Oil barons needn't fear the green machines

By Lee Wild
Date: Friday 18 Sep 2009
LONDON (ShareCast) - Oil bosses are furiously spending billions of dollars trying to find enough of the black stuff to help us maintain our love affair with the car. So, imagine the look on their faces this week when the world’s biggest auto makers wheeled out an army of electric concept cars at the Frankfurt motor show. ‘Damn them pesky greens’, you could hear them cry as Volkswagen claimed its L1 tandem two-seater diesel-electric hybrid concept car will nudge 200 miles-per-gallon. Other manufacturers also rushed to unveil their own fuel efficient, low emission vehicles they hope will lure environmentally conscious drivers to the showroom. But the oil barons really shouldn’t worry too much about the potential impact on their precious revenue, certainly not for the next decade or so. First of all, these super efficient cars that can get you from London to Manchester on a gallon of fuel aren’t in production yet. The 1.6-litre L1 won’t hit the road until 2013, while many experts doubt Nissan’s all-electric Leaf will do 367mpg and GM’s plug-in hybrid Chevy Volt will wring out 230mpg. Audi’s North American President Johan de Nysschen was definitely unimpressed. He reportedly called the Chevy Volt a ‘car for idiots’, later denied, and said potential buyers are part of an ‘intellectual elite who want to show what enlightened souls they are’. This new technology also doesn’t come cheap. VW haven’t put a price on the L1, but they’re unlikely to be giving away a car that boasts impressive carbon-fibre coachwork and television cameras instead of wing mirrors. Of course, there will be cheaper alternatives. Renault promises a big push on electric vehicles, planning production of four models by 2012 and promising to make at least 100,000 by 2016. Chief executive Carlos Ghosn told Frankfurt show-goers the range will ‘bring environmental soundness at a price everyone can afford’. But then there’s performance. The L1 will manage a top speed of just 99mph and labour from 0-62mph in over 14 seconds, while Renault’s jazzy Kangoo Be Bop Z.E. (Zero Emissions) will take about 15 seconds and do just 80mph. OK, so you don’t mind paying a bit more if it’ll save the planet, and you’re not a boy racer so aren’t going to be breaking the speed limit. But you’re not going to get very far. Electric cars generally run for between 40 and 120 miles before they need recharging, a process that can take as long as seven hours. VW’s strangely-named E.Up! might do 80 miles if it ever goes into production, good enough for the school run, but not much more. Governments have said they’ll pump millions of dollars and euros into making the electric car a viable alternative to petrol driven vehicles. But analysts at IHS Global Insight predict production of purely electric cars will jump to just 58,000 in 2011 from 9,500 this year. To put this in perspective, the International Organization of Motor Vehicle Manufacturers said 52.6m passenger cars were made in 2008. Phil Gott, a director for automotive consulting at IHS Global Insight, told Sharecast the penetration of electric vehicles will depend on oil demand, although he believes the ramp up will be so slow that the oil industry will see little impact until after 2020. ‘Even a reasonably aggressive acceleration of electric vehicle sales will not have a significant impact on the energy mix until after 2020, or even 2025,’ he said. Gott admits the situation is uncertain post-2020 as we’ll be closer to the ‘doomsday forecasts’ concerning global warming. Urbanisation and congestion will also have increased, which could boost the market for electric vehicles. ‘A much bigger impact on the oil industry will come from bio fuels and other green fuels rather than electric vehicles until post 2030,' Gott says, 'unless something happens to make governments incentivise the take up of green vehicles.’