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Electrification Challenges and Opportunities and Ford's Response

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To realize the potential benefits of vehicle electrification, a range of issues must be addressed, including the significant issues of cost and customer convenience. Vehicle and fuel technologies interact in a complex system that includes vehicle technologies, battery technologies, fuel types and energy-generation technologies, all of which determine potential impacts on the environment and energy security.

Costs and Savings

The current cost to make plug-in vehicles is substantially higher than that of conventional vehicles, largely due to the cost of batteries. Depending on electricity costs, however, the energy cost to operate an all-electric car is in the range of 2 to 3 cents per mile, compared to about 8 to 10 cents1 per mile for a conventional gasoline-powered vehicle. So, lower operating costs can help offset the higher initial purchase costs of electric vehicles (EVs).

Automakers will need to invest billions of dollars to develop next-generation electrification technologies and electrified vehicles. Utilities will need to invest to increase electricity generation and transmission capacity, with generally higher costs for green electricity sources. Governments will also need to invest by encouraging and facilitating the development of technology and infrastructure and providing incentives for consumers to buy EVs.

Ford's Response

Ford is working with a range of battery suppliers and other partners to develop next-generation battery technologies that will help to bring costs down. In addition, we have been working with utilities and other partners to understand how to make vehicle recharging as efficient as possible.

For example, we recently announced that we are collaborating with Microsoft on new energy-management software that will help customers determine when and how to most efficiently and affordably recharge battery electric and plug-in hybrid vehicles, while giving utilities better tools for managing the expected changes in energy demand. Ford is the first automaker to announce the use of this new technology, called Hohm™, which will be used in the Focus Electric starting next year. Hohm is an Internet-based service designed to help customers avoid unnecessary expense by providing insight into their energy usage patterns and suggesting ways to increase conservation. With Ford electric vehicles, Hohm also will help drivers to determine the best time to charge their vehicle and help prevent the need for infrastructure upgrades to support the added energy demand. Ford and Microsoft plan to continue to work with utility partners and municipalities to help further develop systems to maximize the effectiveness of electric vehicles and their interaction with the electricity grid.

In addition to this work with partners, we are also planning our electric vehicle strategy based on our highest-volume, global platforms, which could also help reduce the costs of electric vehicles by creating economies of scale.

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Battery Technology

Current-generation HEVs run on nickel metal hydride batteries, which offer significant improvements over traditional lead-acid batteries. For example, nickel metal hydride batteries deliver twice the power output for the weight (energy density) compared to lead-acid batteries. Nickel metal hydride batteries have worked well in non-plug-in hybrids, which are designed to allow for constant discharging and recharging and are not expected to store and provide large amounts of energy. These batteries are reaching the end of their advancement potential, however, and new battery technologies are needed to improve on the current generation of HEVs.

PHEVs and BEVs make significant additional demands on battery technology. Unlike HEVs, which maintain a relatively constant state of charge, PHEV batteries are to be depleted to a low level when they are the primary energy source for the vehicle. And BEVs are designed to run solely on battery power. The batteries used in PHEVs and BEVs must function well in a wide range of conditions; tolerate running until nearly depleted and then being fully charged; store and provide a lot of power; last a minimum of 10 years or 150,000 miles; and, ideally, be compact and lightweight.

Automakers are moving toward lithium-ion batteries for next-generation HEVs and for PHEVs and BEVs. These batteries have greater energy density and are lighter than nickel metal hydride batteries. However, the technology is still evolving, and costs must drop considerably before they can be widely used (see section on Battery Evolution below).

It is also important to have a plan for recycling batteries at the end of their useful lives to minimize the material going to landfill, and to ensure that critical elements, such as rare earth metals and lithium, are recovered and reused in new batteries.

Battery Evolution

Battery technology is evolving. The following table shows how new battery technology, such as the nickel metal hydride batteries used in today's HEVs and the lithium-ion battery technology of next-generation electrified vehicles compare to the traditional 12-volt lead-acid battery.

  Lead-Acid Nickel Metal Hydride (Ni-MH) Lithium-Ion (Li-ion)
First Commercial Use 1859 1989 1991
Current Automotive Use Traditional 12-volt batteries Battery technology developed for today's generation of hybrid vehicles Under development for future hybrid electric and battery electric vehicles; some manufacturers launching in limited volumes in 2010
Strengths
  • Long proven in automotive use
  • Twice the energy for the weight as compared to lead-acid
  • Proven robustness
  • About twice the energy content of Ni-MH and better suited to future plug-in electrified vehicle applications
  • By taking up less space in the vehicle, provides far greater flexibility for automotive designers
Weaknesses
  • Heavy; its lower energy-to-weight ratio makes it unsuitable for electrified vehicle usage
  • High cost (four times the cost of lead-acid); limited potential for further development
  • Although proven in consumer electronics, this technology is still under development for automotive applications
  • Will remain relatively expensive until volume production is reached
Specific Energy (Watt hours per kilogram) 30–40 65–70 100–150
Recyclability Excellent Good Very Good

Ford's Response

Ford has been working with battery supplier partners to develop next-generation battery technologies that can improve HEV performance and stand up to the new challenges presented by BEVs and PHEVs. For example, the performance of batteries varies with weather conditions. We are conducting tests of the effects of temperatures and other conditions so we understand and can communicate to customers the impacts on expected range between rechargings.

Ford is also working with researchers at the University of Michigan and the Massachusetts Institute of Technology to develop and test improved lithium-ion battery technology. This research is funded in part by a $55 million tax credit incentive Ford received from the Michigan Economic Development Corporation.

All of Ford's electrified products, including HEVs, PHEVs and BEVs, will use lithium-ion battery cells by 2012.

Ford is also developing a comprehensive strategy to address batteries that can no longer be used in vehicles. Ford engages with all the parties that handle end-of-life batteries, including customers, local authorities, emergency services (e.g., tow trucks), dealerships, independent workshops and garages, and vehicle recyclers. Customers can recycle their batteries with local recyclers or bring them to any Ford or Lincoln dealer for no-cost recycling.

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Recharging

To realize their full all-electric range, plug-in vehicles must be charged regularly. They can be charged using a standard household electric current (e.g., 110 volts in the United States), but they will recharge faster when using a higher-voltage electric service. Since electricity supplies are ubiquitous in developed countries, much of the needed infrastructure already exists, but new charging facilities will be required in public places as well as apartments and homes that lack accessible places to plug in. Other future recharging options, being considered by various entities, might include battery swap stations and inductive charging where batteries are charged without a plug through "wireless recharge." This latter type of recharging could occur in special parking spots or even in "charging lanes" that could be included in roadways in the future.

Another focus of research is rapid-charging technologies. Ideally, an electric vehicle could be charged in the same amount of time it takes to fill a fuel tank, though the electric power needed to perform a rapid charge – and the bulky additional charging infrastructure required to deliver it – remain challenges. In addition, with existing technology, rapid charging typically shortens the life of batteries, but efforts are underway to develop cell technologies capable of rapid recharge without battery degradation in the future.

Developing and agreeing on standard charging connectors between vehicles and the grid and vehicle-to-grid communication protocol are another key challenge. These will be necessary to allow all plug-in vehicles to use a common charging point when they need to recharge.

These and other charging options are all under consideration. Having an understanding of these technologies and how they may develop will be important in making electrified vehicles practical and affordable.

Ford's Response

In North America, Ford participated with the Society of Automotive Engineers to successfully align all original equipment manufacturers (OEMs) on a standard charge connector and communication protocol that will enable all plug-in vehicles to use common charge points. This will be a key enabler for adoption in North America; the same connector is under consideration in Europe and China. Further standardization initiatives that will be helpful include fast-charge standards (for DC charging) and vehicle-to-grid standards. Global commonality for these systems will also be needed. Ford is also working with other OEMs and suppliers to provide a common database of charge point locations for display within vehicles' navigation systems.

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Supply Chain Issues

As widespread electrification of automobiles moves closer to reality, a new set of concerns is emerging over the environmental and social impacts of extracting and processing key materials needed to make electric vehicles. In particular, there are concerns about lithium (used to make the lithium-ion batteries that are widely used in consumer electronics and will be used in BEV and PHEV vehicles) and rare earth metals (which are used in electric motors for vehicles, wind turbines and other advanced technologies).

Significantly accelerating the production of electric vehicles is likely to require the use of much greater quantities of lithium and rare earth metals. Production of these resources is concentrated in a few countries, including Chile, Bolivia and China, which has led to questions about the adequacy of the supply of these resources and the potential for rising and volatile prices as demand puts pressure on existing supplies. In addition, there are concerns about geopolitical risks posed by the limited availability of these materials. Could we be trading dependence on one limited resource (petroleum) for another? Attention is also focusing on the possibility of risks such as bribery and corruption and the potential for environmental and human rights abuses. Finally, the processing of lithium, in particular, uses large quantities of water.

Ford's Response

We take these concerns very seriously. Ford generally does not purchase raw materials such as lithium and rare earth metals directly – they are purchased by our suppliers (or their suppliers) and provided to us in parts for our vehicles. As described in the Human Rights section of this report, our contracts with suppliers require compliance with the legal requirements of Ford's Code of Basic Working Conditions and the adoption of a certified environmental management system (ISO 14001). We are working in our supply chain to build the capability of our suppliers to provide sound working conditions in their operations, and we assess compliance with our Code of Basic Working Conditions in target markets. We ask the suppliers we work with to take similar steps with their suppliers. We are also working cooperatively with other automakers to extend this approach through the entire automotive supply chain.

As part of our water strategy, we are evaluating the water requirements and impacts of powering vehicles by conventional fuels, biofuels and electricity. This work includes a study of the water requirements of lithium extraction and processing.

We will continue to monitor and assess these issues for their potential impact on our electrification strategy and our sustainability commitments.

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Electric Vehicle–Utility Interaction

Clearly, electric vehicles – which plug into the grid for some or all of their power – will have an impact on electric utilities. If electric vehicles are charged during times of peak electricity demand, they may overstress the current grid and require the construction of additional electricity supply. Furthermore, recharging vehicles during peak demand would significantly reduce the operating cost benefits expected from electric vehicles. In addition, "smart grid" technology that allows communication between recharging vehicles and the electrical grid will be required to maximize recharging efficiency and minimize stress to the grid. Automakers and utilities will have to work together to develop this "smart" vehicle-to-grid communication system. Overcoming these challenges will require significant collaboration between automakers, electric utilities and governmental regulatory agencies and legislators.

Because utilities and automakers have not had to work together in the past, effective collaboration requires developing new relationships and learning about each other's business and regulatory challenges. For example, utilities and automakers have very different business models: utilities operate regionally and have little to no direct competition within their markets, while automakers operate and compete globally. Further, automakers are primarily regulated at the national level, while utilities face more local and state regulations, which increases the difficulty of establishing a national strategy for vehicle-to-grid interaction. It will be important for automakers and utilities to understand and address these kinds of differences as they work together on vehicle electrification issues.

Ford's Response

In 2007, we initiated the Ford Plug-in Project, a collaborative project with the U.S. Department of Energy, the Electric Power Research Institute, the New York State Energy Research and Development Authority, and 10 utilities (Southern California Edison, American Electric Power, ConEdison of New York, DTE Energy, National Grid, New York Power Authority, Progress Energy, Southern Company-Alabama Power, Pepco Holdings and Hydro Quebec). In this project we are road testing our Escape PHEV prototypes that are equipped with vehicle-to-electric "smart grid" communications and control systems that will enable plug-in electric vehicles to interface with the electric grid, and will allow the vehicle operator to determine when and for how long to recharge the vehicle. This will potentially enable the user to take advantage of lower, off-peak utility rates.

Ford is also working with DTE Energy on a solar energy and battery energy storage project, using vehicle batteries to store energy from a solar array. For more information on this project, please see Ford's Green Energy Partnerships with Federal and State Governments.

This collaboration continues to yield important lessons for both automakers and utilities. Some of the key learnings we have gained so far include the following:

  • Electric vehicles provide additional impetus to develop smart communication systems between the vehicle and the grid. This communication will allow the consumer to know if and when lower electricity rates are available (as some utilities will offer lower rates during the night when energy demand is low), and help prevent additional loads on the infrastructure. Providing utilities the ability to control when vehicles are charged, or assurances that vehicles will not be charged during peak demand time, could prevent costly infrastructure upgrades, some of which may be passed back to the customer by the utility (e.g., if a transformer needs to be upgraded).
  • Smart vehicle charging will require that utilities and automakers develop a common standard for vehicle-to-grid and grid-to-home meter communications. Currently, utilities tend to operate regionally, but electric vehicles will increase the need for common national and even international standards.
  • Widespread use of electric vehicles will likely require that vehicle power consumption be measured separately from home electricity use, requiring either additional meters or "smart" meters. Additionally, the pooling of electrified vehicles in a particular region may require upgrades to the transformers and/or substations that form the electrical grid in that area.
  • There are interesting possibilities for vehicle-to-grid and vehicle-to-home power flow. However, there are significant challenges to making these possibilities a reality. For example, technical, safety, codes/standards compliance, legal, robustness and business case issues need further study prior to commercialization.
  • Vehicle owners will likely want to be able to charge their vehicles at any geographic location and – in those cases where another payment method isn't used – have the cost applied to their home energy bill. In addition, vehicle identification and home meter association must be seamless for the customer. This kind of mobile or remote billing for vehicle charging services will require a paradigm shift in the utility industry's current billing processes and tools.
  • Automakers and utilities both benefit from working together on outreach to local, state and federal regulators and legislators. Ford and our utility partners are already working with legislators and regulators on national standards for vehicle charging infrastructure and incentives and strategies to bring costs down.
  • Utilities and automakers need to work together to educate consumers about the differences between electric vehicles and traditional vehicles so that consumers understand how to make the most of electric vehicles and charging infrastructure.
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  1. Assuming an energy consumption of about 3 to 4 miles/kWh at 10 cents/kWh for the electric vehicle, and a fuel economy of 30–40 miles/gallon at $3/gallon for the gasoline vehicle.

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