Plug-ins rev up, but are consumers ready?

Paul A. Eisenstein

A California-based startup, Fisker Automotive, will spend nearly $200 million to purchase an abandoned General Motors assembly plant in Wilmington, Del., to produce a new line of plug-in hybrid electric vehicles.

The eponymous carmaker, started by Danish car designer Henrik Fisker, hopes to begin production of the extended-range hybrids, code-named Project Nina, by 2012, and is projecting sales could reach 100,000 units — half of that volume geared for export — by mid-decade.

“This is a major step toward establishing America as a leader of advanced vehicle technology,” said CEO Fisker.

Or is it?

Many auto industry experts and environmentalists see plug-ins and a similar technology known as the Extended-Range Electric Vehicle (the Chevrolet Volt is the best-known example) as a practical compromise between conventional hybrids and pure battery-electric vehicles. The latter are plagued by high costs and limited range. Typically after 100 to 150 miles, the vehicles must be parked for an extended recharge that makes long-distance driving impractical.

Plug-ins are similar to the popular Toyota Prius in that they use two interconnected sources of power. The Volt, for example, has enough batteries on board for about 40 miles of zero-emissions driving, enough for the typical American’s daily commute. For longer drives, the gasoline engine kicks in.

That eliminates the so-called “range anxiety” associated with vehicles running solely on battery power, explains David Cole, director of the Center for Automotive Research, or CAR. But Cole stresses that this doesn’t ensure the success of plug-ins and related technology.

The lower cost of electric power, about one to two cents a mile, compared with 10 cents or more for gasoline, is a selling point, but not necessarily an easy one, according to Cole, who  was one of the organizers of a recent conference dubbed “The Business of Plugging In.”

Fisker and GM aren’t the only makers exploring plug-in hybrid options. Ford plans to bring out a version of its own, as does Toyota, which next year will launch a fleet test of a plug-in hybrid version of the popular Prius.

While the technology may make sense to environmentalists and government regulators, the real challenge is to convince consumers, cautions GM’s product development director Tom Stephens. To do that, prices must drop.

Fisker’s first plug-in, the Karma, will cost $87,900 when it debuts next year. Project Nina, named after Christopher Columbus' flagship, is expected to produce a “family” vehicle that will sell for about $39,900 once federal tax credits are included. The Volt, meanwhile, is expected to come in around the same price. In other words, significantly above the average $25,000 price tag of conventionally powered vehicles.

“We expect that price to come down,” said Stephens, the keynote speaker at the plug-in conference. By the third generation, GM is betting the batteries in Volt will be smaller, lighter  and significantly more cost-competitive. CAR’s Cole agreed, suggesting it is possible that “with development,” a lithium-ion battery pack the size of the one in Volt could come down to “$4,000 to $5,000,” compared with $12,000 or more today.

But there are plenty of other “ifs.” For one thing, automakers need to encourage a significant expansion in the list of suppliers producing plug-in parts. That would likely yield new technology even as it drives down costs.

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