Toward A New Economy by Scott A. Swail


A business case and policy study in the application of plug-in electric vehicles for municipal and commercial fleet operators with the goal of reducing costs and emissions while transforming transportation, the environment and the economy.

A thesis submitted to the faculty of
San Francisco State University
in partial fulfillment of the
requirements for the degree

Master of Business Administration

by

Scott A. Swail
San Francisco, California
May 15, 2008


ABSTRACT

The purpose of this research is to assess the potential benefits of plug-in hybrid electric vehicles (PHEV) in the interest of achieving the City of San Jose’s Green Fleet Policy objectives. The goal of this research is to determine the net greenhouse gas reduction (GHG) impact of converting the City’s fleet of light duty vehicles (LDV) to PHEVs as well as the life cycle costs of PHEVs relative to conventional vehicles to determine their potential benefits. The methods used in this research include a literature review. Additional research methods consisted of interviews with City and industry experts, as well as data analysis from the City of San Jose vehicle fleet and environmental services.

In conclusion, PHEVs were found to have lower life cycle operating costs over a ten year life cycle than conventional internal combustion engine vehicles. In addition, PHEVs can significantly reduce GHG and allow the City of San Jose to double its goal of twenty five percent GHG reduction by 2013.


1.0 Introduction

On October 5, 2007, Mayor Chuck Reed of the City of San Jose unveiled his Green Vision consisting of a 10-point plan to improve the environment. One of Mayor Reed’s goals in this plan is the “greening” of the city’s fleet vehicles. Specifically, Mayor Reed calls for one-hundred percent of the city’s fleet vehicles to run entirely on alternative fuels in 15 years. These alternative fuels consist of compressed natural gas (CNG), flex fuel such as ethanol/gas mix and “hopefully plug-in hybrid”[1] electric vehicles (PHEV). According to the San Jose Mercury News, the city maintains a fleet of approximately 2,700 vehicles, of which 300 presently use alternative fuels.[2]

In discussions with the City’s Deputy Director of General Services, who is responsible for the city’s fleet vehicles, the city has adopted alternative fuel vehicles for fleet use, but the application and feasibility of plug-in hybrid electric vehicles (PHEV) is not well understood. The purpose of this research is to review the definition of PHEVs and their capabilities and limitations, and research and assess PHEV application feasibility for the City of San Jose’s use of fleet vehicles in the interest of achieving the City’s Green Fleet Policy objectives. This research will focus specifically on non-emergency, light-duty vehicle (LDV) class of passenger vehicles that currently use unleaded gasoline and have internal combustion engines (ICE) as the drive-train. The goal of this research is to determine the net greenhouse gas (GHG) reduction impact of LDV fleet conversion to PHEVs as well as life cycle costs of PHEV relative to conventional vehicles to aid in the planning and decision-making toward helping achieve the Green Fleet Policy objectives.

1.1 Background: City of San Jose Green Fleet Policy

Underlying Mayor Reed’s Green Cars vision is the City of San Jose’s Green Fleet Policy, adopted on September 1, 2007. The city established this policy in recognition of the fact that in the U.S. vehicle transportation accounts for a large percentage of GHG emissions. The City’s fleet policy states that “one-third of the city’s GHG emissions come from vehicles.”[3] However, the California Air Resource Board (CARB) report on Climate Change, August 2004 states that “California's transportation sector is the single largest contributor of GHG in the State, producing close to sixty percent of all such emissions.”[4]

In order to curb the local production of GHG emissions, the city sought to upgrade its own fleet of vehicles with the adoption of alternative-fuels. With this policy objective, the city also hopes to save on fuel and vehicle maintenance costs.

Excerpts from City’s Green Fleet Policy goals and objectives include the following:[3]

“The City shall make every effort to purchase and use the lowest emission vehicle or equipment item possible, while taking into account the vehicle’s life-cycle costs (LCC) and the ability to support City operations and services.”

“Through implementation of this policy, the City shall seek to decrease total vehicle emissions by 25 percent by fiscal year 2012-13, using 2002-03 as a baseline year. Current and future emissions targets will be developed and evaluated within the context of the City’s overall greenhouse gas reduction strategies.”

The City has adopted specific measures that are outlined in this Green Fleet policy. These are:[5]

“Purchase non-emergency fleet vehicles that provide the best available net reduction in vehicle fleet emissions, including, but not limited to, the purchase of alternative fueled and hybrid vehicles.”

“Reduce emissions of carbon dioxide (CO2), a critical greenhouse gas produced through combustion of fossil fuels – make reduced CO2 emissions a critical purchase criterion”

“Reduce emissions of carbon monoxide (CO), nitrogen oxides (NOX), and particulate matter (PM)—all pollutants produced by combustion of fossil fuels that endanger public health.”

“The Green Fleet policy deems the primary measure of the City’s success in accomplishing the above objectives as the annual progress toward meeting the goal of reducing vehicle emissions by 25% by the year 2012-13. The policy deems as secondary measures of the City’s success in accomplishing the above objectives to include a reduction in the amount of emissions of the following greenhouse gases from City-operated vehicles:”

“1) Carbon Dioxide (CO2)
“2) Carbon Monoxide (CO)
“3) Nitrogen Oxides (NOX)
“4) Particulate Matter (PM)

“as well as annual reductions in:

“1) The total gallons of gasoline and diesel used in City vehicles
“2) Total fuel costs
“3) Total cost of fleet operations per vehicle.

“The baseline year for determining the effectiveness of the Green Fleet program is fiscal year 2002-03. This baseline is also utilized for broader Greenhouse Gas (GHG) reduction initiatives the City is participating in, and to monitor specific emissions parameters that have been captured since then.”

“The City shall make every effort to obtain the “cleanest” vehicles possible as measured by available emissions certification standards and those published by the manufacturers.”

“Light Duty Vehicles: The City shall purchase or lease only models of passenger vehicles and light-duty trucks that are rated as low emission vehicle (LEV) or better by the EPA, where service levels are not negatively impacted.”

“Each replacement vehicle will achieve the greatest level of emission reductions possible, while still meeting the operational needs of the City.”

“Reduce Vehicle Size: Encourage the selection of vehicles of a smaller class size whenever possible to achieve increased miles per gallon and lower emissions.”

“Increase Use of Alternate Fuel Vehicles and Equipment: Alternate Fuel Vehicles and Equipment will be considered for procurement and utilization when their use is appropriate to the application and life-cycle cost analysis demonstrates the procurement and utilization of the vehicle to be economically feasible.”

“Clean” fuels (such as compressed natural gas, ethanol, electricity and biodiesel) shall be used when feasible. Feasibility assessment will include considerations of vehicles or equipment able to utilize the “clean” fuel, vehicle costs, fuel availability, and the ability to utilize existing fueling infrastructure. Vehicles using these fuel types will be strongly considered when evaluating vehicle replacement.”


San Jose’s Green Fleet Policy can best be summarized as having three primary objectives. These are: a) purchase and use the lowest emission vehicle (LEV) or equipment item possible, while b) taking into account the vehicle’s life-cycle costs (LCC), as well as c) the ability to support City operations and services. However, only one of these objectives has a measurable goal. This goal is the reduction of vehicle emissions by twenty five percent by the year 2012-13. In the next section I will focus on reviewing literature specific to plug-in hybrid vehicles (PHEV) as it relates to each of these goals and objectives of the City’s Green Fleet Policy.


2.0 Literature Review

The purpose of this literature review is to focus research on each of the three categories of plug-in hybrid vehicles (PHEV) as they relate to the City’s policy objectives. The review is organized as follows:

1. PHEV performance, including driving range as a function of battery size and type and fuel efficiency, as vehicle replacement criteria in support of city operations and services.

2. The impact of PHEVs on CO2 greenhouse gas (GHG) emissions.

3. PHEV life cycle costs (LCC), including maintenance and operations costs, and payback period of the vehicles to evaluate economic feasibility.

4. Barriers to deploying PHEV

Literature sources reviewed consist of reports and conference proceedings published by the U.S. government, professional associations, and non-profit organizations (NPO), and articles appearing in newspapers and magazines. There was considerable literature and applied research from the U.S. Department of Energy (DOE) labs and non-profit organizations (NPO) on the battery performance, driving range and application testing of PHEVs. Literature and research reports from these organizations also extensively cover the impact of PHEVs on the greenhouse gas (GHG) emissions. I draw the conclusion from this plethora of research data that both government and industry momentum is backing the technology, with considerable research and development effort and resources.

Literature specific to PHEV life cycle costs, however, are not so plentiful since today’s PHEV vehicles consist of only after-market conversions and have not been in the market for very long. The Kintner-Meyer, et al., 2007 report from Pacific Northwest National Laboratory (DOE) provides an excellent and comprehensive technical and economic assessment that includes life cycle cost (LCC) analysis of PHEVs in comparison to conventional vehicles.

A report provided by Kurani, et al., 2007 from UC Davis serves as an excellent review of twenty three drivers of PHEV conversions, their experiences and opinions of the technology. This report would also serve as an excellent market research review for both automakers and potential fleet customers alike.

Additional PHEV literature and reviews are widely available on the Internet and cover a broad range of topics, from comparisons to standard hybrids, battery types, vehicle applications, and most of all, miles per gallon (MPG) performance and fuel cost savings. This literature points to the many factors to consider in achieving good fuel economy and low LCC for vehicles.

In the next section, I will first define exactly what a PHEV is to establish a baseline of knowledge, and then describe its performance and range, battery life and cost, impact on emissions, and finally – life cycle cost comparison to conventional vehicles.

2.1 Definition of Plug-in Hybrid Electric Vehicle (PHEV)

As one might infer from the name, a plug-in hybrid electric vehicle (PHEV) is a mash-up of both a battery-electric vehicle (BEV) and a standard hybrid electric vehicle (HEV). The power provided to the electric motor comes from an on-board battery system, which is charged by standard 110V or 220V AC electrical current, i.e., utility grid via a plug-in wall socket, or regenerative power[6] produced by the vehicle. A PHEV can power its drive train from a combination of electric motor and from a traditional internal combustion engine (ICE), independently or simultaneously. The difference between a PHEV and a standard hybrid vehicle is that a PHEV operates in both a charge-depleting mode as well as a charge-sustaining mode, whereas a standard hybrid operates in charge-sustaining mode; the vehicle’s battery system maintains a constant state-of-charge. The premise behind PHEVs is that they can be charged daily, at a lower utility rate than the comparable cost of gasoline, to not only suffice the average daily driving needs of most drivers, but also to reduce GHG emissions and lessen the nation’s reliance on foreign oil.

PHEVs are not a new concept, notes Kurani, et al. 2007. In fact, the concept can be traced back over forty years when prototypes were developed with federal funding (Kurani, 2007). More recently, over the past ten to fifteen years, PHEVs have seen much R&D effort across industry, academia and government – ranging from the environmental non-government organization (NGOs and non-profits), universities, the U.S. Department of Energy labs, electric utility companies, battery manufacturers and even auto manufacturers (Kurani, et al. 2007); driven by rising fuel costs, pollution (greenhouse gas emissions), and dependency on foreign oil.

As stated in the City of San Jose’s Green Fleet Policy, and listed in the Background section of this report, the City must consider a vehicle’s ability to support operations and services. For this reason, it is worthwhile to investigate the performance and range of PHEVs to get a sense of the vehicle’s capabilities.

There are definitions of PHEV to identify their all-electric range (AER) capabilities. Several studies have denoted a vehicle’s AER range in miles or kilometers. For example, the Electric Power Research Institute (EPRI) distinguishes a PHEV with an AER of 20 miles as PHEV 20. A PHEV 40 would therefore have an AER of 40 miles, and so on. “All-electric range (AER) operation, however, is not essential for PHEVs”.[7] The vehicle’s AER is determined by various factors such as vehicle weight, size of electric motor, configuration in the allowable charge depletion mode, driving conditions, but primarily by the battery size (or power density) which I will discuss in more detail in a later section (EPRI, 2004).

Kurani, et al. (2007) point out there are variations in PHEV designs. “One design is to operate first in charge-depleting mode, then switch to charge-sustaining mode once the battery state-of-charge (SOC) reaches a design minimum.”[8] This type of operating mode is analogous to standard HEVs of today. However, PHEVs provide more energy storage than HEVs by incorporating “more on-board electricity storage” via larger batteries or batteries with better energy capacity.[8] This extra energy capacity equates to extended AER. The more AER a PHEV can sustain, the more displacement of fuel can be obtained, thus extending the vehicle’s miles per gallon (MPG) attainment, lowering fuel cost and lowering GHG emissions.

“PHEV designs that provide AER contrast to the “blended” operation of currently commercialized HEVs in that power from both the electricity and gasoline systems are more or less continuously combined to provide propulsion. The distance traveled before the design minimum state-of-charge (SOC) is reached is one measure of all-electric range (AER)”. [9] Other definitions have been proposed. Kurani, et al. (2007) note that the California Air Resources Board defined AER as the “distance traveled by the PHEV before the first instance of the ICE starting, regardless of battery SOC or operating mode. In essence, CARB—an air quality agency—is primarily interested in whether and how long a PHEV may operate as a “pure electric” or zero emission vehicle.”[9]

Alternatively, Kurani, et al.(2007) cite another AER definition provided by Gonder and Simpson where they argue that the “distance traveled before the vehicle switches from charge-depleting to charge-sustaining operation—regardless of whether the vehicle can operate in an electric-only mode at all—is a more “appropriate” definition of AER. That is, their definition is related to the size of the “electric storage system” relative to the energy and power demands of any particular vehicle, not the vehicle’s repertoire of operating modes, i.e., all-electric, all-ICE, or the blending of both.”[9] Kurani, et al. (2007) point out that this definition better captures the petroleum displacement effects of PHEVs and that such a definition “better serves the institutional mission of the U.S. Department of Energy.”[9] So, whether the objective of green fleets is zero emission performance or fuel displacement, there are definitions for each. In the case of the City of San Jose, its primary objective is lowering emissions. In this case, the definition of AER provided by California Air Resource Board (CARB) may be more suitable when evaluating vehicles. What’s more, both Toyota and GM have announced plans to introduce PHEVs in the mass market by 2009-10. GM’s Chevy Volt PHEV power train will be entirely driven by electricity in charge-depleting mode, and recharged by a small internal combustion engine - for this sole purpose only. Toyota’s Prius PHEV, on the other hand, will be an iteration of its current Prius hybrid, combining more battery energy to extend its AER in charge-depleting mode, before charge-sustaining mode is triggered.

With this understanding of the definition of a PHEV, I can now review the literature regarding the driving range performance that can be achieved by combining battery electric drive-trains with traditional internal combustion engine drive-trains. Vehicle performance is not necessarily related to speed, but rather the distance traveled in all-electric range (AER) and fuel efficiency. Distance in all-electric mode, and fuel efficiency are necessary for the City of San Jose Fleet Manager to understand, as any alternative-fuel replacement vehicle must support city operations and services.

2.2 Driving Range and Fuel Economy of PHEV

Like today’s hybrid electric vehicles (HEVs), Plug-in hybrids (PHEVs) are attractive because they improve fuel economy and displace gasoline consumption while also reducing GHG emissions. PHEVs, however, are more attractive than HEVs in the sense that the vehicles can be “plugged-in” to recharge a larger battery system to boost its AER and thus its fuel economy, as stated in miles per gallon (MPG) of gasoline. For example, a driver of a Toyota Prius PHEV prototype in Detroit claimed that he achieved a reading of 71 MPG according to his vehicle’s computer following a “4-mile loop through downtown and a short freeway blast”.[10]

According to the U.S. Department of Transportation, Federal Highway Administration, the entire U.S. fleet had an average miles per gallon of only 20.3 MPG, from 2001-2006. [11] In the above example, the PHEVs MPG performance represents a three hundred and fifty percent improvement in fuel economy over that of the average MPG reported by US DOT. But, one should not expect to sustain this level of fuel economy indefinitely. Kurani, et al. (2007) call attention to how to measure PHEV fuel economy and range of travel for a vehicle that uses both gasoline and electricity, especially since driving styles and refueling patterns will differ among individual drivers. The present custom is to measure fuel economy in miles per gallon (MPG). However, “PHEV designs that facilitate AER and those that operate in a blended mode introduces (sic) yet another bit of terminology and affects measurement of an important potential benefit of hybridizing automobility, i.e., “boosted range and fuel economy.””[12]

Boosted range is the distance traveled in charge-depleting mode until the battery reaches a state of charge level that is programmed by-design to engage the vehicle’s charge-sustaining operating mode. What this means is, after a PHEV vehicle depletes its battery to a specified level, the fuel economy declines because the vehicle’s gasoline-only fuel economy declines to that of a standard hybrid vehicle operating in charge-sustaining mode. Nevertheless, even the blended range makes PHEVs attractive in overall fuel cost savings (especially if access to an electric outlet is available and opportunity charging is maximized) because the overall AER of the vehicle is maximized, and refueling with gasoline is greatly reduced.

To offset fuel costs, the City of San Jose can analyze the mean average daily miles driven in its fleet of light duty vehicles, or by application use, and begin to convert this fleet to PHEVs. The PHEVs should, at a minimum, incorporate a battery system that achieves the average daily miles in all-electric range in order to maximize fuel cost savings. Based on literature review, I would expect to find that the City of San Jose light duty fleet travels no more than the average of twenty eight miles per day as cited in Kintner-Meyer, et al. 2007 from the DOT survey published in 2003. Furthermore, a study performed by Denholm & Short, NREL 2006, provides battery energy estimates for range and vehicle class. They assumed a fleet average usable battery capacity of 10.2 kWh. This average was determined by using a 5.0 kWh battery for a compact PHEV 20 and 14.4 kWh for a large SUV PHEV 40. However, since the focus of this study is on light duty class of vehicles in the city’s fleet, I expect to find that a battery capacity of 5.0 kWh and a range of twenty miles are adequate for the city’s application needs.

DOE’s Idaho National Laboratory - Advanced Vehicle Testing division performed fuel economy testing using after-market converted Prius plug-in PHEVs provided by Hymotion® and Energy CS®. The testing consisted of both urban and highway test environments. The researchers recorded MPG performance ranging from 72 to 154 MPG, and 61 to 106 MPG, respectively (U.S. Department of Energy - Vehicle Technologies Program, 2008). As illustrated in Figure 1, when the electric battery is depleted to a pre-defined state of charge level, the vehicle’s control module switches to its ICE power-train and fuel efficiency begins to decline. At this point, the vehicle operates in charge-sustaining mode. Nevertheless, the PHEV maintains fuel efficiency in excess of 60 MPG.




Figure 1: Illustration of PHEV Fuel Efficiency [13]


Additionally, a Google non-profit division, Google.org, has on-going investments and field research in alternative energy applications. One of its partner studies is a PHEV fleet consisting of both Toyota Prius PHEV and Ford Escape PHEV after-market conversions. Google’s fleet of four Prius PHEVs has demonstrated an average fuel economy of 68.4 MPG or 1.5 gallons of unleaded gasoline for every one hundred miles, as illustrated in Figure 2 below. Note that Google’s MPG fuel economy is in the range of the Idaho National Laboratory (INL) testing noted above. I would expect that the City of San Jose LDV fleet would achieve a MPG fuel economy rating comparable to both the INL and Google fleet results.




Figure 2: Google PHEV Conversions, Toyota Prius Average Fleet Fuel Efficiency
Source: www.rechargeit.org, or http://www.google.org/recharge/


In summary, battery technology plays a critical role in the range and fuel economy performance of PHEVs. Battery energy stored equates to extended driving range from the electric drive-train, and this AER displaces gasoline, thus extending the vehicles miles per gallon (MPG) attainment and lowering fuel costs. To maximize fuel cost savings, PHEVs should incorporate a battery energy storage capacity sufficient enough to achieve the City’s average daily miles in all-electric range. As PHEV battery technology improves, so will the AER, thereby further reducing trips to the gas station and fuel costs. It is the hope of many in the U.S. that PHEVs will not only radically improve fuel economy, but also be the first step toward reducing or eliminating the nation’s energy and transportation dependence on oil. In the next section, I will look at PHEV battery technology, life and cost so that the City of San Jose can better understand and assess how these functions will aid in the evaluation of PHEVs as potential fleet replacement vehicles.

2.3 PHEV Battery Technology, Life and Cost

As evidenced in Figure 1 and Figure 2, fuel economy is high in PHEVs. There is no doubt about the high interest amongst industry, researchers and consumers alike, as this level of fuel economy is unprecedented for passenger vehicles. However, battery life and cost pose just one challenge for automakers to manufacture and move PHEVs into mass market applications (ENN, 2005); a pre-cursor to the adoption of PHEVs as fleet replacements vehicles.

Dan Benjamin, Senior Analyst for ABI Research notes that “rechargeable batteries tend to die much faster if they are constantly discharged until empty.”[14] As mentioned previously, today’s factory hybrid vehicle uses regenerative power to charge the battery before it discharges too much (i.e., charge-sustaining mode), but plug-in hybrids are specifically intended to run longer on battery power (i.e., charge-depleting mode), before charge-sustaining mode is engaged and the vehicle operates with the internal combustion engine. “The result is higher rates of battery failure among PHEVs.”[14]

Benjamin explains that “when automakers experimented with pure electric vehicles, the batteries were intended to be replaced every few years. But to be cost-practical, batteries in hybrids are intended to last for the life of the vehicle.”[14] Due to this realization, automakers recognized that battery replacement cost is prohibitively expensive, and therefore they do not want to pay for this cost as part of a vehicle warranty. One particular battery technology, however, holds great promise. This battery technology is the rechargeable lithium-ion. Lithium-ion batteries are used ubiquitously today in many consumer product applications - from laptops to mobile phones. These batteries could push PHEV to that next level to satisfy auto manufacturers.

Lithium-ion batteries do not suffer from “memory effect”. This is best known as the loss in battery capacity when batteries are not fully depleted before being recharged (Economist, 2008). Lithium-ion has been tested by U.S. DOE labs to have a life-expectancy of eight to fifteen years (Howell, 2007). However, “getting accurate life prediction has been challenging, says David Howell.”[15]

There are many choices in battery technology to take into account, as well as the safety of these batteries. Lithium batteries are smaller and they pack more energy by volume compared to other battery technologies. As illustrated in Figure 3, lithium-ion batteries have about four times the energy density of standard lead acid batteries that are used in vehicles today.




Figure 3: Volume and Energy Density of Battery Technologies [15]


What makes the lithium-ion battery so appealing is its energy density. “Lithium-ion batteries are equivalent to having a gas tank that is four-times larger. This is where the driving range comes from. It comes at a price today, but I think that the driving range is one of the most important things to make electric cars become acceptable,” says Eberhard, CEO of Tesla Motors.[16] Other advantages of lithium-ion batteries are that they are highly efficient, fully recyclable and used in many applications. Furthermore, they are non-toxic because they do not contain heavy metals (NOVA, 2008).

Battery size and weight are critical factors to consider in vehicles. Both should be kept to a minimum, but lithium-ion technology plays a key role in maximizing the all-electric range of the vehicle as well as achieving maximum fuel efficiency. Some PHEV after-market conversions today are accomplished by adding a second battery pack to a standard hybrid vehicle, which can then be charged repeatedly via 110V AC electrical power. This second battery is used to extend the vehicle’s all-electric range. However, this second battery pack adds weight. Furthermore, these PHEV conversions place the batteries in the rear of the vehicles, thus disproportionately distributing the weight of the vehicle. This adds safety concerns that an auto manufacturer must consider for production PHEVs in order to pass crash safety testing. Toyota has gone as far as publicly stating that it will revoke the vehicle warranty on after-market conversion Prius PHEVs due to vehicle safety concerns.[17] Batteries and/or other vehicle components and accessories may have to be re-distributed or re-configured as a result.

Battery technology and safety will require additional research and testing in order to bring PHEVs into full scale production. While the lithium-ion battery’s greatest strength is energy density, it is also one of its weaknesses. High energy in a small package can be unstable if the battery is over-heated, overcharged or punctured (Howell, 2007). In 2006, a public scare was created when a lithium-ion laptop computer battery spontaneously caught fire. Sony, the manufacturer of the laptop, found a defect that caused some batteries to burst into flames. As a result, Sony issued a worldwide recall of several million computer laptop batteries of a specific lithium-ion battery configuration that was found to be defective. A faulty car battery which contains many times more stored energy could trigger a much larger explosion.

David Howell notes that lithium-ion batteries are “intolerant to overcharge, crush and high temperature exposure.”[18] The risk of consumer liability is something no car company wants. In response to this safety concern, engineers at Tesla Motors developed monitoring and isolation technology to prevent one defective lithium-ion battery from over-heating and causing a potential for fire, creating a chain reaction to neighboring batteries (Berdichevsky, et al. 2006). Such fail-safe mechanisms are necessary and required in order gain broad market acceptance of battery-electric vehicles.

Current hybrids, such as the popular Toyota Prius and the Honda Civic use nickel-metal-hydride batteries. If lithium-ion can replace nickel-metal-hydride and prove to be lower cost with higher production, this could then lower the cost of current hybrids today. With a few modifications to the control module, an AC charge receptacle, and a larger battery to extend AER, today’s HEV technology can become PHEVs. This appears to be the path that Toyota is taking with its first generation Prius PHEV (Maynard, 2008). Lithium-ion batteries are “clearly the next step,” says Mary Ann Wright, the boss of Johnson Controls-Saft Advanced Power Solutions, a joint venture that recently opened a factory in France to produce lithium-ion batteries for hybrid vehicles.[19] Johnson Controls-Saft is one of the industry’s leading manufacturers for outsourcing battery chemistry for new PHEVs such as Saturn’s Vue series as well as Mercedes’ diesel hybrid (Abuelsamid, 2007). Lithium-ion batteries have been approved for mild and full conversions by auto manufacturers. “It has demonstrated the required combination of power, range, safety and longevity,” says Mike Andrew, director of Government Affairs and External Communications at Johnson.[20]

The cost of lithium-ion batteries is high at roughly $1,000 per kWh. For a twenty mile range PHEV requiring 5kWh of battery capacity, this equates to a premium of $5,000 for PHEV 20. Howell, 2007 states the $1,000 per kWh is one-and-a-half to two-times the cost goals. However, once in mass production, Howell projects that the cost of lithium batteries to come down by seventy five percent, from $1,000 per kWh to $250 per kWh (only a $1,250 premium for a PHEV 20) by the year 2015.

A 2004 report by EPRI titled: Advanced Batteries for Electric Driver Vehicles concluded that improvements in battery life and performance will enable mass-produced plug-in hybrids to reach life-cycle cost parity with non-hybrids. Figure 4 illustrates EPRI’s cost/volume projections for the production of lithium-ion batteries.




Figure 4: Battery Cost Projections in Volume Production [21]


The EPRI battery cost/volume curve seems very attainable over a 5 year time span beginning in 2009-10 when the major auto manufacturers begin to roll-out their PHEVs. Here’s how. The auto manufacturers need assurances that there are customers who will purchase and use the vehicles they make. The City of San Jose is the tenth largest city in the U.S. with a LDV fleet of nearly four hundred vehicles. Fleet customers represent a captive audience and target market for the major auto manufacturers. Assuming similar LDV fleet size as the City of San Jose’s across the twenty largest cities in the U.S. represent a market size of eight thousand lithium-ion car batteries. If each of these cities committed to convert twenty percent of its LDV fleet to PHEVs per year, for the next five years, this represents sixteen hundred batteries when annualized. According to EPRI’s cost/volume curve (Figure 4), sixteen hundred batteries is significant enough to halve the cost of a 5kWh ($5,000) battery to a premium of only $2,500. This does not include the thousands of other fleet customers in the market place with similar LDV fleet characteristics.

It is expected that the global market for hybrid batteries will grow by three hundred percent (to $2.3 billion) by year 2015, according to Menahem Anderman, an automotive battery market consultant based in California (Economist, 2008). Anderman also says “more money is being spent on research into lithium-ion batteries than all other battery chemistries combined and predicts that lithium-ion batteries will first appear in production cars in 2009, which could make up as much as half of the $2.3B market”.[22] Anderman’s statement on the level of battery R&D investment is mirrored by U.S. DOE presentation on Electrical Energy Storage: Plug-in Hybrid Electric Vehicle Battery Research and Development Activities, presented to PHEV stakeholders (Howell, 2007). This summary report shows that U.S. DOE R&D on battery technology has nearly doubled since 2006 to 2008, from $24 million to nearly $42 million, respectively. Furthermore, Howell states that “Lithium-ion is viewed as the most viable battery for PHEV”.[23]

When vehicles are charged from grid power with power produced using traditional methods such as fossil fuels like coal, doesn’t that simply shift the emissions from vehicles to power-utilities, thereby not necessarily reducing GHG emissions but perhaps making them worse? Answers to these questions will be addressed in the next section: The Impact of PHEVs on GHG Emissions.

2.4 The Impact of PHEVs on GHG Emissions

The City of San Jose’s primary objective of its Green Fleet Policy is GHG reduction. GHG emissions are largely produced by the burning of unleaded and diesel fuels in automobiles. California's transportation sector is the single largest contributor of GHG emissions in the State, producing close to sixty percent of all such emissions (CARB, 2004). Even with the city’s LDV fleet consisting of approximately eleven percent of vehicles in the overall fleet, I would expect that a fleet conversion to PHEVs would have substantial benefits toward achieving the City’s goal of reducing GHG emissions.

While plug-in vehicles can operate on electricity, it is the production of this electricity that is of most concern to industry and federal, state and local government officials. This concern is evidenced by the many research studies published by the DOE labs (NREL, Argonne, and PNNL), CARB (California Air Resources Board), and NGOs, such as the Electric Power Research Institute (EPRI) and the National Resources Defense Council (NRDC). All of these have been examined in my literature review. The primary theme in each of these studies is whether or not PHEV electricity demand actually reduces or increases GHG emissions as a result of concentrated demands on electricity production at power plants. The answers to this debate show that initially, it depends on the fuel source that is powering the plant. GHG emissions are dependent on the fuel or method used to produce electricity. The fuels used to generate electricity range from coal, natural gas, nuclear, hydro, wind, solar and geothermal.

A study by Pacific Northwest National Laboratory (Kintner, et al., 2007) analyzed both the technical and economic impacts of shifting electricity demand by the nation’s light-duty vehicles (LDV) should the entire fleet be converted to PHEV. This study concluded that: a) The current electric utility infrastructure could generate and deliver the necessary energy to fuel up to seventy three percent (percentages vary by region) of the U.S. light-duty vehicles (LDV) fleet; and b) GHG emissions[24] would be reduced depending on local electric power producing plants source(s) of energy production.

“Total NOX emissions may or may not increase, dependent on the use of coal generation in the region. Any additional SO2 emissions associated with the expected increase in generation from coal power plants would need to be cleaned up to meet the existing SO2 emissions constraints. Particulate emissions would increase in 8 of the 12 regions.”[25]

With the regulations imposed by the Clean Air Institute Rule (CAIR), the capping of sulfur dioxide (SO2) would reduce nitrous dioxide (NOX) emissions[26] (see Figure 5). The PNNL study concluded that: “with the emergence of PHEVs, the emission sources will shift from millions of individual vehicles to a few hundred central generation facilities. All urban emissions are expected to significantly improve.”[27] Similarly, a joint study performed by EPRI-NRDC on the adoption of PHEVs concluded that GHG emissions were found to improve nationwide (EPRI-NRDC, 2007).




Figure 5: U.S. Power Plant Emissions Projected with Clean Air Institute Rule [28]


Kintner, et al., 2007 also conclude that: as electricity production is more uniformly distributed and level-loaded across a twenty four hour demand period, the adoption of PHEVs and resulting electricity demands placed on the utility grid would “improve the economics of the electric utility industry”.[29]
Figure 6 illustrates the hypothetical electricity demand placed on San Diego Gas & Electric as PHEVs charge from the grid during low energy demand or off-peak demand periods.




Figure 6: PHEV Off-Peak Electric Utility Charging [30]


CalCars cite government studies of GHG emissions from electric vehicles at a national level. Each study finds GHG emissions are reduced “even with fifty percent of the nation’s electricity production coming from coal.”[31] The specific studies cited are:

1. DOE's Argonne National Lab, 2001: GREET 1.6. This study estimates that plug-in hybrids reduce GHG gases by 36 percent.[31]

2. An Argonne researcher reached consensus with researchers from other national labs, universities, the Air Resources Board, automakers, utilities and AD Little to estimate in July 2002 that PHEVs using nighttime power reduce GHG gases by 46 to 61 percent.[31]

A study performed by California Air Resources Board (CARB, 2004), using emissions data from 2002 as the baseline year, shows that an electric vehicle with a twenty mile range has sixty two percent lower GHG emissions than gasoline cars. Figure 7 is repeated to illustrate here in this section that Google’s Fleet of Toyota Prius Plug-in Hybrid (PHEV) conversions achieves sixty six percent lower GHG emissions as a result of high fuel economy than the average car in the U.S. Google’s GHG emissions fleet data corresponds closely to the CARB (2004) study mentioned above, and demonstrates that PHEVs, in fact, can reduce GHG emissions.




Figure 7: Google Fleet PHEV Conversions, Toyota Prius Average CO2 Emissions
Source: http://www.google.org/recharge/


In support of CARB’s study findings, the Electric Power Research Institute (EPRI) and the National Resources Defense Council (NRDC) performed a joint study to determine what would happen to GHG emissions if we switch from gasoline to electricity for most of our driving. It too concluded in favor of PHEVs stating that “even if all the electricity for PHEVs came from coal-fired power plants, there’s still a net reduction in GHG.”[32] Figure 8 illustrates the CO2 reduction of both standard HEVs and PHEVs relative to conventional ICE vehicles, and across each of four vehicles classes. In reality, CalCars states: “PHEVs would presumably get re-charged mostly at night and a higher percentage of our night-time electricity comes from hydro and nuclear since total demand is much less then.”[33]





Figure 8: Greenhouse Gas Emissions Analysis by Vehicle Type [34]


Today, based on PG&E’s power mix, nearly half of the energy production comes from climate neutral or renewable sources. Figure 9 illustrates PG&E’s projected power mix for 2008.




Figure 9: PG&E Power Mix, 2008 Projections
Source: http://www.pge.com/myhome/myaccount/explanationofbill/billinserts/


To address increased demand placed on electric power plants by PHEVs, one can assume that with increased adoption and use of renewable or alternative energy sources, such as solar, geothermal and wind, that GHG emissions from the electric grid will decline over time.

2.5 PHEV Life Cycle Cost and Payback Period

When evaluating the implementation of a new technology, whether for a business objective or a policy initiative, a critical factor to evaluate is cost. The cost of new technology is best evaluated in terms of its return on investment or its payback period. San Jose’s Green Fleet policy states that cost is a factor to be considered when evaluating the replacement of fleet vehicles. The City of San Jose defines the evaluation criteria for fleet vehicles as the full life cycle costs (LCC) of the vehicle, rather than simply the initial purchase cost. One of the objectives of this research is to evaluate the potential LCC of PHEVs relative to that of conventional vehicles in use today so that an accurate cost comparison can be made. LCC of vehicles consist of the initial purchase cost, financing, maintenance and operation costs, fuel costs, and expected depreciation. The city maintains thorough asset management records of all vehicles in its fleet. The records include fuel usage, mileage, and maintenance and operation costs. The records will be used to establish LCC of a conventional LDV that is used in the fleet today, to establish a baseline with which to compare the potential LCC of a PHEV replacement vehicle.

As a guideline for this LCC analysis, I reviewed an economic assessment paper that evaluates the impacts of PHEV adoption by vehicle owners (Kintner-Meyer, et al., 2007). This study is a companion paper (part 2) to the Pacific Northwest National Labs PHEV feasibility report, also done by Kintner-Meyer, et al., 2007. The economic assessment set out to estimate the cost impacts to PHEV owner and then calculate the life-cycle cost (LCC) of PHEV transportation costs. These costs are then compared with the LCC of conventional light-duty vehicles.

The study estimated the premium that a vehicle purchaser could pay for a PHEV and still break-even on discounted costs when both the premium and the value of energy cost savings are calculated over the life of the vehicle. The cost criteria used in the analysis consists of:
  • Discount rate: 8 percent (real interest rate)
  • Life time of ownership: 9 years (not including resale value)
  • Purchase price premium of PHEV: $1,000 to $10,000 variations
  • Price of gasoline: varying from $2.50 per gallon to $3.50 per gallon.
  • Average residential electricity rates: California: $0.12/kWh, Ohio: $0.083/kWh
  • Compared PHEV with a vehicle achieving the current corporate average fuel economy (CAFE) for cars of 27.5 mpg.

The Kintner-Meyer, at al., 2007 economic assessment found favorable impacts on the LCC of PHEV owners for both California and Ohio utilities. For California PHEV owners specifically, the break-even point of a PHEV compared to a conventional vehicle is about $6,200 purchase price premium. Figure 10 (see red arrow line) illustrates this break-even point comparison using California electricity prices of $0.12 per kWh, gasoline prices of $3.50 per gallon of gas, and a conventional vehicle meeting corporate average fuel economy (CAFE) standards of 27.5 mpg. The conclusion drawn from this analysis is that assuming electricity rates remain constant, and gas prices continue to rise, then the price premium break-even point for a PHEV also increases in relation to conventional vehicles achieving 27.5 mpg or less.

Furthermore, the Kintner-Meyer, at al. 2007 study found that electric utility companies could improve their economies of scale with electricity production due to PHEV charging during off-peak hours, therefore potentially lowering utility rates or improving their marginal costs and profits. Electric utility rates could remain relatively constant or increase only slightly due to rates of inflation. There are no signs of oil prices going down at anytime in the near future. As oil prices continue to rise, PHEVs become ever more attractive in terms of LCC.




Figure 10: Life Cycle Cost Analysis for a PHEV
Compared with a Conventional Vehicle
[35]


A 2004 study by J.D. Power and Associates on consumer acceptance of alternative drive-trains shows that buyers are already willing to pay $4,000 more for cars with hybrid electric drive-trains (Grewitt & Tews, 2004). A PHEV, with an extended AER over that of today’s standard HEV, will improve fuel economy and thus reduce total LCC of PHEV ownership. It is also worth mentioning again that, once lithium-ion batteries are mass-produced, PHEVs could reach cost parity with conventional internal combustion engines (ICE) gasoline-powered vehicles (EPRI, 2004).

In conclusion, it appears that a nine year vehicle lifespan and $6,200 price premium is the break-even point for PHEV ownership. Based on the forward-looking prognosis of technology development combined with the forecast that high gas prices are here to stay, PHEVs have the potential to offer a lower life cycle operating costs compared to conventional internal combustion engine vehicles. As battery technology improves, cars become lighter, and electric utility costs are reduced through efficiency gains, then not only will the LCC of PHEVs decrease, so will GHG emissions.


3.0 Research Project Questions

Can the City of San Jose achieve the goals and objectives established in its Green Fleet Policy (2007) by replacing all non-emergency light duty fleet vehicles with plug-in hybrid electric vehicles (PHEV) by 2012?

3.1 Research Methodology

Both qualitative and quantitative research and analysis methods were required to assess whether or not the City could achieve its Green Fleet policy goals and objectives.

3.2 Qualitative Research

Qualitative research consisted of interviews with Todd Capurso, Deputy Director of General Services Department and Don Beams, City Fleet Manager. The interviews were conversational in nature.

Key Questions for Interview

1. What issues are associated with the adoption and implementation of PHEVs in the City’s fleet?
2. What is the replacement criteria for fleet vehicles?
3. What evaluation criteria is used when assessing fleet vehicles for replacement?
4. What fleet vehicle applications are viable targets for PHEVs?
5. What percentage of these applications can be addressed by Light Duty Vehicles (LDV)?

City of San Jose Interview: General Services Department, Fleet Vehicles

The Department of General Services oversees the entire City of San Jose vehicle fleet. The fleet budget for Fiscal Year (FY) 2007-08 is $1.6 million. It will have the same budget for FY 2008-09. The budget is sufficient to cover a fleet conversion of only one-hundred vehicles per year. Capurso noted that he is under-funded for his fleet needs, stating that his “actual budget needs for the fleet are $4.8 million.” Capurso also noted that he does have a small amount of money set aside each year in the budget for pilot programs to test new vehicles. This pilot program budget is “approximately $100,000-200,000 each year.”

Before city vehicles can be replaced, the city’s turnover policy mandates that each vehicle reach 100,000 odometer miles and ten years of service. The needs-assessment protocol for evaluating vehicles for replacement is performed by both Capurso and Beams. Each interviews the individual driver(s) or department group(s), and supervisors of personnel requesting replacement vehicle(s), in order to assess the application’s requirements. Once the interviewing process is complete, they apply the appropriate vehicle to the application. However, three additional departments participate in the decision-making process: purchasing, auditing, and fleet maintenance.

An evaluation “must take into account productivity gains, LCC, fuel economy and emissions reduction,” Capurso stated. Beams interjected that he strongly considers the “vocational needs” of the vehicle during his needs-assessment evaluations. In other words, he believes that “the vehicle must support the vocation and the vocation must support the vehicle.”

Vehicles must be cost-effective. Capurso evaluates the full life-cycle costs to determine the break-even point. He advised that he applies a straight-forward method to analyze the life-cycle costs of a vehicle. The LCC is determined by estimating the number of miles the vehicle is to be driven, multiplying it by the cost of fuel ($/gal.), and multiplying the result by the number of years the vehicle is to be used in service.

Both Capurso and Beams said that they look to implement only market-tested and proven vehicles. They stated that there is little time or resources for experiments. Both warned that they don’t want any “science projects, they have a large fleet to manage”.

Regarding the feasibility and application use of PHEVs, Capurso said that “parks would be ideal because they have the perception and the expectation of being a green environment. The parks department manages six satellite park facilities. Parks require pick-up truck vehicles due to the utility needs of servicing parks for maintenance. However, there is a perceptual barrier among fleet drivers when it comes to the capabilities of electric vehicles when applied to pick-up truck applications.” “But,” he stated, “the loads are light and don’t necessarily need full-size trucks for the application.”

Capurso went on to say that he would like the City to consider a “holistic approach to the City’s energy needs, i.e., how to offset net electric utility cost, not just what is required for vehicle charging.” Capurso gave the example of capturing solar power to offset the electricity needs and cost of charging vehicles. Capurso said that he “could imagine facilities such as parks and fleet yards with solar-electric power production to offset grid-electric power and fuel costs.”

“The City has in use today eighteen hybrid-electric Toyota RAV4s,” advised Beams. “These are used in for applications such as building inspectors and fire inspectors. The learning curve for hybrid introduction was minimal. The vehicle’s form, fit, function are analogous to any other standard, small SUVs.” Beams stated that, “instrumentation panels, read-outs are important for users. There cannot be any confusion with interpretation of instrument panels or gauges. Users should not have to make interpretations, math conversions or assumptions.” Capurso advised that the City has purchased a Toyota Prius and a Ford Escape SUV hybrids for use in LDV applications. “$5,000 is the expected premium on hybrids,” Capurso stated. He also said that “there is a six-month waiting period for the Ford Escape vehicles because demand is high." The City has signed a 3-year contract with Ford Motor Company for Escape Hybrid SUVs. I asked about the possibility of making PHEV purchases. Capurso responded: “How do you charge them? What are the LCC of fuel costs and kW energy needs?” These factors and infrastructure would need further evaluation.

Capurso offered the following summary of potential city departments and applications to consider for PHEV feasibility analysis. (Note: due to time constraints in our interview, Capurso did not elaborate on application details or criteria for PHEVs. The lack of insight into application details may also be due to the fact that PHEVs are not yet available from the major automakers. Additionally, Caruso’s and Beam’s assessment criteria follow the path of: what does the vehicle do, or not do? They then apply the appropriate vehicle to the appropriate application.)
Potential City departments for PHEV application include: Transportation, Environmental Services, Fire, Police, and Park maintenance departments:

1. The Parks Department has six satellite locations and uses light utility pick-up trucks. The Park Department’s facilities have AC electric outlets for charging needs.

2. The Department of Transportation uses light duty vehicles out of the main yard.

3. The Environmental Services Department may have applications in airport services. Vehicles used for airport applications operate from the ESD budget due to the higher emissions standards applied at the airport. This may be a good target application for use of PHEVs using a separate budget than General Services Dept.

4. The Police Department may have applications for PHEVs where its needs require “unmarked police vehicles for personnel transport and non-emergency use.”

Further, Capurso stated that many departments are co-located at City Hall in downtown San Jose. The City encourages “pooling” of vehicle needs (car sharing) at City Hall. Capurso stated that this would be a good implementation point for public relations reasons. When Capurso was asked how he would evaluate and apply PHEVs to an application, he offered the following guidance:

1. Assess those applications for passenger vehicle transport needs only, as they are less restrictive on occupational requirements than trucks. “Trucks are applied to more vocational requirements”, i.e. specific job needs.

2. Evaluate the PHEV vehicle’s capable range in miles. Then apply the vehicle to the job requirement(s).

3. Involve the end-users in the vehicle selection process. If done properly, then adoption of new vehicles is more successful. Capurso stated, “We don’t have a closed loop decision-making process and it is best to implement new vehicle technologies as optional, not forced. If new vehicles are slowly introduced, rather than forced, they are more successfully adopted.”

I asked Capurso about potential or perceived implementation barriers, he stated that there is a higher probability of success if there are no infrastructure requirements. According to Capurso, “there is higher probability for immediate success if the fueling infrastructure is already in place. This removes many barriers. Barriers can include underground tanks or internal fuel tanks. These are not desirable.”

The primary take-away points from the interview are:
  • There is a lot being asked of Capurso and Beams. Not only must they manage the City’s fleet needs, with a fraction of the budget necessary, but they must also abide by the goals and objectives instituted in the City’s Green Fleet Policy. While they may be held accountable to manage the fleet to the Green Fleet goals and objectives, there is not enough budget money to help them manage the fleet accordingly.
  • The City fleet vehicle turn-over objective is ten years and 100,000 miles. However, this is not happening due to budget constraints. The City has a backlog of older vehicles with no budget to replace its ageing fleet.
  • Decision-making is by the application of needs-assessment, job function requirements, life-cycle cost analysis, and committee influence by other departments. Capurso does not believe goals and objectives are aligned between the decision making committees.
  • General Services has a budget of $100,000-200,000 per year for pilot programs with new vehicles. Capurso and Beams have no tolerance for science projects. They prefer market-proven vehicles.
  • Capurso noted that there is an accepted premium of $5,000 for hybrid vehicles and these vehicles have been well-received. They have potential target applications for PHEVs with various City departments. Each of these should be pursued for PHEV feasibility assessment in the future.

3.3 Quantitative Research and Analysis

The quantitative research for this report required thorough analysis of fleet vehicle records provided by the City of San Jose. The General Services Department provided year 2007 fleet vehicle records.

City of San Jose Fleet Data Analysis

My analysis of the City’s light duty fleet (LDV) records concludes the following:
  • Total of 362 LDV cars and pick-up trucks in the fleet
  • Average (mean) miles per gallon (MPG): 20 MPG
  • Average annual miles: 5,750
  • Average (mean) daily vehicle miles traveled (VMT) for 2007: 23 miles.[36]
  • Average annual maintenance and operation (M&O) per vehicle: $1,479.74
  • Average annual fuel cost per vehicle: $993.76

3.4 Vehicle Life Cycle Cost Comparison

I performed a life cycle cost comparison analysis using an online LCC calculator from DOE Alternative Fuels and Advanced Vehicles Data Center. Using the LDV fleet vehicle data from the above fleet data analysis, I applied the following data when comparing a conventional LDV to a PHEV:
  • Life cycle: 10 years
  • Discount rate: 4 percent [38]
  • Price per gallon of gas: $3.95 [39]
Conventional City ICE:
  • Purchase price: $20,000 [40]
  • City average (mean) miles per gallon (MPG): 20 MPG
  • Average annual miles: 5,750
  • Average annual maintenance and operation (M&O) per vehicle: $1,479.74
PHEV vehicle data used in LCC calculations:
  • Purchase price: $25,000 (includes $5,000 premium over standard hybrid (HEV) for a PHEV battery) [41]
  • Maintenance and operation (M&O) per vehicle: $1,479.74 [42]
  • Annual electricity cost: $125.00 ($0.10/kWh * 5 hours charge time/day * 250 work days/year)
  • Total maintenance and operation (M&O) per vehicle, including electricity cost: $1,604.74
  • 68 MPG [43]
Conclusion: The PHEV obtains a lower LCC over a ten year life cycle by $707.49 (See Figure 11: LCC Analysis of PHEV v. ICE).




PHEV Standard (ICE)
Purchase Price
$ 25,000.00 $ 20,000.00
Tax Incentives/Price Discount($) 00
City Fuel Economy (MPG) 6820
Hwy. Fuel Economy (MPG)6820





Other Cost Factors

Annual Mileage

5,750
Years of Use

10
Gasoline Cost

$ 3.95
PHEV Annual Electricity Cost
$ 125.00
Discount (%)

4%
Percentage of City Driving
100%





Cost Comparison

Cumulative Cost (hybrid model)
$41,353.98
Cumulative Cost of (standard model) $42,061.47
Lifetime Savings from (hybrid model) $707.49
Average per-mile savings from (hybrid model) $0.01
Average annual cost of (hybrid model) $4,135.40
Average annual cost of (standard model) $4,206.15
Average annual savings from (hybrid model) $70.75

Year by Year Costs


Car Costs (PHEV model)


YearsDiscount Factor Purchase Price (discounted) Annual Fuel Costs (discounted) Annual Maintenance Costs (discounted) Total Cumulative Costs
11$25,000.00 $334.01 $1,604.74 $26,938.75
20.96
$321.16 $1,543.02 $28,802.93
30.92
$308.81 $1,483.67 $30,595.41
40.89
$296.93 $1,426.61 $32,318.95
50.85
$285.51 $1,371.74 $33,976.20
60.82
$274.53 $1,318.98 $35,569.71
70.79
$263.97 $1,268.25 $37,101.93
80.76
$253.82 $1,219.47 $38,575.21
90.73
$244.06 $1,172.57 $39,991.84
100.7
$234.67 $1,127.47 $41,353.98
110.68---$41,353.98






Car Costs (standard model)


YearsDiscount Factor Purchase Price (discounted) Annual Fuel Costs (discounted) Annual Maintenance Costs (discounted) Total Cumulative Costs
11$20,000.00 $1,135.63 $1,479.74 $22,615.37
20.96
$1,091.95 $1,422.83 $25,130.14
30.92
$1,049.95 $1,368.10 $27,548.19
40.89
$1,009.57 $1,315.48 $29,873.24
50.85
$970.74 $1,264.89 $32,108.87
60.82
$933.40 $1,216.24 $34,258.51
70.79
$897.50 $1,169.46 $36,325.47
80.76
$862.98 $1,124.48 $38,312.93
90.73
$829.79 $1,081.23 $40,223.95
100.7
$797.88 $1,039.65 $42,061.47
110.68---$42,061.47

Figure 11: LCC Analysis of PHEV v. ICE


3.5 GHG Reduction Analysis with PHEV

The Environmental Services Department (ESD) provided the data for GHG emissions analysis. The GHG emissions data provided includes the 2002-2003 baseline numbers used to establish the Green Fleet Policy goal of 25 percent GHG emissions reduction by year 2013. The City’s methodology used to calculate total GHG emissions is to apply the total fuel consumption to EPA calculators found online, for unleaded fuel [44] and separately for diesel fuels.[45] I applied the same methodology using fleet data records for 2007 to determine the net GHG emissions reduction from 2003 to 2007.

The results of my analysis shows that the city has already achieved its goal of twenty five percent GHG emissions reduction, five years ahead of its goal year of 2013. The trend line analysis for achieving the City’s GHG emissions goal of 25 percent reduction is illustrated in Figure 12: GHG Reduction Trend line and Analysis (see red line).
Figure 12 illustrates the City’s 25 percent target goal (yellow baseline), but also illustrates a GHG reduction trajectory trend line that is achievable with the introduction of PHEVs to the City’s fleet starting in year 2009 when PHEVs are available from automakers.

With the introduction of PHEVs to the fleet beginning in 2009, the City can reduce GHG emissions by an additional twenty five percent by the year 2013, thereby doubling its original goal of only 25 percent.[46] To further illustrate this point, Figure 13: PHEV GHG Reduction v. Conventional LDV Fleet magnifies the GHG emissions reduction trajectory. The blue line represents the current GHG emissions level, while the purple line represents the additional GHG emission reductions that are achievable if the City implements PHEVs in the fleet.


Figure 12: GHG Reduction Trend line and Analysis


Figure 13: PHEV GHG Reduction v. Conventional LDV Fleet


The City of San Jose can reduce green house gas emissions produced by its class of light duty fleet vehicles by 73 percent in 2013 with the implementation of plug-in hybrid electric vehicles to the City’s fleet.[47]


4.0 Recommendations

It was noted in my interview with Capurso and Beams that the City has a small budget for pilot programs. My recommendation is to first target some of the departments that Capurso mentioned as potential applications for use of PHEVs. These applications would require further analysis of the range of travel required by the vehicle’s application usage as well as a LCC analysis. However, the door is open for pilot testing.

Furthermore, it was noted by Capurso that one of the most appealing aspects of plug-in hybrid vehicles is that they can be charged from standard 110V or 220V electrical outlets. PHEV “fuel” is ubiquitous, i.e., the electricity infrastructure is already widely available. As Capurso stated in our interview, there is “more immediate success if the fueling infrastructure is already in-place. This removes many barriers.” Nevertheless, some planning and integration must be considered when accommodating small or large fleets. The planning and integration of facilities would be dictated by the size of the fleet and where the fleet vehicles are either distributed or centralized for charging needs. If most or all vehicles are distributed throughout the day for its particular application use, opportunity charging can be accomplished via standard AC electrical outlets, when vehicles are not in-use. This will boost the vehicle’s all-electric range (AER) and therefore improve overall fuel costs.

For centralized charging needs, for example back at the City’s “main yard,” larger charging facilities would be required. Large fleet charging would likely best be accomplished during off-duty hours, typically from 5 p.m. until 8 or 9 a.m. the following day, a charge-time duration period of roughly fifteen hours. With PHEV average charging time of five hours for each vehicle, fleet charging can be distributed (or timed) in three shifts. Central yard fleet charging can be accomplished by having each vehicle plugged in to its own AC charging receptacle and a timer-controlled charge meter, switching electrical current to each of three fleet groups in succession until the entire fleet is completely charged. Alternatively, the AC electrical current could be set lower in order to charge the entire fleet simultaneously, but a longer duration of charge time.

At locations where opportunity charging can be applied, the fleet could maximize use of renewable energy sources such as solar covered parking structures, or simply tapping into facilities with solar roof panels. Such examples can be found at locations like Google’s corporate campus in Mountain View, CA as seen in the following images (Figure 14 through Figure 16). An application such as this fits well with the “holistic energy needs” approach that Capurso discussed in our interview. The City of San Jose General Services Department should work with other city departments and officials to model the feasibility and cost-benefit, payback period on a similar sustainable energy and transportation project. Such a feasibility study could be conducted by modeling centralized fleet locations where vehicles are aggregated at the end of shifts or at the end of business days. A target application for PHEV could be the downtown City Hall facility where multiple departments are co-located in centralized offices and vehicle sharing or “pooling” is encouraged. A solar-electric infrastructure, such as Google’s, installed at city facilities that includes the capability to not only supply or supplement the city’s electricity needs, but also charge a fleet of plug-in vehicles is one of the most innovative applications of sustainable energy and transportation combined. A system such as Google’s depicted below also ensures that the City is truly maximizing the cost-savings of PHEVs, as well as capping or containing its GHG emissions by not shifting the emissions to an electric utility plant.




Figure 14: Solar Covered Carport on Google Campus, Mountain View, CA[48]




Figure 15: Solar Panel Carport on Google Campus, Mountain View, CA [49]




Figure 16: Google Fleet Vehicle, Plug-in Hybrid Toyota Prius [49]


5.0 Conclusion

My conclusion is that PHEVs were found to have a lower life cycle operating costs over a ten year period than that of conventional internal combustion engine vehicles. In addition, PHEVs can significantly reduce GHG emissions and allow the City of San Jose to double its goal of twenty five percent GHG emissions reduction by 2013.


Copyright © 2009 Scott A. Swail. All Rights Reserved.


Acknowledgements:

I would like to thank Dr. Peter Melhus, my thesis advisor at San Francisco State University. Thank you for your guidance, support, and most of all your tough critique. You were the perfect advisor for me, providing the framework to help me achieve my target completion date of May 23rd. A significant date to me, indeed.

I would also like to thank both Dr. Aaron Anderson and Dr. John Dopp for your support throughout the thesis process. I appreciate your advice and words of encouragement to pursue a topic that I am passionate about.

I am grateful to my good friend, former colleague and MBA cohort Jess Martinez, for your review and edit suggestions of this thesis. Thank you.

I also want to thank Bob Garzee, CEO of Synergy EV and member of the San Jose Environmental Business Cluster. I am grateful for your introductions to the City of San Jose General Services Department and arranging the interviews that played a critical part of my thesis research.

And finally, I want to thank my champion and lovely wife Debbie for your support throughout the MBA program and allowing me to pursue a goal and a dream. This thesis would not have been possible without you.

I dedicate this thesis to my Dad. You worked so tirelessly to provide. I wish you could have lived to witness the results of the dreams you aspired of me.


6.0 Bibliography

[1] San Jose Mercury News. (2007, October 15).Green Vision, p. 1A

[2] San Jose Mercury News. (2007, October 15).Green Vision, p. 11A

[3] City of San Jose Green Fleet Policy. (2007), p. 3

[4] CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY AIR RESOURCES BOARD. (2004), p. ii

[5] City of San Jose Green Fleet Policy, the quotes following are all included in the City of San Jose Green Fleet Policy. (2007), p. 3

[6] Regenerative power is the capability to re-capture energy from sources such as the vehicle’s internal combustion engine and braking system, and convert this to electricity for the purpose of recharging the vehicle’s battery systems or maintaining a battery’s state of charge level.

[7] Kurani, et al.(2007), p.3

[8] Kurani, et al.(2007), p.1

[9] Kurani, et al. (2007), p.2

[10] Healey, USA Today (2008)

[11] U.S. Department of Transportation, Federal Highway Administration, (2006).

[12] Kurani, et al (2007), p. 2.

[13] U.S. Department of Energy - Vehicle Technologies Program (2008), p.11

[14] ENN, 2005. p.1

[15] Howell, 2007. p.9

[16] Tesla Motors, based in San Carlos, CA, is a manufacturer of high performance, all-electric sports cars

[17] CalCars.org: http://www.calcars.org/calcars-news/683.html

[18] Howell, 2007. p.9

[19] Economist, 2008. http://www.economist.com/science/tq/displaystory.cfm?story_id=10789409

[20] Tannert, 2008. p.1

[21] EPRI Journal, 2005[21]

[22] Economist, 2008: http://www.economist.com/science/tq/displaystory.cfm?story_id=10789409

[23] Howell, 2007. p.8

[24] “Greenhouse gases are defined as: carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O)” [Kintner, et al., 2007, p. 13]

[25] Kintner, et al. 2007, p. 1

[26] Clean Air Interstate Rule (CAIR) is an EPA rule that will “permanently cap emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) in the eastern United States.” http://www.epa.gov/cair/

[27] Kintner, et al. 2007, p.13

[28] Sanna, 2005 p. 16

[29] Kintner, et al., 2007, p. 22

[30] Sanna, 2005, p. 9

[31] CalCars.org, from http://www.calcars.org/vehicles.html

[32] EPRI-NRDC, 2007, http://www.calcars.org/calcars-news/797.html

[33] CalCars.org, from http://www.calcars.org/calcars-news/797.html

[34] Sanna, 2005, p. 14

[35] Kintner, et al., 2007. p. 26

[36] Based on 250-day/work-year

[37] AFDC: HEV Cost Calculator. (2008).HEV Cost Calculator Tool.

[38] The discount rate is based on the most current U.S. rate of inflation. According to CBC News, the inflation rate was 3.9% in April 2008 (CBC News, 2008). Retrieved May 14, 2008, from http://www.cbc.ca/money/story/2008/05/14/usinflation.html.

[39] AAA gas price for San Jose area: http://www.fuelgaugereport.com/CAmetro.asp

[40] Estimated purchase price for a City LDV sedan fleet vehicle.

[41] 5 kWh battery at $5,000 premium (Howell, 2007)

[42] City fleet records show a lower average annual cost of maintenance and operations for Hybrids, however, I applied the City average annual maintenance cost for ICE to that of PHEV, per DOE Annual Maintenance Costs: “Like resale values, maintenance costs are much more difficult to estimate for hybrids because of their newness in the marketplace. Some anecdotal information exists to indicate that maintenance costs for hybrids are similar to conventional vehicles. For example, a Honda representative indicated the transmission fluid change may be more frequent (30K miles versus 60K for conventional), but the spark plug change interval for the hybrid is less frequent. Some believe that due to excellent warranties and other factors unique to hybrids, hybrid maintenance may actually be lower. For example, brake pad replacement may be less frequent in hybrids than conventional models, as there is less wear due to hybrid regeneration. Battery replacement has not been factored into the default figures due to the extended warranty (currently 8 years or 100,000 miles for most hybrids.” http://www.eere.energy.gov/afdc/hev_calculator/. Toyota Prius extended warranty coverage for HEV battery is only $1,000 for eight years.

[43] Google’s Toyota Prius PHEV fleet data (see Figure 2).

[44] http://www.epa.gov/cleanenergy/energy-resources/calculator.html

[45] http://www.epa.gov/OMS/climate/420f05001.htm (conversion factor of 22.2 lbs/gal)

[46] Assumes a 20 percent LDV fleet conversion to PHEVs per annum, for five years beginning in 2009-2013

[47] Based on each of the following: 1) 2002-03 GHG emissions as the baseline year, 2) the implementation of PHEV with CO2e lbs/mile of no more than 0.411 lbs/mile, and 3) estimated 2013 total LDV fleet miles of 1,534,224 gallons of fuel used.

[48] Google Press Images: http://www.google.com/intl/en/press/images.html#green

[49] Google Press Images: http://www.google.com/intl/en/press/images.html#green

______________

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5 comments:

  1. Great to see this new policy initiative to begin electrifying U.S. fleet vehicles, nearly 13 years later than proposed here.
    Start with USPS vehicles!

    https://www.mic.com/p/joe-biden-wants-to-buy-the-government-650000-us-made-electric-vehicles-58975866?

    ReplyDelete
  2. Electric Cars Are Better for the Planet – and Often Your Budget, Too

    https://www.nytimes.com/interactive/2021/01/15/climate/electric-car-cost.html

    ReplyDelete
  3. The US Postal Service operates one of the largest government fleets. It is also one of the oldest and dirtiest emission fleets on the road today. If you've ever been behind one, you know!
    It is great to see the administration's executive order to electrify all US fleet vehicles. The USPS is ready with a vehicle selection and contract order. Still, however, a long way to go to achieve zero emission fleets.

    https://www.cnet.com/roadshow/news/usps-new-mail-trucks-appear-at-odds-with-biden-administrations-ev-agenda/

    ReplyDelete
  4. Electric cars get a needed boost

    https://www.linkedin.com/news/story/electric-cars-get-a-needed-boost-5015628/

    ReplyDelete
  5. Energy and Transportation: Two of the five "fastest, deepest, and most consequential technological disruptions in history."

    "Energy: Solar, wind, batteries

    "Transport: Batteries, fleet-charging networks, support for AVs, and integration and conversion of rail and public transit with Transportation as a Service (TaaS)"


    https://www.fastcompany.com/90559711/we-are-approaching-the-fastest-deepest-most-consequential-technological-disruption-in-history

    ReplyDelete