Germany, Electric Cars and Collapse

Germany wants to put one million electric cars on the road by 2020 but is falling a wee bit short – to date there are about 4500 such cars clogging up the autobahns. And maybe that’s a good thing, at least in the short term:

But the Ministry of Economics and Technology argues that placing strict limits on vehicle charging would require electricity providers to concentrate renewable energy generation in areas with large shares of electric vehicles. This could overburden the power grid and threaten the country with blackouts, according to renewable energy experts within the ministry.

Given the short time left to get 996,000 electric cars onto the road, I was poking around to see if the country was offering tax rebates, as the United States and other countries are doing to seed the marketplace. It appears not, at least not yet:

Germany has not decided whether it too will offer subsidies to electric vehicle consumers. The government estimates, however, that subsidizing as much as one-third of the cost of a vehicle's battery should allow for competitiveness with gasoline-powered vehicle counterparts. How the subsidy would be financed remains to be decided, but likely sources include general tax revenue or the country's relatively high gasoline tax.

Not only is the market nascent, but so is government policy regarding it. And let’s put these numbers in proper context: Germany has about 53 million cars on the road, so even the goal has a smell of the nascent about it.

To date, the electric (and hybrid) car market has not caught much traction. The most compelling reason for this (among several plausible explanations) is that they are too expensive – $40,000 at a minimum. About a third of that cost goes to the battery. But what if that changed?

New research from analysts at the McKinsey & Company suggests that the price for lithium-ion batteries could fall by as much as two-thirds by 2020. Instead of $600 per kilowatt-hour today, batteries would cost just $200/kwh in 2020 and $150/kwh in 2025. And that, the report suggests, would upend the entire automobile industry.

That leads to the conclusion that Germany and the U.S. are risking that this will happen and the appeal of the cars will increase. Everything aligns rather nicely in 2020, too, though that’s largely guesswork. And the reasons people might not want such cars regardless of cost will still have to be overcome. So the risk remains high – so does the reward, if reward there will be.

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Electric cars and nuclear energy have always seemed a natural pair, because the latter can produce the electricity on grids as they currently exist while “smart” grids (which can manage the intermittency of renewable energy sources better) are built out. These are exceptionally large infrastructure projects and just on cost alone, you wouldn’t want to try to build one in a year even if you could. Hence, the German energy grid as it is threatens to collapse if it tries to power cars with renewable energy sources.

And, as it happens, it doesn’t need cars to (almost) bring that about.

Germany’s lights were kept on by solar power last winter, after Berlin’s rapid phase out of nuclear power brought the country to within a whisker of complete breakdown, senior energy industry sources say.

And that’s because February was an uncharacteristically sunny month – want to count on that happening next February? Or the next?

“The data don’t lie,” Brandon Mitchener, a spokesman for First Solar, a leading PV manufacturer, told EurActiv. “They prove that solar and wind can provide real power right when it’s needed most, when demand is at its peak.”

Feels almost pagan, doesn’t it? We needed the sun and the sun responded. May the sun always respond thusly.

Germans love cars almost as much as do Americans – their automotive industries contribute equally to their national identities. I believe this sporty little number is a prototype made by Daimler AG.