any cost factor. Also, the United States is not the only market for cars. Europe and Japan have gasoline and diesel costs that are three to four times U.S. costs, and many places have excess electric energy.
Andrew A. Frank
The hybrid vehicle does not need to make economic sense everywhere. It is quite possibly worth its weight in pollution abatement in Los Angeles, Mexico City, or Tokyo, while being a mere curiosity in Chicago or Sydney. It can also be a valid product for places where automobile pollution is unusually concentrated, and those markets may add up to quite enough to justify the technology.
The analysis was also too narrow. Yes, improving the omnipresent ICE is a great idea and fits today's mass market. But hybrids are at a qualitatively different level already, and so are well worth developing. Other solutions may also exist that will be unmatched by an ICE. We are going to need to experiment to get the kind of improved city environments we want. It is simply too risky to leave all our eggs in the ICE basket.
No Slouch in Real Traffic
The most egregious flaw in the article is the authors' use of the "Perf-Prius." They assume that the Prius has "sluggish acceleration" compared with an ordinary Corolla so they devise a hypothetical hybrid car, with higher fuel consumption and carbon emissions, to knock down. They obviously have never driven a Prius, or looked past the 0-60 mph [0-100 km/h] figures.
Hybrid drive systems have fundamentally different characteristics. Electric motors have high torque and fast response. Prius has stop-light acceleration (0-30 mph, or 0-50 km/h) and passing power (30-50 mph, or 50-80 km/h) as good as or better than other popular sedans. I am always first away from the light, and often pass Corollas up steep freeway hills. The electric drive gives this performance at full mileage and emissions efficiency. Prius is far from sluggish in real traffic.
They also assume the Prius has greater mechanical complexity. It has less. Toyota replaced complex failure-prone mechanical systems, such as the automatic transmission and hydraulic power steering, with reliable electronic systems. Prius has no clutches, bands or hydraulic fluids, just electric motor/generators, a few constant-mesh gears, IGBTs [insulated-gate bipolar transistors], and software.
Better Design Is Needed
The article provides misinformation about both EVs and HEVs. Lightweight materials are essential for all vehicles trying for better emissions, not just electric ones. The authors' assumption of EVs weighing so much more comes from the fact that most current EVs are still burdened (unnecessarily) by transmissions and differentials. These not only add significant weight (more than 300 lb, or 135 kg) but also rob power and efficiency. The effect is exponential because extra power is needed to overcome losses of transmission, which means larger motors and battery packs.
The authors explain "that a current Corolla emits 0.2 gram of NOx and 217 grams of CO2 per kilometer (for the entire fuel production and use cycle, not just its use in the vehicle)." I don't think so. The emissions cost of producing gasoline is more than that according to the chemical engineers I know who work in the field, which leads to an unfair comparison for an EV versus a normal car.
Also ignored (possibly) is the electric energy required to make gasoline. Half the power at a refinery is co-generated there. The other half is obtained from power plants, so some factor of pollution from power plants must be figured into the gasoline-driven Corolla.
The authors' main assumption is that current offerings are the best solution. The Prius is not state of the art by any means; it is hybrid and thus has two transmissions with the losses inherent in that. In industrial applications where efficiency of moving large masses is the key, all vehicles have electric drives with diesels generating real power (in locomotives, mining trucks, track cranes, etc.). Is this a coincidence? No, it is simply the most efficient way to spend energy. Hooking the diesel up to the wheels directly just simply is not efficient. So why are both of the hybrid offerings in the market designed this way? Because car companies cannot get rid of their sacred cow, the transmission.
A last gripe is that the authors, in my opinion, failed to do their homework. They should look up Vanadium Redox batteries, which can be quickly recharged by replacing the electrolytes or recharged like a normal battery, with their range extended by regenerative braking. The batteries should start trickling onto the market at the end of 2001.
The authors should also look into Powerball Technologies, in West Valley City, Utah. It has a solid hydrogen salt storage tank that lets a person carry a ton of hydrogen at low pressure safely. The tanks are available now along with salt pellet balls to store the hydrogen. This isn't pie-in-the-sky talk. Just because the automotive companies aren't doing something doesn't mean it can't be done.
Joshua T. Irish
Saint Paul, Minn.
The major criticism that is warranted about the Lave/MacLean article is the impression it gives that HEVs are "not worth it." Obviously, those in the automotive industry (Ford, GM, Toyota, Honda, and others) believe the HEV "is worth it." Even one of the accused "evil backers" of the Lave study, GM, is producing not one, not two, but four HEVs.
There is nothing new in the conclusion that it might not make economic sense to have an HEV instead of a vastly improved conventional car. In the first of many articles I have written about HEVs, back in December 1967 (not a typo), I proposed the HEV because of the looming crisis in car emissions and fossil fuel depletion. [Wouk is Spectrum's consultant on HEVs and EVs. --Ed.]
If we must reduce vehicular emissions and fossil fuel consumption by a large amount in a short period of time, we must use existing technologies.
The HEV was then, and still is, the only system that can go into production today, and it is going into production, which is what apparently spooks the authors.
New York City
The Authors Respond:
Thanks to the many people who sent e-mail or wrote to Spectrum. We apologize for not having the space to address each issue. Discovering the conditions under which an HEV will be attractive is complicated. However, having Stoneham (and others) impugn our motives does not help answer the questions. We work to find effective and efficient ways to increase environmental quality and sustainability. We have chosen to live close enough to our offices that we walk to work, thus avoiding the fuel use and emissions of any transportation vehicle.
Analysis and data
We analyzed the fuel savings and reduction in pollution emissions and carbon dioxide of an HEV compared with an ICE vehicle. Our analysis made the cars as comparable as possible, used a transparent method, and cited the data sources and assumptions.
Limbach and Irish question our data. Toyota provided Prius and Corolla data, including prices, 0-60-mph acceleration times, fuel economy, and emissions; it indicated that the Corolla LE was reasonably comparable to the Prius in size and appointments, contrary to Butts. Like McKay, we have heard that the cost of producing the Prius is $10 000 to $20 000 above the sales price. Industry experts indicated that even with large-scale manufacturing, an HEV would cost $3000 to $5000 more than a comparable ICE. So, $3495 seems a reasonable long-term price premium.
Other data sources are documented along with analyses in peer-reviewed publications. Data on the fuel production (upstream) emissions come from the U.S. Department of Energy. We know of no peer-reviewed publication that contradicts the numbers we quoted.
Valuation of emissions
Limbach questions our dollar values on pollutant emissions. Regulatory agencies are forced to set dollar values on pollutants, implicitly or explicitly. Society tolerates some pollution emissions in return for mobility and other benefits. The numbers we used are not our personal opinions. Rather, they come from regulatory agencies in several states.
We found these estimates similar to values in the scientific literature. Because the valuations differ across areas, as Bennett notes, and reflect the values of diverse people, we used both the median and the highest valuations of the pollutants. The analysis finds that if regulators were to mandate the Perf Prius in order to lower pollution emissions, they would implicitly be valuing NOx emissions at $40 000 per ton. Polluted cities have many ways of lowering NOx emissions at much lower costs. The point is that we have much cheaper ways to clean up the environment than to buy a Prius rather than a Corolla.
Gasoline prices and impacts
We show that the price of gasoline would have to be $5.10/gal [$1.35/L], equivalent to more than $100 per barrel of petroleum, in order for the greater fuel economy of the Perf Prius to recover its price premium over a Corolla. The many opportunities for saving petroleum at lower prices include reducing vehicle weight, increasing efficiency of trucks, and more efficient industry fuel use.
Adjusted for inflation, gasoline prices are near an all time low. Like Steiner, we don't know what future prices will be. In 1975, the OPEC embargo led to predictions of $100 per barrel by 2000--more than $300 per barrel in 2000 dollars.
A Prius is not comparable to a Land Cruiser (Steiner's point). There are huge savings in substituting a Corolla for a Land Cruiser; but trading a Corolla for a Prius gives tiny savings. Unlike older, larger vehicles, the Corolla's emissions are so low that little is gained from further reduction. If all the vehicles in California had emissions levels as low as the Corolla, stationary sources would dominate air pollution emissions. Some people buy a Prius because it is wonderful technology or sexy. We do not believe that hundreds of thousands of new vehicle buyers would pay $3495 more for a Prius than a Corolla unless its performance, fuel savings, or emissions justified the price premium.
Bierman and Stoneham are high on battery-powered vehicles (BPVs). The data suggest such vehicles are an endangered species. BPVs are not competitive beyond a few niche markets. They are costly and have limited range. They are not an environmental benefit: there are emissions from the electricity to charge the batteries as well as the discharge of heavy metals from the mining and smelting of the battery materials and the making and recycling of the batteries. A breakthrough in electrochemistry might change this conclusion some day.
If BPVs required 400-500 kg batteries and were a substantial proportion of the fleet, the demand for battery metals would skyrocket, driving up prices, particularly of the rare earths in nickel metal hydride batteries.
And contrary to what Stoneham and Fisk write, GM has put enormous effort into marketing the EV1.
Bennett and Kirsch note that we compare an evolutionary technology (the ICE automobile) with a promising new technology (the HEV). The Prius is likely to improve faster than the Corolla. We evaluated an advanced HEV having 50 percent better fuel economy than the Prius. It still does not pay back $3495 in fuel savings over its life.
The ICE has made enormous progress, particularly in the last 30 years, in fuel economy, emissions, and power. Improvements of the last 15 years have made vehicles peppier, rather than increasing fuel economy, as Bierman indicates. Automakers believe that consumers want performance more than fuel economy--the highest fuel-economic vehicles have under 1 percent of new car sales.
Technologists must be optimists. Otherwise they couldn't get out of bed in the morning. We encourage inventors and would like to see more resources devoted to research. Still, Limbach seems to believe that if you can build it, you should build it. Contradicting this view, the market regards feasibility as just one, weak indication of what is worth producing.
The conventional wisdom is that the ICE will be phased out. Our analysis indicates that the ICE is a tough competitor and cannot be dismissed. We encourage research on advanced technologies. We question whether the best use of Toyota and Honda resources is a large subsidy for the manufacture of each HEV, rather than allocating the resources to research. The improvement in the ICE auto makes life difficult for alternatives, but conveys a large benefit to society.