GM bets the farm

Jonathan Rauch writes excellently in The Atlantic on just how hard it is to build a working mass-market electric car, how hard General Motors is trying to do it, and how much GM is putting on the line to make it happen.

In conversations with everyone from staff engineers to Rick Wagoner, the chairman and CEO, I heard references to the Apollo program. “John Kennedy didn’t say, ‘Let’s go to the moon and, you know, we’ll get there as soon as we can,’” Wagoner said in a recent interview in his office, atop a high-rise in Detroit. “I asked our experts, ‘Guys, do we have a reasonable chance of making it or not?’ Yes. ‘Well, then, let’s go for what we want rather than go for what we know we can do.’” With the Volt, GM—battered, beleaguered, struggling for profitability—hopes to re-engineer not just the car but the way the public thinks about cars, the way the public thinks about GM, and the way GM thinks about itself.

McCain’s silly prize

Republican presidential candidate John McCain wants to offer a $300-million prize to anybody who can devise

a battery package that delivers power at 30 percent of current costs and has “the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”

Right, ’cause there aren’t billions to be made in being the first to market with that anyway.

I like the idea of prizes for technological advances — especially for fun things, like going to space without working for NASA or the Russian space agency — but they’re really only a lot of use if everyone’s not already desperately striving to get there.

Miles driven in the United States keeps dropping

The pattern of Americans driving fewer and fewer miles as the price of gasoline goes up and up is holding.

Americans drove less in March

So says the transportation department:

Americans drove less in March 2008, continuing a trend that began last November, according to estimates released today from the Federal Highway Administration.

“That Americans are driving less underscores the challenges facing the Highway Trust Fund and its reliance on the federal gasoline excise tax,” said Acting Federal Highway Administrator Jim Ray.

The FHWA’s “Traffic Volume Trends” report, produced monthly since 1942, shows that estimated vehicle miles traveled (VMT) on all U.S. public roads for March 2008 fell 4.3 percent as compared with March 2007 travel. This is the first time estimated March travel on public roads fell since 1979. At 11 billion miles less in March 2008 than in the previous March, this is the sharpest yearly drop for any month in FHWA history.

Drivers seem to be slow to react to changes in gas prices, but during and after the post-Katrina price spike, there was definitely an effect. Let’s see whether this keeps up.

Expensive gas can be a problem for suburban sprawl

Duh.

Who built the electric car?

Marc Gunther updates entrepreneur Shai Agassi’s still-quite-plausible plan to bring electric vehicles to the masses:

How does the business work? Essentially, by exploiting what Agassi argues are the cost advantages of electric cars over vehicles powered by gasoline and, yes, you read that right—he says it’s significantly cheaper to operate an electric car than a gas-powered one, particularly with oil priced at more than $110 a barrel. (The economics work with much cheaper oil, too, he says.) The low-cost advantage for electric cars is even greater in Europe, he says, where gas prices are the equivalent of $7 to $9 a gallon.

His claim depends on a lot of assumptions—that a battery with a sufficient range can be produced for $10,000 or less, that he can bring the cost of renewable energy down by committing to buying lots of it, and that the costs of building distributed networks of recharging points and service stations will not spiral out of control.

If he’s right, the cost of powering the electric car will be about 5 cents a mile. As for a gas-powered car, you can do the math, but fuel costs for a car that gets 25 miles to the gallon with gas priced at $3.75 a gallon amount to 15 cents a mile.

Even so, there’s a problem—many people don’t want to pay an extra $10,000 up front for a battery, not knowing how long it will take for them to get their money back in the form of reduced fuel costs. So Agassi isn’t asking for that money up ront. Instead, he intends to sell his customers the cars for much less than they cost, provided that they agree to long-term service plans that will supply them with electricity, battery changes when needed, replacement batteries, etc. He estimates that he could afford to give people a free car if they agree to sign onto a service agreement for six years.

Stop subsidizing ethanol

I haven’t had very much time for the National Review since it devolved from Republican-oriented conservatism into full-throated Bushism a few years ago, but maybe its editors are looking ahead to a post-GWB America and realizing they’re going to have to stand for some principles again.

And this is a good one: mandating the consumption of ethanol and subsidizing its production is bad policy, for the United States and for the world.

Congress has created an artificial demand for ethanol to satisfy the farm lobby, which is one of the most powerful in Washington. To make matters worse, almost every major candidate for president in the last 20 years has supported ethanol subsidies because of the program’s importance in the capital of corn, Iowa, which holds the nation’s first presidential caucuses. Hillary Clinton and Barack Obama are not exceptions to this rule. Both voted for the 2007 energy bill, and both declared their support for ethanol while campaigning in Iowa. Obama, from the corn-growing state of Illinois, has been singing ethanol’s praises for a long time.

But John McCain somehow made it through the early primary gauntlet without going back on his long-held opposition to ethanol subsidies. To be sure, he took a lower profile on the issue and made some comments about how ethanol “makes sense” now that oil prices are so high, but when questioned about these pro-ethanol comments he reiterated his opposition to the federal government’s meddling in the market.

The Iowa caucuses are over, and McCain no longer has any reason to obscure his opposition to U.S. ethanol policy. In fact, he has several good reasons to voice his opposition to the ethanol mandate loud and clear. For one thing, he can point to it as a clear difference between himself and both remaining Democrats. They support a policy that is contributing to higher food prices for Americans. McCain opposes it.

Both Democrats (and McCain) appear to be in favour of doing all they can to make gasoline cheaper, too, even as all three paint themselves as greenies. It’s not what you’d call a consistent position, and it speaks to the difficulty that even a U.S. president who wants to tackle pollution and global warming will have in actually doing so.

Who’s to blame for the biofuels mess

It’s almost not worth commenting on, but I can’t resist pointing out that the lead of this Lorne Gunter column in the Edmonton Journal is simply false.

Note to environmentalists: Remember, you were the ones who demanded biofuels the loudest.

Actually, Midwestern corn farmers, plus drivers complaining about high gasoline prices. Most of the rest of the column on the havoc being wreaked by biofuels production from food is bang on, but no evidence whatsoever is advanced in support of this particular lead.

Maybe price does matter

Canadians used more petroleum products than ever in the last reporting period, says Statistics Canada, but less regular unleaded gasoline:

Sales of refined petroleum products increased in five of the seven major product groups in December 2007 compared with December 2006.

Sales totalled 8 500 800 cubic metres, up 2.6% year-over-year. (One cubic metre is equivalent to 6.3 barrels.)

Heavy fuel oil sales showed the biggest increase, registering a gain of 132 900 cubic metres or 23.7%. Diesel fuel oil sales rose 6.0% or 122 100 cubic metres. Motor gasoline sales were up 2.5% or 85 300 cubic metres.

Sales of mid-grade gasoline (+14.7%) and premium gasoline (+3.2%) increased while regular non-leaded gasoline sales fell 2.6%.

Maybe drivers think more expensive gasoline will yield more efficiency?

A sign of urgency?

GM is actually forming a special internal group  to see about hurrying it up with the plug-in electric cars.