Transforming the market for electric cars: The solution to "Range Anxiety"

Building the market for electric cars presents a tricky conundrum: charging.  People are less likely to want to buy an electric car if they are uncertain about being able to get it charged, and charging stations are not likely to pop up to serve these vehicles if there are few electric cars around.  This fear of running out of charge, "range anxiety," is  a significant obstacle to more widespread adoption.  I believe a forward-looking gas company can help break this logjam while also improving their market positioning.  Here's how.

Suppose one company, let's say Shell, installed chargers in every one of their stations in the Greater Washington area (or another region where there are electric cars on the road).  The key here is to install in every station, even though many will hardly get used.  It's a marketing strategy: make your stations synonymous with electric charging.  One company getting out ahead on this could create a very long lasting market advantage.  Put a charger in every station and make that information common knowledge to everyone.  The marketing has to be comprehensive, so that everyone knows those gas stations have charging stations; it becomes common knowledge. The stations and the marketing are loss leaders; a marketing strategy that pays off in more than one way.

Hypermiling in our Camry Hybrid

We purchased our 2007 Toyota Hybrid Camry in March of 2007 and I have previously written about it six times (first, second, third, fourth, fifth, sixth postings).

Last week I set a personal best for mpg on a trip we made to and from Philadelphia.  Our car records the mileage continuously from the time the tank is filled until it is filled again.  On the trip back, we stopped at the Chesapeake House rest area on I-95 at Mile Marker 98 in North East MD.  From there to our house in Arlington we traveled about 94 miles.  The mileage reading shown when we parked in front of our house is shown to the left.

Used Car vs. New Car (Reprise)

A couple of weeks ago I posted my take on the environmental impact of buying new vs. used (see post here). I received a thoughtful email from a reader in Colorado:
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Steve:
I have been thinking about the same question. When buying/trading used cars does MPG matter to the environment?

Most people, rightfully, want to do the right thing for the environment and get more fuel efficient vehicles. But let's go in the opposite direction for the sake of argument.

Let's say that at a used car dealership I hand in my Honda Civic and purchase your Ford Behemoth (and you do the same in the opposite direction) was our transaction environmentally net-net?

I would think so since both cars are in use. Your article seems to point to the same conclusion. Does this abdicate used car buyers from considering fuel efficiency in their purchases and trades?

While I agree wholeheartedly that NEW car purchases need to be as environmentally friendly as possible, to guide manufacturers towards more fuel efficient vehicles. I think that used car purchases are just shuffling owners. The miles in each car need to be 'used up' prior to it's replacement in the U.S./Global fleet with a (hopefully) more fuel efficient model.

I might even go so far as to argue that if you maintain your Ford Guzzler you are doing the environment a favor by keeping it out of the hands of a secondary market. Many of our cars that are highly used end up auctioned and sent to Central and South America, where people may not be able to afford to keep them running as efficiently as possible - or where they would not be subject to stringent emissions monitoring. (A statement of economic inequality, not character.) Where I live near Denver you can watch them parade on Wednesdays from the Used Car Auctions down I-25 headed south towards Juarez, Mexico. Will their new owners have the means to optimally maintain the functioning of the vehicle to ensure minimal environmental impact?

Such thinking would also lead me to believe that a Cash-for-Clunkers would have a long term, net benefit by taking the guzzlers out of the total fleet faster. Obviously, such thinking then also points to the efficacy of raising CAFE standards.

Thanks - I enjoyed your article!
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And thanks for reading and commenting.
Here's one more twist to think about. I have a colleague who suggests that as long as CAFE standards are in effect and the manufacturer you purchase from is not exceeding CAFE, then by buying a fuel efficient car you are just allowing the manufacturer to sell another less efficient (and more profitable) one, because they can do so and still keep their fleet average above the limit. There's probably a bit of truth to that--CAFE regulates a fleet average, and your purchase is just part of that overall average. However, it's a pretty complicated system (details here), so I'm not confident of my opinion. And all in all, I think the economic signal sent by purchasing a more fuel efficient car is the right signal to send, so I'll stand by my original post.

Rule of Thumb #3 - The Average Car Burns More than Its Weight in Gas

The average car burns its weight in gasoline every year!

That's right. Most cars will burn about their weight in gasoline every year. Heavier vehicles generally get poorer gas mileage; lighter cars generally get better mileage, so this rule of thumb is pretty accurate for most cars. A 5000 pound vehicle will burn about 5000 pounds of gas; a 2500 pound vehicle will burn about 2500 pounds of gas.


Each pound of gasoline burned is converted to more than three pounds of the primary greenhouse gas - CO2 (for an explanation of how one pound of gas becomes three pounds of pollution, click here). So that means that each vehicle contributes about triple its weight in greenhouse gases to the atmosphere each year. Wow!

Our New Hybrid: Update #2

It's now been about 13 months since we purchased our 2007 Toyota Camry hybrid. I've had 3 previous posts about it (Our New Hybrid, Update 1, Update 2). It's almost up to 10,000 miles and we have had no mechanical or reliability issues whatsoever (which is what one would expect from any new car).

Economics analysis coming up soon, but I want to make one point loud and clear: IF YOU LIVE IN ARLINGTON AND ARE BUYING A NEW CAR, YOU SHOULD BUY A HYBRID! Why? Because of the tax advantages. I just did my taxes, and it's very likely that the incremental cost we paid for our hybrid will be completely paid for in tax savings over less than the life of the car. That makes the hybrid upgrade free and the gas savings are pure gravy on top of that.

Here's how it worked for our car:

We bought it last March, which qualified it for a $1,300 federal tax credit (we actually hurried to get it before April 1, 2007, because the credit went down to $650). Our Arlington property tax bill was reduced by $750 (first $20,000 is tax free--in our case for 9 months). Total tax savings year 1 - $2050.

Although it's hard to do a perfect apples to apples comparison, I think we paid about $4,000-$5,000 extra for the hybrid--let's say $4,500. Making some reasonable assumptions about future values of our car and a 2007 regular Camry, we will save about $3,000 in Arlington property taxes over 7 years (click here for information about the Arlington tax break). Add in the $1,300 federal tax break for a total of about $4,300 savings, and the hybrid upgrade was free.

Please note that the federal tax breaks are different for different cars and are phasing out on Toyotas and Hondas. Fueleconomy.gov has the details.

How about gas savings? Our experience has been that our mileage is a bit lower than the EPA estimate. We've been getting about 32 MPG. Assuming our driving in the regular Camry would also be a bit lower than average mpg, I'll assume 24 mpg. Last year we drove about 9000 miles.

So our annual savings will be $300-$400 or more if gas prices continue to rise beyond $4 per gallon in the future.

Friends we have spoken with are mostly unaware of the Arlington tax break for hybrids, so clearly the information needs to get out there better. The bottom line is that if you live in Arlington and are shopping for a new car, the hybrid option is much more affordable considering the tax advantages than just looking at the price tags would indicate. Even if you don't live in Arlington, some hybrids are still eligible for a $2,600 federal tax credit, which should be taken into account while you are shopping.

Rule of Thumb #2 - 1 Mile=1Pound

One mile = One pound!
Each mile you drive your car contributes about one pound of CO2 into the atmosphere. Drive six miles to work, that's six pounds. Drive 10,000 miles a year, that's 10,000 pounds--five tons!

Here's how it works:
Burning a gallon of gasoline emits about 19.4 pounds of CO2 out of your car's tailpipe. In addition, exploration, drilling and extraction emit greenhouse gases; giant oil tankers transport the gas, burn fuel and emit CO2; refineries use energy to change crude oil to gasoline and emit additional greenhouse gas emissions; trucks or pipelines transport the fuel to your local gas station, adding more emissions to the equation.

Add together the tailpipe emissions with the emissions needed to get the fuel from the ground into your car and the total is about 25 pounds per gallon. So if your car gets 25 miles per gallon, your CO2 emissions are just about exactly 1 pound per mile. If you have a highly fuel efficient car that gets 50 mpg, then your emissions are about 1/2 pound per mile. If your car gets less than 25 mpg, then your emissions are greater than 1 pound per mile.

Here's a table that shows CO2 emissions per 1000 miles of driving based on the miles-per-gallon efficiency of your car:

So every trip matters: a quick 1/2 mile to the coffee shop and 1/2 mile back = 1 pound of emissions (a 16 oz. coffee is about a pound. . .go figure!). Each time you choose another way to go: walk, bike, skateboard, transit, make your coffee at home instead--you are saving real pounds of CO2. Now with this rule of thumb you know how many.

Our New Hybrid: Update #2

As I mentioned in my June post, Arlington County passed a tax break for residents who own hybrid vehicles. I am pleased to report that we have received our personal property tax bill for this year and--just as hoped for--our bill was reduced by $750 because of the break. What would have been a $898 tax bill is only $148.

I must admit that this is an unexpected windfall. At the time we bought the car we were not aware that the county was considering this idea. We are, of course, happy about it.

EPA has now updated their www.fueleconomy.gov website to include the new MPG ratings, which are more representative of real-world driving. It shows our Camry as 34 MPG combined, which is much closer to our experience, instead of the official 39.

Here are the revised fuel efficiency ratings for the cars that qualify for the tax break.

And here are some of the highest mileage 2007 model year cars for comparison (2008 data are not all available yet). Hybrids that qualify are bolded.

Our New Hybrid: An Update

Back in March I posted about our brand new 2007 hybrid Toyota Camry. It looks silver, but it is actually "titanium!" We've now driven it about 1800 miles, and I have a report.

It has some cool features. Probably the coolest is the "smart" key that allows you to unlock, start and drive the car without ever taking the key out of your pocket or purse. Once you start using a smart key, you'll wish you had one for your house, too. Also, the hands-free Bluetooth connection to your cell phone is a nice convenience and safety feature.

However, the most important feature, fuel economy, has been a big disappointment. We've averaged only about 31 miles per gallon--no better than lots of economy vehicles that are not hybrids. I still feel good that the air quality emissions are much better than the vast majority of vehicles--especially since the DC area has such poor air quality, but I've not been impressed with the mileage. Because the vehicle has regenerative braking and often shuts down instead of idling, it's supposed to be better in city driving, which is the vast majority of what we do. That has not been our experience. We did pretty well on our one road trip to Philadelphia. Our highway mileage was over 40 mpg, and our total trip including the city driving while we were there averaged about 36-37 mpg.

The web site keeps a database of fuel efficiency for the various hybrids. Our mileage is in the bottom 10% of the Camry hybrids reporting there (average is 37 mpg). So, why? I think it's because of the short trips that we take. For mosts trips of under 3 miles it is very difficult to get the car to average above 30 mpg for that trip (oh, yeah, another feature is that it tells you your fuel efficiency for every trip at the end of that trip). It doesn't do well for the first couple of miles. Probably 60% - 70% of our trips are shorter than 3 miles.

The good news is that shortly after we purchased it, Arlington County adopted a tax break for hybrid cars, so we'll save several hundred dollars on our personal property tax this year, which will more than make up for the difference in fuel economy that I had hoped for and what we are actually getting. It won't, however, make up for the greenhouse gas emissions I had hoped we would be reducing.

What's Your Price

Today's Washington Post reported on a joint Post/ABC poll that asked people how current high gas prices are affecting or will affect their driving habits. Only 11 percent said that current prices would curtail their driving in the coming weeks. In fact, gasoline consumption is up 2.6% over the same week as last year.

I find it interesting that the price at which people say they will start to make changes is always about $0.50 - $1 higher than whatever the price is now. However, I believe that most people can only make changes on the margins in the short term (moving, buying a new car, etc. are long-term changes that are also freighted with many other factors). Jackson Landers blogs today about his situation, which is not that atypical for much of America. In the DC area, more people have more choices than he does, but it's not all that much better.

Trying to change our "addiction to oil" cannot be done by raising fuel prices alone. $5 or $6 gas will not change the driving habits of most people very much. It will probably start to change their buying habits; however, even that has only a limited effect. With the advent of leasing over the last decade or two, the people who are most likely to be affected by higher gas prices are actually buying used cars--not new ones. Rich people buy new cars, and they are less influenced by gas prices than by gadgets like navigation systems, safety features, style, etc. Manufacturers don't manufacture cars for the used-car buyers; they manufacture them for the new car buyers.

As much as I like the idea of using economics (I have an MBA after all) to move markets, the only good solution to our oil addiction in the transportation arena is to drastically and rapidly increase fuel efficiency standards. Unfortunately, that has proven to be politically impossible for more than two decades. Good luck, and drive safely this weekend.

Our New Hybrid

We have upgraded our car from a 1999 Toyota Camry to a 2007 Toyota Camry hybrid. I must admit that it's a nice feeling driving the new car. It's especially cool when you "start" it (nothing happens) and then start driving away with no engine running. But I have mixed feelings, too.
Hybrids are great, and our new car should get about 50% better mileage than our old car. We won't ever make a profit--even at $5 gasoline--on the incremental cost, but as an environmentalist I was taking more into consideration than that.
As a husband, I had other things to consider, too. I would have preferred the Prius, which gets even better mileage, but had to "compromise" with my wife--who preferred the larger Camry. (For those of you not in relationships, "compromise" means something entirely different than what the dictionary says.)

So this is good. If everyone made the decision to reduce their environmental footprint at inflection points (remodeling, new car, appliance replacement, etc.) and made a conscious effort to pay attention to their footprint and reduce it each year, then we would be definitely making progress.

On the other hand, even if everyone replaced their car tomorrow with a 40 mpg car or even a 50 mpg car we would still be barreling down the same road to climate catastrophe that we are on now. To avoid the worst outcomes a changed climate will wreak on our future generations, we need to reduce carbon emissions by 80%-90% over the next few decades. That means 250 mpg cars if we keep driving the same mileage we do now. And how you are you going to reduce your energy use in other parts of your life by 90%, too?

So I'll enjoy my new car, but I'll also keep trying to drive it less and bike or walk more. And keep looking for ways to reduce my climate footprint.