Friday, July 06, 2012

The End Of Range Anxiety-The Future Of The Electric Car Is Here

For over a hundred years people have been trying to design practical cars that did not rely on petroleum - cars that run on electricity. But they always hit a road block. Electric cars have had one major drawback. They afflicted their owners with a gut wrenching condition referred to as range anxiety. It didn't matter whether the car had the 70 mile range of a Leaf or the 250 mile range of a Tesla, range anxiety was always there. Few people want as their only vehicle a car that that they can only drive ten, fifty, two hundred miles, if they then have to wait hours to recharge. Even on short trips, the moment you get in such a car you start thinking about whether you have enough juice to get back. Every attempt at building a truly practical electric car that average drivers could use as their only car failed. Yes, as battery technology improved you could increase the distance that could be driven on a charge and even reduce somewhat charging times but range anxiety was always there.


Enter GM executives Bob Lutz and Jon Lauckner. Working together they conceived of an electric car that would solve the problem of range anxiety and use a revolutionary lithium-ion battery with a long life thermal management system. They designed a car that eighty percent of people would be able to drive in their daily commute using only electricity but, and here's the key, it would also have a gasoline powered generator that would give it the same range as any other gasoline powered car. In the process they also decided to make it sporty, practical and fun to drive.

The result is a marriage made in heaven. It's a car that you can charge up at home or work or wherever, and that you will usually drive without ever using a drop of gasoline. But this car is so much more. Unlike any other electric car you can drive it 100 miles, a thousand miles, across the country, or around the world (with a little help over the oceans) without having to wait hours to recharge the battery. You can do this because this electric car has its own on-board generator powered by a gasoline engine. When you deplete the battery, the generator starts up. And when the change happens, you don't hear or feel anything. You just see an icon change on the dashboard telling you that the "extended range" motor is now running, but that's about it. Like so many other aspects of the Volt, "seamless" is the best word to describe it.

The Volt is smooth, seamless and quiet but also very quick because of its electric motor with 273 lb.-ft. of torque that is immediately available the moment you step on the "gas." And make no mistake, it is always an electric car, even when the gas engine is running, because that engine is producing electricity that is powering the electric motor. It is a car that will accelerate with the best of them, with a top speed of 100 mph, but do it without a sound and with no herky jerky transmission shifts. Basically, it is more fun to drive than almost any car on the road.

The Car

So what does it all mean? The EPA says that you can expect to average 38 miles on a fully charged battery and that you will get 98 MPGe when running on that charge. MPGe is miles per gallon equivalent, which represents the number of electric miles that can driven on the amount of energy contained in a gallon of gasoline. EPA also says that when you run solely on the gasoline "extended range" motor your average should be 37 mpg. To make these numbers more meaningful the EPA then calculates the actual cost of driving by factoring in an average gasoline price of $3.70/gallon and an average electricity cost of 12 cents/KWH. According to the EPA, if you drive 12,000 miles per year you can expect to spend $601 when running solely on electricity and $1,302 when running solely on gasoline.

So what are the real life experiences of Volt drivers? Voltstats is a site that logs real time data on thousands of Volts. The fleet total mpg, which is miles driven divided by gasoline burned is 126.7 mpg. Since that does not count the cost of electricity they also computed the MPGe of the fleet, which is 64.3 MPGe. The fuel economy of the gasoline engine alone is 36.5 mpg. Volts are running on battery power for 71% of the miles driven and on gasoline the remaining 29% of the miles driven.

My experience is somewhat better. I drive about 90 percent of my miles on electricity and my off-peak electric rate is 4.6 cents/KWH, far lower that the 12 cent national average. I am currently driving about 47 electric miles on a full charge and my cost is about 1 cent per mile. In my first 1,000 miles I drove 950 miles on electricity and averaged 4.34 miles/KW. The total cost of the electricity consumed was $10.07. I also drove 50 miles on gasoline, using 1.4 gallons of gas. At a cost of $3.79 per gallon I spent $5.30 on gas. So it cost me $15.37 to drive 1,000 miles which works out to 1.5 cents per mile.

The car I traded got 20 mpg. Driving it 1,000 miles would have consumed 50 gallons at a cost of $189.50. My savings driving the Volt for that 1,000 miles was $174.13. Amazing.

Maybe more importantly we love driving the Volt. Except when we have to drive both cars or when hauling large loads, the Volt is the car of choice for both my wife and I. It is so smooth, so quiet, so well put together and so cool. Of all the 25 cars I've owned it is my favorite. Our other car is an Acura MDX. It is a really good car, but when I drive it now it feels positively clunky compared to the Volt.

Environment and the Nation

People ask whether electric cars are really better for the environment and the nation. The answer is clearly "yes." Based on EPA data the average internal combustion engine car produces 500 g/mile of greenhouse gasses. On average a Volt running on battery power will produce 260 g/mile, or roughly half that of a gasoline powered car. These are averages of course and the numbers vary widely depending on the fuel used to produce the electricity. Here is a really good article explaining the differences between fuels. In summary,

the average Coal burning power plant emits 2.17 pounds of CO2 for every kilowatt-hour it produces. (EIA) Now, coal makes up only 48% of our electrical generation. Natural Gas produces 20% and it also emits CO2 (1.4 pounds per kWh). But, 30% comes from nuclear and renewable sources. So, taken together, our national electrical supply generates, on the high side, 1.51 pounds of CO2 per kWh.

Similarly emissions of gasoline engines vary widely depending upon the efficiency of the engine. The best are 28% efficient while the worst are only 15% efficient. Consequently, the emission of CO2 of gasoline engines ranges between 1.9 lbs/kWh and 3.59 lbs/kWh. Thus the most efficient engines produce slightly less CO2 than coal plants but substantially more than gas, nuclear or renewable electricity. And the least efficient engines are far behind all sources of electricity.

But it's not all about CO2. It's also about reducing our dependance on oil and staying out of conflicts whose primary motivations seem to revolve around oil. In May GM noted that Volt drivers had travelled 40 million miles, saving 2.1 million gallons of gasoline and saving themselves $8 million in the process. That 2.1 million gallons would have filled an entire super-tanker. That is impressive. And this was achieved with fewer than 17,000 thousand Volts on the road. Imagine the impact if 10, 20, or 30 percent of us were driving extended range electric cars like the Volt.

A Chevy?

There's one more thing. Before the Volt I had only bought one other American car and it was a special purpose vehicle. Walking into a Chevrolet showroom and buying a Chevy was not part of my life experience. Guess what? This car is great. The engineering is second to none. The design and execution of the car is fantastic. Everything feels right, works right and looks right. The quality is as good and in some respects better than that of any comparable car.

My eyes have been opened. Chevy hit a home run and my whole attitude towards American cars and GM in particular has changed. On car forums people often ask how Volts drive and what are they comparable to. The frequent answer is that it feels like a BMW three series - every bit as tight, not quite as grippy, and a whole lot smoother and quieter. Remembering that, it was fascinating to read that BMW has hired away many Volt engineers and that the upcoming BMW i8 will be largely based on the Volt architecture. Chevrolet has over 200 patents on the Volt that they will work around but the signs are clear. The extended range electric vehicle pioneered by GM is here to stay and truly is a marriage made in heaven.

The Real Financial Cost

The Volt sells for between $39,000 and $44,000 depending on how well optioned it is. Even though the base Volt is pretty well loaded its price is more than the price of average new car which is now just shy of $31,000. But the Federal Government has a $7,500 tax credit that reduces the $39,000 cost to $31,500. And many states have additional incentives, such as Colorado, which has an additional $6,000 tax credit. When I also considered that the VOLT would save me $2,400 per year in energy costs the deal was too good to pass up.

All Things Considered

The Volt reduces our dependance on oil, saves money in operating costs, is an absolute blast to drive, is made in America, reduces greenhouse emissions, and is the smoothest, quietest, and quickest ride you can imagine. Also, it is way cool and has a UAW sticker on the door jam.

Anyone who is in the market for a mid-size sedan is doing themselves and our country a real disservice if they don't consider the Volt.

There is much detail about the Volt that is omitted for this post in order to keep it at a manageable length. For example, it has two electric motors, not one, but both are there to maximize efficiency. Under very rare circumstances the gas engine can drive the wheels directly, if it improves efficiency. Also, the battery is unique for several reasons. To maximize longevity it has a sophisticated heating and cooling system that keeps it at the optimal temperature. And to maximize longevity, it is never fully charged or discharged, generally using only about 65% of its total capacity.

Tuesday, July 03, 2012

The Obama Administration Made The Exact Tax Argument That the Court Accepted

There is much confusion regarding the ACA tax issue. Contrary to what some think, this is the same argument the President made. He said the penalty was not a tax for purposes of the Anti-injunction Act. The Majority agreed. He said it was a tax for purpose of Congress' Article I taxing authority, thus giving Congress power to enact the ACA. The majority agreed with that.

Do you remember how much criticism the Solicitor General received from some after oral argument. Many said that not only was he stumbling and ineffective but his seemingly contradictory arguments on the tax issues were lame. Well, it appears that ineffective and lame won the day.

Here is the relevant language from the Roberts opinion. First, the Court sets up the issue,
Government’s tax power argument asks us to view the statute differently than we did in considering its com- merce power theory. In making its Commerce Clause argument, the Government defended the mandate as a regulation requiring individuals to purchase health insurance. The Government does not claim that the taxing power allows Congress to issue such a command. Instead, the Government asks us to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product.
Then he explains that the Court must find any reasonable reading that allows a law to be sustained,
The text of a statute can sometimes have more than one possible meaning. To take a familiar example, a law that reads “no vehicles in the park” might, or might not, ban bicycles in the park. And it is well established that if a statute has two possible meanings, one of which violates the Constitution, courts should adopt the meaning that does not do so. Justice Story said that 180 years ago: “No court ought, unless the terms of an act rendered it unavoidable, to give a construction to it which should involve a violation, however unintentional, of the constitution.” Parsons v. Bedford, 3 Pet. 433, 448–449 (1830). Justice Holmes made the same point a century later: “[T]he rule is settled that as between two possible interpretations of a statute, by one of which it would be unconstitutional and by the other valid, our plain duty is to adopt that which will save the Act.” Blodgett v. Holden, 275 U. S. 142, 148 (1927) (concurring opinion). The most straightforward reading of the mandate is that it commands individuals to purchase insurance. After all, it states that individuals “shall” maintain health insurance. 26 U. S. C. §5000A(a). Congress thought it could enact such a command under the Commerce Clause, and the Government primarily defended the law on that basis. But, for the reasons explained above, the Commerce Clause does not give Congress that power. Under our precedent, it is therefore necessary to ask whether the Government’s alternative reading of the statute—that it only imposes a tax on those without insurance—is a reasonable one.
Then he analyses the law to discern its essence as a tax,
Under the mandate, if an individual does not maintain health insurance, the only consequence is that he must make an additional payment to the IRS when he pays his taxes. See §5000A(b). That, according to the Government, means the mandate can be regarded as establishing a condition—not owning health insurance—that triggers a tax—the required payment to the IRS. Under that theory, the mandate is not a legal command to buy insurance. Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax. . . . . . The exaction the Affordable Care Act imposes on those without health insurance looks like a tax in many re- spects. The “[s]hared responsibility payment,” as the statute entitles it, is paid into the Treasury by “tax- payer[s]” when they file their tax returns. 26 U. S. C. §5000A(b). It does not apply to individuals who do not pay federal income taxes because their household income is less than the filing threshold in the Internal Revenue Code. §5000A(e)(2). For taxpayers who do owe the pay- ment, its amount is determined by such familiar factors as taxable income, number of dependents, and joint filing status. §§5000A(b)(3), (c)(2), (c)(4). The requirement to pay is found in the Internal Revenue Code and enforced by the IRS, which—as we previously explained—must assess and collect it “in the same manner as taxes.” Supra, at 13–14. This process yields the essential feature of any tax: it produces at least some revenue for the Government. United States v. Kahriger, 345 U. S. 22, 28, n. 4 (1953). Indeed, the payment is expected to raise about $4 billion per year by 2017. Congressional Budget Office, Payments of Penalties for Being Uninsured Under the Patient Pro- tection and Affordable Care Act (Apr. 30, 2010), in Selected CBO Publications Related to Health Care Legislation, 2009–2010, p. 71 (rev. 2010).
Finally, he explains that the fact it is labeled as a "penalty" does not mean it isn't a tax for this purpose
It is of course true that the Act describes the payment as a “penalty,” not a “tax.” But while that label is fatal to the application of the Anti-Injunction Act, supra, at 12–13, it does not determine whether the payment may be viewed as an exercise of Congress’s taxing power. It is up to Congress whether to apply the Anti-Injunction Act to any particular statute, so it makes sense to be guided by Con- gress’s choice of label on that question. That choice does not, however, control whether an exaction is within Congress’s constitutional power to tax.
Although many thought the Solicitor General's argument was bizarre and convoluted, it won the day.