Wednesday, June 14, 2006

The Whiff of Conspiracy

Last week's edition of NOW on PBS featured excerpts from a new documentary on the failure of battery-powered cars in the 1990s, structured as an interview with the film's director, Chris Paine. Throughout, there was the whiff of conspiracy: car companies and oil companies working together to kill the electric car in the marketplace, including junking all the ones already leased to consumers--and some that had never left the car lot. But having participated in this episode of automotive history in a very small way, myself, I could only shake my head at the glaring misinterpretation of facts. The EV-1 wasn't killed by corporate greed or collusion, but by simple market economics.

As I've mentioned several times over the course of my blogging, I had a chance to drive GM's EV-1 battery powered car. It was wonderful; not quite the flying car I'd been promised for the 21st century, but still very high-tech, sleek, powerful and quiet. I can fully appreciate the almost fanatical devotion of EV-1 owners--lessees, really, since none was ever sold outright--and their sense of outrage when GM took the cars back at the end of their 3-year leases. So what went wrong, and why didn't these cars take off and thrive?

There were two fundamental problems, one of which has been done to death in the media: the limited range of battery cars. The first EV-1's were equipped with 26 conventional lead-acid batteries and could go 50-60 miles in real-world driving. The second generation, which came out a year or two later, had nickel metal-hydride batteries and could go about twice as far before needing to be recharged. Now, we can argue about how much of our actual driving would fit nicely within this range, and how terrific these cars would be for urban lifestyles, but only a tiny handful of consumers seemed willing to look past this limitation.

The bigger issue, which went hand-in-hand with the range problem, was the challenge of developing a recharging infrastructure, and this is where my own small contribution came in. I worked with Texaco's marketing department in Southern California to set up EV-1 recharging at a few selected service stations, in order to gain experience with the technology. The cost of buying and installing one "quick" recharger, which would give an EV-1 about a 1/3 charge in 15 or 20 minutes, was around $30,000. Service station owners weren't interested in paying for this, since they didn't expect enough battery car traffic to recoup their investment, so the corporation had to pick up the tab. Even worse, the rules under which the electric car was launched prohibited charging customers a fee to recharge them. So the economic incentive for the service station business to adopt this new technology was nil.

As if that weren't bad enough, fire codes prohibited putting a high-voltage charging facility near the gas pumps. So even if a retail site was willing to host a recharger as a public service, it had to be large enough to provide enormous separation between the gasoline and electric operations. We only found a couple of sites in our network that would have been suitable.

Meanwhile, a competing network of recharging stations was springing up--mostly paid for by the state or city--with rechargers at parking garages, Saturn dealers, libraries, and even a few restaurants. I think there were a hundred or so by the time the program ended. They never reached a sufficient extent to assure consumers that their battery car wouldn't strand them somewhere on the way to work or home. This was the deal-killer, as far as I could tell. Total EV-1 "sales" on a cumulative basis were about 1100, much worse than that of the Edsel that is synonymous with auto industry failures.

Finally, I'd like to report on attitudes within a large oil company about this threatening innovation. Texaco's Chief Technology Officer at the time was fascinated by the EV-1 and was the one who got me involved in the project. The response of our marketing people to our plan to help recharge them ranged from moderate interest--largely as a PR initiative--to cold skepticism. The reaction at corporate headquarters was indifference. I want to stress that I didn't encounter a single manager who saw battery cars as a threat to the core business of finding oil and gas and selling their products to customers.

As to GM, although the documentary makes much of the company's half-hearted efforts to sell the EV-1, every GM official I met at the time was quite gung ho on the technology. And while they might now regret their decision to kill the EV-1 after investing hundreds of millions in it, what corporation in any line of business could afford to sustain such an expensive but remarkably unsuccessful effort? Conspiracy titilates us, but the truth is often more mundane. The EV-1 failed as a product launch, not as an idea that threatened vested interests.

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