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America’s silent revolution and its consequences

THE HEADLINES coming from the United States of America are completely dominated by the collapse of banks and the efforts to save these private institutions by public money through nationalisation of their losses. But Europeans pay much less attention to the fact that alongside the financial crisis that is causing revolutionary changes in the world economy, another revolution is silently gaining speed on the other side of the Atlantic. This revolution is technological, and the consequences for everyday life as well as for the big geopolitical chessboard may turn out to be more fundamental than the consequences of the financial crisis.

THE HEADLINES coming from the United States of America are completely dominated by the collapse of banks and the efforts to save these private institutions by public money through nationalisation of their losses. But Europeans pay much less attention to the fact that alongside the financial crisis that is causing revolutionary changes in the world economy, another revolution is silently gaining speed on the other side of the Atlantic. This revolution is technological, and the consequences for everyday life as well as for the big geopolitical chessboard may turn out to be more fundamental than the consequences of the financial crisis.

In the middle of September, major car producer General Motors unveiled its “production version“ (as opposed to prototype model) of a fully electrically powered Plug In Hybrid Vehicle (PHEV) – called the Chevy Volt. The mass-produced Volt should come on the American market toward the end of 2010.

For trips of less than 65 km all its energy comes from its 16-kWh lithium-ion batteries. When the batteries are empty, the car switches smoothly to its built-in electric generator powered by diesel or E85, which supplies electricity for continued travel powered by the electric engine.



The Chevrolet Volt can be recharged via 120 V or 240 V outlets commonly used in households and garages, and its intelligent recharging system can recharge completely empty batteries in less than three hours from a 240 V outlet or eight hours from a 120 V one. At the current price of electricity in the US, a 60 km ride would cost 80 US cents.

GM’s determination to bring a revolutionary new car to the mass market did not have to wait long for a response from the competition. Just a few days after the GM announcement, car maker Chrysler, which saw a 24-percent decrease in car sales over the first eight months of 2008, announced its plan to start mass production of not one, but three different types of PHEVs. At its headquarters in Auburn Hills, Chrysler presented all three of them – a minivan and an SUV, both with an electric range of 65 km – just like the Chevrolet Volt – and a fully electric Dodge EV built on the Lotus Europa platform, with a 250 to 320 km range on batteries only. Like GM, Chrysler too plans to introduce at least one of these cars on the mass market before the end of 2010 (more at www.chryslergoeselectric.com).

What the announced possible merger between GM and Chrysler will mean for these plans remains unclear, but otherwise Chrysler plans to catch up with GM by using existing platforms instead of developing new cars, and by outsourcing many of the components already produced for existing models.

The most likely supplier of the most critical part of any PHEV – its batteries – will be A123Systems. The final goal of Chrysler is the full transformation of its entire production line to electric driving.

In the meantime, the US Congress, along with the famous bailout package for the collapsing American financial system, approved a bill on energy taxes. This includes tax credits ranging from $2,500 to $7,500, depending on the battery capacity of the PHEVs. These credits will fully cover the price difference between common gasoline cars and PHEVs. The credit has a base of $2,500 plus $417 for each kWh of battery pack capacity in excess of 4 kWh, to a maximum of $7,500 for light-duty vehicles.

As nothing can stay small in the US, it does not end with light personal cars and includes a $10,000 credit for vehicles with gross vehicle weights of more than 10,000 but less than 14,000 pounds; $12,500 for vehicles with a GVW of more than 14,000 but less than 26,000 pounds; and $15,000 for any vehicle with a GVW of more than 26,000 pounds. Phaseout of the credit is to begin when the total number of qualified PHEVs sold in the US after 31 December 2008 reaches 250,000.

To give US car makers an advantage over their more advanced competitors, the vehicles must have a battery pack with at least 4 kWh of capacity to qualify for a credit – a provision that will exclude the first generation of Toyota PHEVs as well as some other lower range all-electric plug-ins.

But it was not concern about the global climate that led American car makers and the Senate to these moves. The power behind them is economy. The inefficient American cars had already been pushed from the global markets by the much more efficient Japanese, European and other cars.

To ignore fuel consumption as a key car quality had proved to be a fundamental strategic mistake. While just four years ago the author of this article was able to fill the empty tank of his personal car for less than $20, gasoline at US gas stations is more than twice as expensive today, and American gas-guzzlers are now unable to compete even in their own domestic markets.

Japanese producer Toyota is the leader in PHEV development, and for a long time it appeared that Detroit was going to lose another strategic battle, as happened with the hybrids. It was this urgent threat that gave up the wake-up call to petrified American automakers and moved them towards revolutionary innovation. Neither was Congress motivated by concerns about climate change. The US pays $7 billion annually for imported oil, mostly to politically problematic countries such as Arabic regimes in the Persian Gulf, Venezuela and Nigeria.

In Europe, the European Commission as well as the more progressive governments and parliaments concentrate on lowering emissions from cars’ combustions engines. This strategic focus alone may prove to be totally obsolete in competition with the rising PHEV revolution in the US and elsewhere. It indeed is obsolete when it comes to the geopolitical challenge of Europe’s dependency on Russian and other foreign oil.

There is no doubts that PHEVs still have several challenges ahead of them, be it quality and longevity of batteries, or additional sources of clean electricity to recharge potentially tens and hundreds of millions if electric cars.

However, the success of PHEV revolution would have such huge environmental and social consequences, that for the EU to ignore it any longer is unacceptable.

Concerning its geopolitical consequences, the success of PHEVs would mean nothing less than a geopolitical earthquake leading to the robust strengthening in position of western democracies. Europe must wake up to these opportunities.

Indeed, the current loud cries of the European automobile industry calling for direct financial support from the EU provide a once-in-a-lifetime opportunity to introduce PHEVs to Europe on a quick and massive scale.



(The opinions expressed herein do not reflect the views of The Slovak Spectator. The analysis and opinion pieces published in the newspaper are intended to provide a wider scope of views and opinions and inspire further debate.)


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