Future for plug-in cars linked to electric utilities

LOS ANGELES Tue Jun 30, 2009 9:10pm EDT

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LOS ANGELES (Reuters) - Under pressure to deliver sharply higher fuel economy in coming years, U.S. automakers are deepening ties with electric utilities as rechargeable cars move from the drawing board and head toward the dealership.

Both the embattled auto industry and the utilities are retooling and both industries have a stake in the success of the growing effort to deliver electric-powered vehicles to U.S. consumers.

Such plug-in and pure electric vehicles are projected to play a key role in allowing automakers to meet an aggressive U.S. fuel-economy target for 35 miles to the gallon for passenger cars by 2016.

The million plug-ins that the Obama administration wants on the road before those standards take effect could also serve as a reserve source of power to an overstretched electric grid, particularly if owners plug in at night.

Those battery-powered cars are also a potentially new source of electricity demand, and U.S. automakers and utilities are using existing alliances to test new marketing ideas for the technology.

"We cannot do it alone," Ford Motor Co Chief Executive Alan Mulally told utility executives last week at a speech in San Francisco.

Ford plans to introduce a battery-powered commercial van in 2010, a battery-powered small car the following year and a plug-in hybrid to challenge General Motors Corp's highly touted Volt starting in 2012.

Those plans put utilities and battery companies "at the center of the universe" for automakers, Mulally said.

Ford, the first of the U.S. automakers to roll out a hybrid, has made a renewed commitment to the technology a centerpiece of its turnaround plans.

GM, now operating under a federally funded bankruptcy, has also pledged to have more plug-in hybrids and even pure electric vehicles for city driving in the future.

Within a decade, automakers and utility companies expect to make commonplace two-way communication between vehicles and an interactive utility power grid that will solidify their cooperation.

Utilities are expected to install millions of "smart meters" at homes that would signal the car's computer when the power grid is strained, and power expensive, so charging can be suspended.

For now, the goal is simply to convince motorists to plug in, said Nancy Gioia, Ford's director of hybrid vehicle programs.

Gioia projects that "from 10 to 25 percent" of Ford's production by 2020 will be some type of electrified vehicle.

Britta Gross, GM's director of global energy systems and infrastructure commercialization, would not offer a percentage for plug-ins and other types of electric cars, but said GM would "do the heavy lifting" trying to meet the moonshot-like goal set by President Barack Obama to have 1 million plug-in hybrids on U.S. roads by 2015.

For the automakers, the coordination is much more complex than simply plugging in, said Gioia.

"As soon as consumers say, 'I'm plugging in,' and that recharge of the battery comes from the grid, clearly, we have to understand the utility business," said Gioia. "We are connected to a common customer and a common fuel."

MAKING THE CASE FOR PLUG-INS

Major utilities have established alliances with U.S. and foreign automakers in developing electrified vehicles, but they have less at stake, said Jim Piro, chief executive of investor-owned utility Portland General Electric Co, which is working with Nissan Motor Co Ltd and Mitsubishi Motors Corp.

Utilities will need to make major infrastructure changes that tie in to the need for plug-ins to work -- like power grid development -- even if electric cars remain a niche market, executives say.

"It's going to help our load factor, but we are ready, so it's not that much of a challenge," said Piro. "The bigger challenge is for the automotive people to make a business case for customers to adopt these."

Automakers say the fact that utilities reach almost every U.S. household through monthly utility bills offers them a huge chance to convince consumers to buy electric cars.

Consumers can expect announcements along with their monthly bills on how plugging in a rechargeable car at night when the power grid is less stressed will help lower energy expenses and cut carbon emissions, representatives of both industries say.

(Reporting by Bernie Woodall; Editing by Richard Chang)

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