Did Electric Cars Just Hit the Wall?

Could the electric-car revolution -- or at least, the lithium-ion battery revolution that is expected to power all those electric cars -- be in trouble?

Concerns about fires in the Chevy Volt, General Motors' (NYSE: GM  ) "moonshot" plug-in hybrid car, suddenly have investors raising the question. While there's no question that any major new technology brings unanticipated complications, some are starting to worry that safety concerns around electric vehicles could make already-skeptical consumers even more dubious -- and kill the electric-car revolution before it starts.

Are those worries justified?

A smaller-- and bigger -- deal than it seems
Here are the key facts: A Chevy Volt that had been crash-tested by the National Highway Traffic Safety Administration caught fire -- three weeks after the test. Concerned, NHTSA and GM engineers attempted to replicate the incident by deliberately rupturing a Volt battery pack, which then also caught fire, a week later.

GM held a press conference with senior executives yesterday to address the issue, but not much in the way of actual new information came to light. Product czar Mary Barra wouldn't explain exactly how the fires started, saying that GM would release full information once its engineers had "validated" the cause. But here's what else we do know:

  • It's not likely a danger to drivers. Barra did say that the fires were caused by energy left in the batteries, and pointed out that the fires happened days after the crashes -- no accidents involving Volts have yet resulted in fires. GM has developed procedures and equipment to "de-power" the batteries of wrecked Volts, which it is rolling out to first responders, repair shops, and salvage yards, the folks who are more likely to be facing a risk.
  • GM is taking this very seriously. Right now, whenever OnStar receives word of an accident involving a Volt, GM has been dispatching engineers to the vehicle to de-power the batteries and advise on safe handling of the damaged car. GM has also offered to lend any concerned Volt owner a (non-Volt) vehicle to drive until the problem is resolved. And the company has established a team of senior engineers who will work with the Feds to develop changes and procedures to ensure the safety of Volt drivers.

GM has to take this seriously. While Volt sales aren't yet a significant contributor to the General's bottom line, the car is a huge symbol of GM's comeback and a big part of its current marketing push. And the truth is, looked at in isolation, it's probably not that big a deal. GM did extensive safety testing on the Volt, but they missed this scenario -- and really, that's not super-surprising with a still-new technology.

But while most of Barra's focus in Monday's press conference was on the Volt, she did say that this isn't just a GM problem, it's an industry problem, a fact of the new-generation lithium-ion battery packs like those used in the Volt that will have to be addressed. If that's true, she's right. And it'll need to be addressed soon, lest consumers (and first responders and repair shops) start to think of electric cars and hybrids as safety risks.

But I'm not yet convinced that it is true.

Where are the Tesla fires?
The electric cars made by Tesla Motors (Nasdaq: TSLA  ) use lithium-ion batteries like the Volt's, though Tesla's battery packs use a different configuration, lots of small laptop-type battery cells rather than the smaller number of big cells that GM and other automakers use. But still, there are a couple thousand Tesla Roadsters driving around out there, and nothing like the Volt fires has been reported.

Most Toyota (NYSE: TM  ) and Honda (NYSE: HMC  ) hybrids use nickel metal hydride batteries, an older technology, but the new Honda Civic Hybrid and the upcoming plug-in version of the Prius use new-generation lithium-ion technology like the Volt's, as does the Nissan (OTC: NSANY) Leaf. And Ford's (NYSE: F  ) new Focus Electric will use lithium-ion batteries from LG Chem, the same supplier that makes the Volt's batteries.

All of those vehicles have undergone extensive testing (and in the case of the Teslas, many thousands of miles of actual on-road use by customers) and no after-crash fires have been reported. That doesn't mean there's no risk; it's possible that the Volt test did in fact reveal a risk that all these cars will share.

But it does at least suggest that this is a GM problem, not a lithium-ion battery problem. That would be a good thing for both GM and the industry as a whole.

If it's just a GM problem, that's good news -- even for GM
Safety defects in vehicles are costly hassles for automakers, but they crop up for every automaker sooner or later. From a PR perspective, GM is mostly doing the right thing here -- getting out in front of the problem, working closely with the Feds, making executives available to answer questions, taking care of affected customers -- and the fact that nobody has been injured so far is a very good thing. If it's a Volt-specific problem, GM will look a little clueless for a while, but it'll fix it and move forward.

A problem with lithium-ion battery packs, long touted as the technology that will enable the electric-car and advanced-hybrid revolution, would be a bigger deal. In the long run, it may turn out to be a manageable risk for those who work with wrecked vehicles, just as full tanks of gas are a manageable risk now.

But with consumers still skeptical of electric vehicles, and automakers still facing the challenge of selling them to a mass audience, any hint of an increased safety risk could be A Big Problem. EV enthusiasts and investors -- and not just GM investors -- should keep a close eye on this story as it plays out in the coming weeks.

GM's dividend might return next year, but you don't have to wait to put the power of reinvested dividends to work in your portfolio. In a special new report, Motley Fool analysts identify "11 Rock-Solid Dividend Stocks," all great additions to a long-term investor's portfolio. This new report is completely free for Fool readers -- click here to get instant access.

Fool contributor John Rosevear owns shares of Ford and General Motors. You can follow his auto-related musings on Twitter, where he goes by @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (15) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 29, 2011, at 4:10 PM, 8thwonderworld wrote:

    Keep in mind that the Volt is a hybrid.

    Preliminary investigation information is leading towards a problem with the batteries too close to the ICE and fuel systems.

    PEVs such as the Nissan LEAF don't have this risk, as they are 100% electric, with no combustible fuel and related ICE components.

  • Report this Comment On November 29, 2011, at 5:16 PM, kmacattack wrote:

    Despite the best efforts of Mitch McConnell to stop the shift away from OPEC oil, the country is moving toward energy efficient transportation. McConnell filibustered the energy bill which would have boosted all kinds of new technologies, including electric and hybrid vehicles, solar power, wind, geothermal, and the biggest impact "bridge" alternative energy source, Compressed and Liquid natural gas vehicles. The CNG/LNG market is overwhelmingly commercial, perfect for the long haul trucking and local bus and delivery vehicle fleets, for many reasons. CNG costs about $1.29 per gallon equivalent in most markets, as opposed to about $3.75 for dirty burning diesel. A long haul trucker would save about $1,000 PER WEEK converting to CNG from diesel, and since the conversion cost is about half what it was 2 years ago (Now about $40,000 for a brand new engine under warranty) the payback for conversion is about 40 weeks. Within 5 years, adopting CNG/LNG for long haul trucking would cut our OPEC imports in HALF and would save American consumers over $3 TRILLION PER YEAR that is now going straight to OPEC bank accounts, and in some cases financing terrorists who want to destroy us. Natural gas emits 1/4 the carbon of Diesel or Coal (used for electric generation) and no sulfur, so we benefit from cleaner air, especially in large cities where in some cases, over 100,000 trucks are running every day and polluting the air. Adopting this program alone will create about 1 million new high paying jobs, including jobs involving EXPORTING LNG to an energy starved world. We are still trying to crawl out of a near depression caused primarily by the snowball effect of $150 per barrel/$5.50 per gallon gasoline which sucked the middle class and poor of virtually all their disposable income. Just before the vote on the energy bill, Mitch McConnell received a "campaign contribution" of about $500,000 from big oil, and another $50,000 from the powerful coal lobby, because both of these lobbies will do anything to keep us dependent on their products, which make trillions of dollars for their companies while Americans starve. According to Gallup polling, 85 percent of Americans wanted to see the energy bill become law, but McConnell was able to arm twist all the senate republican co-sponsors, including Senators Lindsay Graham, Orin Hatch, Olympia Snowe, and Susan Collins into withdrawing their support at the last minute, supposedly because of two provisions in the bill that he didn't like. The first was the "cap and trade" clause, which was part of the house bill passed 18 MONTHS BEFORE, which is largely supported by natural gas producers, because they can offset any carbon tax liability by planting tree farms, which eat C02 and can also be lucrative business ventures. The second was the elimination of the Bush policy which only held oil companies liable for a $75 million cap on liability, part of a secret agreement when Dick Cheney invited big oil to Camp David.where they were allowed to write their own energy bill, as a payback for the hundreds of millions in "contributions" given to republican candidates down to the state and even local level.

    During the Bush years, the oil companies made TRILLIONS OF DOLLARS at the expense of the Americans and our economy. If Obama hadn't summoned BP's Tony Hayward onto the carpet in Washington, American taxpayers would have been stuck with at least $30 billion in cleanup costs for the BP Horizon disaster. I don't know how he did it, but Obama secured an escrow to begin with of $20 billion from BP (I suspect nationalizing assets in the US may have been part of the discussion), and an additional $10 billion at least since that time. McConnell, Boehner, Cantor and other republicans ACTUALLY called press conferences CLAIMING THAT TO MAKE BP PAY FOR THE CLEANUP WAS "UNFAIR". Whose side are these republicans on anyway? For an answer to this question, I recommend checking out the political contribution disclosures of republican politicians, and certain democrats as well. My congressman has nearly a full page of line listings of contributions from the Koch brothers who inherited oil refineries and stand to lose BILLIONS OF DOLLARS if the monopoly of big oil as a transportation fuel is broken. Over the republicans dead bodies, Chesapeake energy recently loaned Clean Energy Fuels $150 million to build out CNG fuel stations at major truck stops nationwide, and the network should be in place within 24 months. Big oil will now be forced to lower prices, which are rigged from the wholesale to the retail level, or they risk losing the retail customer market as well, because anyone can install a natural gas compressor at home and fuel their cars and trucks at even lower prices per gallon. We have about a 200 year supply of natural gas in the United States, so we would not have to worry about bogus "oil shortages" ever again. Natural gas is the perfect "bridge fuel" to completely renewable energy sources, i.e. electric and hydrogen (made from WATER) cars, electricity from Wind power, Solar, geothermal, etc. There is no reason that this country needs to voluntarily stay dependent on OPEC oil, which robs Americans of disposable income, threatens our sovereignty, funds military and terror threats, and pollutes our air. If we were to eliminate "campaign contributions" altogether, and require all lobbying to be done before a live TV audience in congressional hearings. No lobbyist should have any more access to congress than any American citizen, so equal time should be afforded to both sides of every argument. If we adopt public financing, congress should have ample time to study bills on their merit, since much of that time from the day they take office is spent groveling for money for the next campaign. The really great benefit will be for the 98 percent of Americans who have not owned a lobbyist over the past 80 years or so. I think we should cut congressional pay to a base of about $100,000 per year, but allow them to all make up to $1 million each, BASED ON THEIR PERFORMANCE of achieving job growth, reducing annual deficit spending, and moving toward paying off the national debt, while at the same time funding needed social programs like social security and medicare. The $106,800 cap on social security contributions needs to be eliminated, because it is nothing but a welfare program for the people who need it least. This cap is costing the country about $500 BILLION annually which would completely fund social security, medicare, medicaid, and universal health care, AND THIS IS ONLY ONE LOOPHOLE. Rupert Murdoch made $10 billion last year, and not only paid zero income tax, but received a $4 billion rebate. No wonder he became an American citizen, Australia wouldn't allow him to steal from it's citizens. This is the same man whose "news" organization rails about 50 percent of the people who don't pay federal income tax, when he is not only part of the 50 percent, but he receives enough welfare to fund a small state's entire Medicare program... If congress is not indebted and imprisoned by the people who pay for their election, and re-election provided that they "play ball", I think we would all be amazed at how well republicans and democrats would find a way to work together for the benefit of the country. The energy /transportation bill would only be a small start.

  • Report this Comment On November 29, 2011, at 5:50 PM, TMFMarlowe wrote:

    @8thwonderworld, what's your source for that 'preliminary investigation information'? I hadn't heard that, though it wouldn't surprise me -- though it WOULD surprise me if NHTSA's standard post-crash-test procedure didn't include draining the gasoline out of their wrecks.

    Also do keep in mind that lithium-ion plus ICE is probably the leading contender to be the default transportation choice for most Americans 10 years from now, assuming there isn't some Large Problem with L-I battery packs. You may not love it, but it's the (near) future.

    Thanks for reading.

    John Rosevear

  • Report this Comment On November 29, 2011, at 5:57 PM, DJDynamicNC wrote:

    @kmacattack - I like your style, sir or ma'am.

    @John - thanks for the article, good reading.

  • Report this Comment On November 30, 2011, at 9:33 AM, imearthfriendly wrote:

    research shows that even if a electric car is rechared by using energy from coal fired powerstation still it would reduce carbon by 30%. Electric cars are a sure welcome, read more on this at http://www.imearthfriendly.net

  • Report this Comment On November 30, 2011, at 12:50 PM, Brettze wrote:

    I support EV only if they are much lighther than what we got now.. EVs should weigh less than 1000 pounds or so have thinner tires and aluminium bodies or plastic. The battery pack has to be able to take us at least 100 miles per charge not just 35 miles . Also photovoltaic panels on roof of EVs will be able to take us much further if EVs is much lighter as well. it is the weight that makes all the difference.

  • Report this Comment On November 30, 2011, at 12:55 PM, Brettze wrote:

    Tesla Motors seems to be doing a better job than Chevy on EVs.. Tesla Motors use computers and electronics to control electricity precisely and efficiently. We can really elminate first and second gears in our transmissions and replace them wtih electrc motors for low speed trajectory. The gas engine will take over at third gear and higher only. No more first and second gear which is the least efficient for gas engines.. while electric motors is most efficient for low speed only. Electric motors is inefficient at higher speeds .. So we can switch back and forth ..as we drive around. getting stuck in rush hour traffic, or stopped at intersections almost forever!!

  • Report this Comment On November 30, 2011, at 12:59 PM, Brettze wrote:

    EVs make very little sense as long as your utilty use multi tiered price schemes for the monthly amount of electricity you use.. It has nothing to do with peak hour or off peak time... Every month, you are charged at lowest price per kilowatt for first few hundred kilowatthours which almost all of you usually use up everymonth.. after first few hundred kilowatthours, the charge double for next few hundreds then triple for the next few kilowatthours.. .. Your EV will be charged at the highest price because you must use lamps, stoves, applicances etc that usually take up the lowest allocated low priced kilowatthours everymonth.. Your EV will be adding the highest priced kilowatthours to your utitily bill and drive you nuts!

  • Report this Comment On November 30, 2011, at 1:01 PM, Brettze wrote:

    Utility marketing teams are so quick to mislead you with useless information on off on peak hours like encouraging you to charge during off peak hours.. You pay the same during peak or off peak.. your utilty is the one who pay higher prices for buying extra juice from the grid during peak hours not you.. What your utility dont tell you is that you pay extra for more kilowatts you use past certain tieers up to several times the price of basic price... REad your statement again and find those tiers ..

  • Report this Comment On November 30, 2011, at 3:21 PM, Brettze wrote:

    There is still a huge unmet demand for EVs like commercial use or even police cars, big factory , high concentration population centers, etc.. The long list goes on.. only if EVs are much lighhter and made without any heavy steel or iron. EVs may never be safe for highway use or heavy traffic like this.. EVs can be as powerful as pickups able to haul tons just around factories or supply lines between suppliers and factories close to eachother. You have to make right EVs for right markets.. EVs is not for mainstream use yet. until we develop much longer battery range first.

  • Report this Comment On November 30, 2011, at 3:21 PM, Brettze wrote:

    Jay Leno can collect dozens of EVs for all I care!!

  • Report this Comment On November 30, 2011, at 3:43 PM, CluckChicken wrote:

    "EVs should weigh less than 1000 pounds or so have thinner tires and aluminium bodies or plastic."

    I am not sure that is possible with current technology. The battery packs alone are about 250 lbs, add in the required safety features and you are probably near 1000 lbs and you would still need to add in the creature comforts.

    The Tesla Roadster weighs in at 2723 lbs but the Lotus Elise that it is based off of comes in at 1896 lbs. The main difference between these two cars is the powertrain.

  • Report this Comment On November 30, 2011, at 7:23 PM, steveEV wrote:

    Wow, Brettze, that is a lot of comment but a little behind on curent events.

    Most electric cars do already travel 100 miles per charge. 90 to 110 is normal for my LEAF. A solar panel on the roof does provide some power to the vehicle. Tesla does very well building efficient cars that require only one gear to drive from 0 to 60 in less than four seconds and sustain a maximum speed of 120mph. My LEAF also has only one gear which accelorates me up to 90mph on the highway. The tiered pricing for electricity does not really matter since I have solar PV on my garage to power the house and charge the car. My electric bill is about $20.

    Things are as you expect. Go ahead and get a new EV.

  • Report this Comment On November 30, 2011, at 9:22 PM, nutcutter wrote:

    On the question of tiered pricing for electricity, as SteveEV says, solar will completely cover your kWh needs for your home and car - if you have the roof for it. It's also cheaper then grid power here in CA. If you can't go solar, then the utility will offer you a time of use (TOU) rate for you EV charger only. This takes it off of your tiered rate schedule, and as long as you charge during off-peak times at night, the cost will actually be less than your lowest tier.

  • Report this Comment On December 01, 2011, at 2:24 AM, spectechinvest wrote:

    The Volt may end up backfiring on GM if they start getting scrutinized like Solyndra with all the government loans they also received.

    Does anyone think that this may actually have the potential to sink GM?

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1696604, ~/Articles/ArticleHandler.aspx, 11/27/2014 7:15:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement