DEC Panel: EVs Huge Opportunity For Michigan

Electric vehicles won't be taking over the world any time soon, but even at a small fraction of the overall auto market, EVs are a multibillion-dollar opportunity for Michigan.

That was the view of a panel of EV experts convened Wednesday by the Detroit Economic Club.

Even if they only grow to the predicted 3 to 8 percent of the auto market, EVs will be a $14 billion-a-year industry by 2014, with EV production capacity jumping from 100,000 a year worldwide to 1.7 million in 2016, according to panelist Dan Galves, a vice president at Deutsche Bank and member of its automotive equity research team.

"This is not a mass adoption story over the next five or 10 years," Galves said. "But there are enough people from a social and environmental standpoint ... to make this work."

David Vieau, president and CEO of A123 Systems, said his Massachusetts-based company will be hiring "a couple of thousand" people at its Michigan operations over the next two years, having hired 1,000 already. He said the company found Michigan had plenty of engineering and manufacturing talent that met its needs -- though the automotive recovery may make it a little tougher to recruit in the future.

Vieau also launched an impassioned plea to get America off imported oil, saying that besides spending a billion dollars a day on the oil itself, America spends $500 billion a year on other costs, including part of the defense budget, to ensure the availability of that oil.

Vieau also pointed out that the market finally seems ready for feasible electric cars. In 2008, he said, there were five companies making 13 models with some form of electrification, virtually all hybrids. By 2012, there will be 36 carmakers building 116 models featuring some type of electrification, featuring several pure electric models.

"The trend is definitely a progression toward electric vehicles," Vieau said.

Micky Bly, executive director for global electrical systems, infotainment and electrification at General Motors, said that besides hugely publicized cars like the Volt, GM is also spreading hybridization and "light electrification" to other vehicles, like the Buick LaCrosse and Regal.

"We want to offer customers choices," Bly said. And even limited hybridization can boost fuel economy 20 to 25 percent, he added.

Bly also said GM engineers are already at work on the battery technologies that will be used by the next-generation Volt.

Vieau said universities and the federal government are pouring research money into improving battery technology like never before. A123 alone has 80 PhD's working on it. The goal is batteries that operate efficiently in a broader temperature range; offer battery packs of fewer, larger cells, which makes the packs more efficient; and increasing energy density.

Vieau said he believes batteries can be cut in cost by half within five years, which allows automakers to cut costs, or boost range, or some of both.

Vieau also said he didn't think electrifying cars would trade dependence on foreign oil for dependence on lithium for batteries. He said there was ample supply of lithium for the foreseeable future, and it's scattered around the world, including China, Latin America, Canada and the United States.

And EVs work even without government subsidies, Galves said -- at current prices, the cost of a tank of gas to take you 450 miles is about $60. At current electric prices, the electricity to take you 450 miles in an electric car is $13. If the typical driver fills up twice a month, she'll save $1,200 a year in an electric car. The batteries in an electric car cost an extra $12,000, Galves said, meaning someone who drives the car 10 years breaks even.

"If batteries indeed fall in price by 50 percent you won't need subsidies," Galves said.