With U.S. EPA recently announcing a new national target for fuel economy, how will U.S. automakers adapt their fleets to meet the new standards? During today's OnPoint, Brian Wynne, president of the Electric Drive Transportation Association, discusses the impact of the new standards on the electric vehicle market. He also talks about the cost of electric vehicles, including the Nissan Leaf and Chevy Volt.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Brian Wynne, president of the Electric Drive Transportation Association. Brian, thanks for coming on the show again.
Brian Wynne: Great to be back.
Monica Trauzzi: Brian, U.S. EPA recently announced a new national target for fuel economy equivalent to any nationwide fleet average of 35.5 miles per gallon by 2016. And the rules agree to temporarily treat electric vehicles as causing no CO2 emissions, even though it's agreed that they do. They're going to be classified as zero emissions vehicles. Is that a fair way for EVs to sort of get into the marketplace?
Brian Wynne: I think so and I think the ruling really demonstrates the importance, the recognition of how important this breakthrough technology is, particularly in the world of reducing our greenhouse gas emissions. So there's no question that this technology is going to be in the forefront of the solutions that are going to be adopted.
Monica Trauzzi: And when we talk about the emissions that are associated with EVs it's predominantly from the grid, the fact that the energy for these vehicles is coming from the grid?
Brian Wynne: For plug-in vehicles, sure, and the energy mix, of course, the generation mix is different in different parts of the country. So, the math warrants some investigation here and I think clearly this is the first attempt to try and figure out exactly what that impact is going to be. But, you know, there are some terrific studies that have demonstrated that not only is the grid getting better over time, but even with today's generation mix it's generally better to plug your car, no, it's definitely better to plug your car in than to use gasoline, both from a greenhouse gas perspective, as well as other pollutants.
Monica Trauzzi: Will auto companies be able to adjust after 2016 when EVs may be considered for their actual emissions?
Brian Wynne: Well, this technology is going into the marketplace all the time. We have 20 plus hybrids already available in showrooms. This is going to be a terrific year for some of the newer vehicles that are coming into the marketplace that do plug into the grid. And we're on this continuum now that goes all the way through to fuel cells in terms of the use of electric drive. So, one way or the other, the technology vehicles are electrifying very, very rapidly and the fuel side of this, as I say, the grid, I think, will continue to improve and to get better in terms of accommodating the demand for these kinds of vehicles.
Monica Trauzzi: Environmental groups are concerned that EPA may be making it a little too easy for automakers and giving too many incentives at this point to meet the fuel efficiency requirements. How difficult is it to strike that balance between environmental benefits, but also making sure that the automakers are able to meet the requirements and stay economically viable and sound?
Brian Wynne: No question that we have to continue to improve gasoline engines and combustion engines. There's no question that that needs to be done in any case. I think the balance is going to be struck over time as we begin to recognize the benefits of utilizing this phenomenal national security aspect that we have called the utility grid as a source of fuel. Let's not forget that not only is it cleaner, but it's all, to a very, very high degree, from domestic feedstock. So, we're keeping money that typically goes offshore for fuel here in the United States and that's a really important point as well, both from a national security perspective as well as an economic perspective.
Monica Trauzzi: What's your take on U.S. EPA and its adjoining forces formally? Will we see better policy on autos as a result?
Brian Wynne: Well, we're going to get in there. I think there's a lot of math that needs to be done and a lot of numbers that need to be crunched here. The important thing is that this breakthrough technology is being recognized as a solution in this picture going forward. The question, as you say, is exactly how do you balance that so that we introduce these new technologies in a way that really gets us to lower greenhouse gas emissions in the most efficacious way?
Monica Trauzzi: There's been some question about the price used per ton of carbon dioxide in EPA's announcement and economists say it only amounts to about $0.20 per gallon, which is not enough to really have an impact or provide an incentive to mitigate emissions from vehicles. What's your take on that price?
Brian Wynne: We're just beginning to look at those numbers too and let's not forget that plug-in hybrids, we're still looking at exactly how they're going to be treated under these new regimes as well. But I think the important point is that we're trying to move this into the mainstream, this technology into the mainstream. We're going to have to see what the desired impact is and I think the numbers will work themselves out over time. And we get another take at this, of course. We'll be looking at this in the run-up for 2017.
Monica Trauzzi: And you mentioned the grid several times. Obviously, smart grid, the Renewable Electricity Standard will be coming up in a climate and energy package, whatever we see coming out of the Senate. How closely are you watching those discussions that are happening in the Senate and where do you see that going?
Brian Wynne: Well, your question points to the complexity of this. We're at a particular moment in time where there are lots of different motivating factors to move us down the road toward advanced vehicle technologies and use a new fuel source. And exactly how do we take advantage of all those things and adopt regulations and policies that are going to accelerate what's already a very, very important market phenomenon we're going to see as we go forward.
Monica Trauzzi: Nissan recently announced the price of its Leaf vehicle. It's expected to cost around $25,000 with tax incentives and it's considerably less than what has been projected for Chevy's Volt vehicle. What do you think this means for the electric vehicle market and what we might see down the line in terms of competition?
Brian Wynne: I think the average cost of a light duty vehicle today is about $27,000; so I felt the pricing was very interesting from that standpoint. It demonstrates that electric drive, particularly in some of these pure-battery electric drive vehicle configurations, can be competitive with straight-up combustion engine vehicles. No one knows exactly what some of the other vehicles like the Chevy Volt are going to cost until those announcements are made and, obviously, because Nissan I think came in lower than what some people may have anticipated, it's probably not good to speculate about that. But the objective is to be able to compete and one by one I think we're going to find that out on a vehicle announcement by a vehicle announcement. The point that I always try and bring people back to is that there is a phenomenal cost advantage to using electricity. In terms of moving down the road, cost per mile, it's about two to three cents using electricity, whereas it's 12 to 13 cents using gasoline. So there's an inherent fuel price advantage here that, over the life of the vehicle, can really make a huge difference for consumers and I think what we're going to find is that this is a great way to put money back in the pockets of consumers. And, of course, fleet operators live and die by cost per mile, so they really love the technology.
Monica Trauzzi: OK, we're going to end it there. Thank you for coming on the show.
Brian Wynne: Thank you, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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