Suddenly, a market for plug-ins Calif. action helps companies with big hybrid programs

Richard Truett
March 31, 2008

With the stroke of a pen, California regulators have created an instant market — and a sizable one — for plug-in hybrids.

Last week, the California Air Resources Board ruled that automakers must sell at least 66,000 plug-in hybrid vehicles from 2012 through 2014. The ultimate sales target for plug-ins could grow even larger if 12 other states that have adopted California's emissions rules follow suit.

That's big news for the six biggest automakers in California, measured by sales volume. General Motors and Toyota are developing plug-in hybrids for sale around 2010.

Headache for Nissan

But the mandate could pose a major headache for Nissan, Honda and Chrysler, which have not yet announced plans for plug-in vehicles.

General Motors and Toyota are locked in a tight race and hope to have their plug-in hybrids ready by 2010. But that may be a stretch, since battery suppliers have not yet perfected a lithium ion battery that has passed durability and heat tests.

The air resources board also ordered the six largest automakers to sell at least 7,500 zero-emission vehicles — either electric cars or fuel cell vehicles — in California from 2012 through 2014.

The board previously had called for 25,000 units, leading environmentalists to express disappointment. The American Lung Association was "disappointed" that California reduced its sales mandate, said Bonnie Holmes-Gen, the organization's senior policy director.

These vehicles still face technical hurdles. Fuel cell-powered vehicles remain very costly, and electric cars still suffer from a limited daily range. Several automakers, such as Mitsubishi, BMW, Nissan and Subaru, are considering "pure" electric vehicles, but none has been approved for sale in the United States.

But California regulators want to force the issue. "We're introducing a whole new category of vehicles to the public," CARB Chairwoman Mary Nichols told The Associated Press.

What price?

Hybrid vehicles are powered by a gasoline engine plus an electric motor. The gasoline engine can power the wheels, or it can recharge the battery pack that generates electricity for the electric motor.

Unlike a conventional hybrid, a plug-in can be recharged overnight by hooking the batteries up to a power outlet. If the owner doesn't drive more than 40 or 50 miles a day, a plug-in can run solely on its battery pack.

General Motors plans to roll out the Chevy Volt in 2010, and it is developing a plug-in version of the Saturn Vue. Ford is testing a plug-in Ford Escape, while Toyota plans to roll out a plug-in version of the Prius.

Lithium ion batteries are ideal for these plug-ins because they are smaller and lighter than the current nickel-metal hydride batteries. Lithium ion batteries would allow plug-in vehicles to travel further on pure electric power.

Analysts have estimated the cost of the lithium ion battery pack for the Volt at about $10,000. Are consumers willing to pay thousands of dollars extra for a plug-in hybrid?

"That's the key question," GM spokesman Dave Barthmuss said. "Ultimately, the consumer is going to have to bear the cost of these technologies for us to move forward." 

General Motors hopes to have its plug-in Chevrolet Volt, shown, ready for sale by 2010.