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Santa Monica Bets on Electric Cars, but Consumers Are Slow to Switch

September 20, 2013 by

But even here, in this wealthy, environmentally conscious city of 90,000 west of Los Angeles, only a core group of owners has switched from traditional gasoline-powered cars.

Less than 4 percent of registered cars run only on battery power, according to an analysis by the industry researcher Edmunds.com of data from R.L. Polk, which records vehicle registrations nationwide. Hybrids, which run on some combination of gasoline and battery power, account for 15.5 percent, the data says, but many of those are traditional hybrids, which do not require a plug-in cord for recharging.

RoseMary Regalbuto, a Santa Monica resident, bought a Ford C-Max Energi plug-in hybrid this year for the two-mile commute between her home and her office, where she is chief executive of Meals on Wheels West.

She wanted to reduce emissions and spend less on gas but said that going fully electric was too risky, especially for longer work trips to downtown Los Angeles or cities like Santa Clarita about 30 miles north.

“I wouldn’t necessarily be able to plug in on the other end,” she said.

The car gets 22 miles on a charge. Ms. Regalbuto has filled her tank only twice in the 2,200 miles she has put on the odometer, charging at home every other night. When she or her husband, who drives a Ford Fusion plug-in hybrid, run the air-conditioning at home while charging their cars, the fuse blows, she said.

For now, automakers’ push to sell electric cars “has sparked sales to early adopters but has failed to encourage mainstream consumers,” said Jean François Tremblay, director at Ernst Young’s Global Automotive Center.

Higher sticker prices (even after a $7,500 tax credit), shorter ranges and a lack of a national network of charging stations are among the reasons consumers are shying away from buying electric vehicles in favor of gasoline engines, Mr. Tremblay said.

For automakers, the reluctance underscores how difficult it will be for them to meet strict federal and state mandates on fuel efficiency and pollution over the next 12 years.

California’s law to reduce pollution, for example, requires that 15.4 percent of automakers’ vehicles be powered by alternative technology by 2025. As a result, some automakers are producing electric vehicles just for California and a handful of other states. That includes the electric versions of the Honda Fit and Fiat 500. And the federal government is requiring automakers to nearly double their vehicles’ average fuel economy by 2025.

Santa Monica would seem like the ideal market. With an average household income of more than $71,000, its residents can afford the higher upfront cost of electric cars. City officials have also tried to make it easy to own them. Four years ago, even before the all-electric Nissan Leaf was released, the city began a push to install public charging stations at its parking lots, shopping centers and streets downtown, where it offers electricity free. Today, Santa Monica has 42 charging stations, with 80 more on the way by early next year.

The city offers free parking to any vehicle displaying the state-issued sticker that allows access to the car pool lanes, and the Santa Monica city government has also made it easier for residents to install chargers at home by waiving electric permit fees and speeding up the approval process.

“We’ve worked to make it an over-the-counter process,” said Dean Kubani, director of the city’s Office of Sustainability and the Environment.

The city, known as a surfing haven, also has one of the strongest environmental records in the nation. In 1982, it created one of the first municipal curbside recycling programs, and it has led other California cities in a ban on plastic bags at drugstores and supermarkets.

“Santa Monica has a long history of progressive politics,” Mr. Kubani said. “It’s attracted the type of person who tends to support environmental policy.”

The efforts to encourage electric-car ownership are bearing some fruit here compared with the rest of the nation. The city’s registration rate of 3.6 percent for all-electric cars is the highest in the United States, outside of two towns in Silicon Valley. About 90 percent of the municipal fleet runs on alternative fuels, including natural gas, biodiesel and battery power.

Article source: http://www.nytimes.com/2013/09/21/business/santa-monica-bets-on-electric-cars-but-consumers-are-slow-to-switch.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Dutch Put Electric Cars to the Test

February 9, 2013 by Leave a Comment

But electric vehicles have improved, the network of charging stations in the Netherlands has expanded and drivers like Mr. Langevoort are getting used to the particularities of electric driving. “I used to be a real petrol head,” said Mr. Langevoort, who works for a company that manages electricity networks. “Now, I’ve sold my petrol car.”

Although a number of European countries and a few American states are aggressively promoting the use of electric vehicles to reduce planet-warming emissions and pollution, the Netherlands provides perhaps the ultimate feasibility test. If electric vehicles catch on anywhere, it should be here: a small country — about 100 miles east to west — with gas prices of about $8.50 a gallon and a long tradition of environmental activism.

To encourage electric driving, the country is developing a rapidly expanding national grid of charging stations in cities and along highways; and Amsterdam offers owners of electric vehicles free street parking and charging. With hefty tax breaks, promotional leases and cheaper operating costs, the vehicles offer driving costs no more than those of conventional cars, some analysts say.

The number of plug-in electric vehicles in the Netherlands soared eightfold to about 7,500 last year, and charging posts dot the sidewalks. “In a few countries you’re starting to see a number of E.V.’s on the road, especially in capital cities; they’re very visible,” said Peder Jensen, a transportation expert at the European Environment Agency.

And yet, experiments with the cars in the Netherlands and Denmark also underscore the challenges facing this new technology. Sales have been lower than politicians and automakers hoped, representing under 1 percent of new vehicles, even here. “It seems that the industry has not convinced consumers that they can do this,” Mr. Jensen said. “If they fail over the next few years, I think investors will pull out, and that will be a problem.”

Last year 120,000 plug-in electric vehicles were sold globally, according to a recent report by Pike Research, an industry analyst group, which predicts 40 percent annual growth between now and 2020. In 2012, 52,000 were sold in the United States, which now has 12,000 charging stations, according to the automotive consulting firm J. D. Power; but they are dispersed over a large area. Those statistics include pure electric cars and plug-in hybrids, which can run on gas or propane once the battery loses power.

Though many analysts had assigned electric vehicles to the second-car niche, a 2012 survey of Dutch drivers of the cars by the consulting firm Accenture found that most of them ended up being used as a family’s primary vehicle.

Drivers learned to figure out how far they could drive on a charge, overcoming what has been dubbed “range anxiety.” They started off cautiously driving straight from home to the office, knowing they could charge at one or both sites. Over time, they expanded their driving repertoire, learning where to find charging points in garages and along highways — a smartphone app contains them all — much as people learn the locations of convenient A.T.M.’s. That task was made easier by the growing number of chain stores and restaurants offering parking spots with charging outlets, so that customers can refuel while they dine or shop.

Still, a layer of complexity limits acceptance. “There’s still some planning; it’s a bit like a puzzle,” said Maarten Noom, an Accenture consultant who drives an electric vehicle. “It’s not the same ease of mind as with a gas car.”

Mr. Noom, for example, charges at his office and overnight at home, but he switches to a gasoline car when his appointments are scattered around the Netherlands, since he sometimes drives hundreds of miles in a day. Charging at home uses low voltage and takes four to eight hours. New high-voltage rapid charging stations give an 80 percent charge in 20 to 30 minutes, but they are costly to install and still rare.

Mr. Langevoort, the electricity company manager, says he now leaves for work later because his Opel Ampera’s charge goes further as the day warms.

Some electric car leasing programs here provide free or discounted gas vehicles for those who want to take a weeklong driving vacation around Europe.

Many experts say the lack of a uniform business model in the fledgling market is also a hindrance. Contracts for charging are sometimes purchased along with the car and tied to a particular charging network, much as cellphones are linked to a certain carrier. What is more, the penetration of the various networks varies depending on the region, and technology is not always interchangeable.

In Europe, the charging network run by New Motion delivers electricity from pumplike devices. One rival, Better Place, offers swap stations where drivers get a fresh battery in addition to charging points. In the United States, SAE International, an organization of scientists and vehicle engineers, recently adopted a standard charging plug nationwide so that most electric vehicles can use any charging station. But some companies, like Tesla Motors, operate closed networks of high-performance “superchargers.”

“That type of uncertainty is also unsettling to customers,” said Mike Omotoso, a senior manager of forecasting at LMC Automotive, a market research firm. “There’s a Wild West feel, with a lot of companies jumping in. But ultimately there will be a shakeout and consolidation.”

In many European countries there is a good financial case for driving electric. In Denmark, taxes on new luxury cars can be 200 percent of the sticker price, whereas electric vehicles come tax-free. In the Netherlands, gas costs about five times as much as the electricity needed for a similar journey.

While there are some tax breaks for electric vehicle purchases in the United States, the Obama administration has relied more on exhortation to make electric vehicles “as affordable and convenient as gasoline-powered cars in the next 10 years.” Last month, the Energy Department announced its Workplace Charging Challenge, in which Google, Verizon, Eli Lilly, Nissan and other companies pledged to put charging infrastructure in at least one major office.

Mr. Jensen, of the European Environment Agency, said that a big infusion of money could be needed to improve infrastructure in those countries seeking to increase the use of electric vehicles.

When he looked into buying an electric car, the charging system would not fit in his garage, Mr. Jensen said, and few are willing to drive around Europe with a trunk full of adapters. “I think the companies who will win are not necessarily the ones that have the best technology, but the ones that form the best alliances,” he said. “It you have a mobile phone — and even more a car — the most important thing is that you can use it wherever you go.”

Article source: http://www.nytimes.com/2013/02/10/world/europe/dutch-put-electric-cars-to-the-test.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: Utilities Turn to Mergers as Demand for Power Slows

June 17, 2011 by Leave a Comment

A Progress Energy nuclear plant in New Hill, N.C.  The utility’s merger with Duke Energy is pending.Jim R. Bounds/Bloomberg NewsA Progress Energy nuclear plant in New Hill, N.C. The utility’s merger with Duke Energy is pending.

Even as the number of tablet computers, electric vehicles and Internet data centers multiply rapidly, electricity demand is barely growing. Low-power processors, smarter manufacturing plants, rooftop solar panels and other technologies are keeping a lid on electricity use.

The slowdown is spurring a fresh cycle of deal-making among publicly traded utilities. Not unlike the wave of consolidation that came after deregulation in the 1990s, major electricity players are looking to get bigger to protect their bottom lines.

So far this year, utilities in the United States have announced mergers and acquisitions with a total value of $44 billion. That compares with $30 billion in all of 2010, according to Thomson Reuters.

If approved, Duke’s Energy’s $26 billion deal in January to buy Progress Energy would create the country’s largest utility. The combined company would own power plants with 57 gigawatts of capacity, generate $22.7 billion in revenue and serve 7.1 million customers across six states.

The surge of deals “marks the acceleration of a long-awaited consolidation of the U.S. electric utility industry,” said Todd A. Shipman, credit analyst of utilities and infrastructure ratings at Standard Poor’s.

By his take, today’s deal-making will pick up from the previous era of consolidation. Since deregulation, the industry has shrunk to roughly 50 publicly traded companies, from 100. That number could be halved to 25 in as little as five years, Mr. Shipman said.

While the usual financial pressures to fortify balance sheets and improve credit quality are once again pushing mergers and acquisitions, environmental dynamics are playing a bigger role than in the past. Utilities — facing pending regulation on greenhouse gas emissions and renewed enforcement of older rules on air pollution — must reckon with the rising costs of compliance.

The added expenses come just as growth in electricity demand is being crimped by efficiency gains. Electricity usage increased 0.5 percent a year on average for the decade that ended 2010, down from 2.4 percent a year during the 1990s, according to the Energy Information Administration.

The anemic figures represent the tail end of a six-decade deceleration of electricity demand. The rate peaked in the 1950s, at 9.8 percent a year, during a period of supercharged industrial growth and home construction.

Customers’ plans reflect a secular shift. Nine out of 10 businesses and 70 percent of consumers have set specific goals to lower their electricity costs, according to a recent study by the Deloitte Center for Energy Solutions with the Harrison Group, a research services firm. Nearly a third of companies polled have goals to self-generate electricity, whether through solar panels, reuse of wasted heat or other methods.

Utilities are adjusting to the new reality. With customers tapering their electricity use, Consolidated Edison is deferring the installation of transformers and other costly capital equipment in New York, said Rebecca Craft, the company’s director of energy efficiency and demand management. Con Ed trimmed its outlook for how much the city’s appetite for power will grow in the coming decade to 1 percent a year, from 1.7 percent.

“Practically every utility today is thinking about flattened growth of demand for energy,” said Gregory E. Aliff, a vice chairman of energy and resources at Deloitte.

“In the last wave of utility mergers, it was more offensive — companies were seeking growth,” he said. “Today is different: the industry is more on the defensive. Companies face a question of how to grow, and consolidation is a way to grow earnings.”

New environmental regulations are only heightening the growth challenge. The industry faces potentially sizable bills to meet a raft of air pollution rules being pushed by the White House.

Utilities with a big reliance on coal face the steepest emissions penalties. American Electric Power, which derives about 85 percent of its power from coal, recently estimated the new rules could cost $6 billion to $8 billion in coming years. The money would pay for adding filters to power plant smokestacks, closing coal-fired generators and switching to lower-emission natural gas generators.

Some merger-minded utilities are shedding assets to lower their exposure to such rules. As part of its $7.9 billion deal to buy Constellation Energy, Exelon plans to sell a batch of coal-fired plants. While coal fuels 12 percent of their current generation, the companies aim to halve that share after the merger.

A.E.P., Duke and Exelon declined to comment.

Unlike in previous periods of consolidation, regulators seem more willing to approve deals, given the sluggish economy and job market. Previously, the process could drag on for years, but recent mergers have been moving along more quickly.

This month Connecticut regulators effectively approved Northeast Utilities’ tie-up with NStar, despite opposition from the state’s attorney general. When the $6.9 billion deal including debt was announced last October, the companies pledged that “no broad-based, corporatewide layoffs or early retirements are planned.”

Said Mr. Shipman of S.P., “In most of these deals, executives have been careful to emphasize that jobs will be spared, rather than cut.”

Article source: http://feeds.nytimes.com/click.phdo?i=c068dd9ddfeb851711c45dc0080d31d9

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