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Wednesday, May 20, 2009

CAFE, NiMH, and EV

The administration’s proposed CAFE standards should be good news for the EV industry. The standards will naturally force Americans into smaller cars than they would otherwise buy, perhaps more in line with the rest of the world (where gasoline is more expensive and urban parking is more scarce).

If an SUV is twice the mass of an econobox, it’s pretty cheap to build a gas tank twice as big. (Yes, there’s more steel in the body and iron in the engine block, but…).

Thus far electric vehicles have been on the small side, in large part due to battery size and cost issues. Batteries have been the biggest cost for EVs (and HEVs and PHEVs) asw ell as the major technological limiting factor. So having buyers used to smaller cars makes it more feasible to sell small EVs — and to design smaller EVs with smaller batteries that are more cost competitive with efficient gasoline-powered cars. (My next car is more likely to be a $15k 35mpg econobox than a $40k Chevy Volt.)

On an unrelated note, Tuesday Daimler announced a 10% stake in Tesla Motors that Business Week guesstimates is worth $50 million. The investment from the world’s oldest (and once most prestigious) car company should go a long way to legitimate the San Carlos-based startup. The company has already pulled away from its startup competitors, but partnering with Daimler could help it overcome the liability of newness facing all startups.

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