With new fuel efficiency standards to meet and a more green-savvy consumer, U.S. automakers are hoping to incorporate a variety of electric drive technologies into their vehicle fleets over the next several years. Many of these technologies, however, still need to overcome some major development hurdles before they can reach wide scale implementation. During today's OnPoint, Brian Wynne, president of the Electric Drive Transportation Association discusses the core challenges facing his industry. Wynne also comments on the President's budget proposals for transportation and clean energy technologies and the cost barriers that continue to impact sales of hybrids and other electric drive vehicles.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Brian Wynne, president of the Electric Drive Transportation Association. Brian, thanks for coming back on the show.
Brian Wynne: Glad to be here.
Monica Trauzzi: Brian, the president released his FY 2009 budget earlier this week. What's your take on the amount of money he's proposed for clean energy technologies?
Brian Wynne: We're 100 percent in favor of the president's initiatives and, obviously, we're very pleased that he's decided to promote advanced technologies as a solution to the challenges that we're all facing with our dependence on oil. And the '09 budget is an important step in the right direction. There are some really important things for electric drive in that budget. A good example would be the funds that are set aside for hybrid electric technology, plug-in hybrid electric technology, and advanced battery technology. Obviously, we're moving to lithium ion batteries and some other additional technologies that we want to have a better understanding of how they perform in the marketplace and that's very important to our industry. Other elements to the budget we're looking at, there's been some changes in the hydrogen portions of the budget, some reductions along those lines, some realignment of those budgets. And we're concerned about that because those are also electric drive technologies, fuel cells and hydrogen.
Monica Trauzzi: Right. And, obviously, last year was a big year for the auto industry. A CAFE increase was passed at the end of the year for the first time in a few decades. How key is electric drive and hybrid technology going to be as automakers try to meet these new standards?
Brian Wynne: Well, electric drive technology, of course, has been moving inexorably into the marketplace for some time now, so that trend, if anything, has just simply accelerated over the last couple of years and going forward, I mean you could see it at the Detroit auto show, you could see it at the Tokyo auto show. And beyond autos there are also medium and heavy-duty vehicles where you've got, in metropolitan transit buses, hybrid electric technology being utilized. All of these things, I think, are extremely important going forward and the industry is embracing a lot of different technologies, but I think an electric drive plays very, very well in the future in meeting the CAFE standard.
Monica Trauzzi: Are U.S. automakers going to need to scramble at all to reach those standards? I mean compared to the international counterparts, you have already implemented many of these technologies. Is there going to be this mad dash to reach those new standards?
Brian Wynne: Well, I wouldn't characterize it that way. I just think that all of the vehicle manufacturers and the supporting industries, particularly around electric drive, are very energized right now to get these solutions into the marketplace in a way they meet consumer's expectations and they make good commercial sense. That's not easy to do. We need to work together with the government. We need consistent policies going forward. We need consistent budget support for the programs that underpin those policy initiatives and I think the industry is really about that business right now. They're working very hard, not just on this technology, but a range of solutions that will address our dependence on petroleum and greenhouse gas emissions.
Monica Trauzzi: And the cost of hybrids and newer, cleaner technologies is still not on the same level as your standard vehicles. It's still a little higher. Are you expecting that number to come down so that the mainstream will accept these technologies more readily?
Brian Wynne: It's a technology adoption cycle and the premiums have been significant, there's no question about it. The economics are changing all the time. It's a very fluid situation with gas prices continuing to set new floors all the time. And consumers, when they look at these trends, I think they're beginning to do a different kind of math. They are doing a calculation which not only includes a payback on that premium, but they're also looking at what are my personal responsibilities and what position do I want to be in going forward given the severity and the risks associated with particularly climate change and our 97 or 98 percent dependence upon petroleum for transportation in this country. Nobody really wants to continue down that road, so I think people are stepping back and looking at that. Having said that, we are early in this adoption cycle. We're competing with the combustion engine, is one way to look at that. We've been working on that technology. We know how to get it in the marketplace. It's already at scale. And electric motors have been around for a long time, but some of the newer technologies that really make this a very, very attractive approach, are relatively new, the electronics associated with them, the dual-drive systems, etc. So, yes, there is a premium associated with that, but we have a very, very significant number of vehicles already on the roads now and more and more vehicle types coming out and consumers really love them.
Monica Trauzzi: So, beyond the cost difference, what are some of the other challenges that a group like yours faces and this industry faces as a whole?
Brian Wynne: Well, energy storage is the obvious challenge. If we could figure out a way to solve the energy storage problem that would ripple through, not just the transportation sector, but it would have an astonishingly important impact on renewable energy in general. And, of course, as those two things come together I think we have an even more compelling solution in electrifying transportation. So, we are making, I think, enormous strides in coming up with batteries that can be utilized not just for hybrid electric vehicles and plug-in hybrid electric vehicles, but for pure battery EVs as well. And depending upon what application you want to look at, and there's a lot of talk right now for example of city center kinds of traffic, urban vehicles, etc. Some of these things make a dramatic amount of sense and we're right on the cusp of being able to demonstrate that those batteries are suitable for those kinds of applications. Now we need to work on the reliability issues and the cost issues and over time those will come along as we have more experience and we have more manufacturing capability.
Monica Trauzzi: There's some safety concerns associated with the batteries at this point, that there's a fire risk. How big of a concern is that for you? And are you fearful that consumers might be deterred because they hear of these health issues that could arise as a result of driving those vehicles?
Brian Wynne: Well, automakers are not going to put a vehicle on the road if it's not safe. I mean that's the bottom line for these vehicles. They're going to stand behind the vehicles. And for the most part, I think that's where the real achievements have been most recently, is in developing battery chemistries that can be managed properly. Thermal runaway is not as big a concern any longer and that's really where we are right now, is we are addressing those safety concerns and putting those vehicles in a car in a way that's both safe, meets the performance expectations of the consumer, and make sense from a commercial standpoint.
Monica Trauzzi: What more could the federal government be doing in terms of funding for battery research in order to push the R&D along?
Brian Wynne: Well, I think that's already being done. We're looking at there's about 50 million in the current budget, depending upon how it gets applied, for advanced battery research. That's very important money. The other things I think where the federal government could play a dramatically important role is in the deployment area, where we actually get these vehicles on the street in greater volumes and we can collect more data on how they're doing. And actually prove the case that has already been proven specifically with hybrid vehicles of fuel efficiency savings and greater performance through this particular technology.
Monica Trauzzi: There was a lot of attention paid to the introduction of the smart car a few months ago in the United States. It gets about 33 miles to the gallon. It's a standard vehicle. It doesn't employ these electric drive technologies. What's your take on the amount of attention that this car has gotten? And is there room for these smaller types of vehicles plus all the different technologies that you're pushing?
Brian Wynne: For sure there's room for all these solutions. We all know how dramatically we need to change this picture and the trend lines have been well expounded on this show and in other places. So, I think what that demonstrates is how excited consumers are in particular and let's not forget fleet owners who have massive challenges around increases in fuel costs, etc. They want to embrace more fuel-efficient vehicles. They're looking at this. They're stepping back and looking at their transportation options and saying, "Well, I've got some different things that I can choose from now. And that can't help but be a good thing." So we work very, very strenuously with all the alternative fuel industries. Hybrids can be an electric drive. Technology can be utilized in a lot of different ways, a very flexible technology. And lord knows we need enough of these solutions out there. There's room for all of them and the quicker we can green the fleet the better off we're all going to be.
Monica Trauzzi: Is the hybrid here to stay or do you think it's going to be considered old technology in a few years?
Brian Wynne: Boy, just driving around it looks to me like it's here to stay and the technology keeps getting better. That's the astonishing part to me, is it's a very competitive environment. At the end of the day everybody is out there trying to sell vehicles that consumers want or fleet owners are going to buy in volume, so they're coming up with newer and more innovative ways to implement the technology. And it's not just about hybrids. It's also about pure battery EVs and it's also about creating the electricity in different ways and in certain applications fuel cells make a dramatic amount of sense.
Monica Trauzzi: And final question, how much of a learning curve do you think still exists for consumers when it comes to all these different types of technologies? It can be very confusing.
Brian Wynne: Yeah. We started down a road where we were going to plug everything in and then we kind of backed up from that and said you don't have to plug this in. There is some justifiable confusion out there that we're going to address. But at the end of the day I think people know what it is that they want to drive and I think they're going to go looking for that. And I think the beauty of electric drive technology is because of its flexibility, because it is complementary to other technologies, it's going to find its way into the marketplace and naturally be pulled through by consumers and by fleet owners.
Monica Trauzzi: All right. We'll end it right there. Thanks for coming on the show.
Brian Wynne: My pleasure.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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