BMW will build electric cars in Leipzig

It's been crystal clear for some months that BMW would be making more EVs after getting nothing but high praise for its little 500 car MINI E experiment. Not so much for the logistical foul ups in their haste to deploy the fleet in time for valuable CARB credits, but for the giggle-inducing speedster they unleashed on the world.

Thanks to Tom Gage and Alan Cocconi's world-class motor/controller combo, the famed ACP 150, BMW proved that a mid-priced electric pocket-rocket could be made. With what they learned burning a hole in their corporate pocket, the Bavarian engineers are busily refining designs for multiple electric BMWs.

They plan to build them in Leipzig with the initial cars hitting showrooms around mid-2013.

The first to market will be a subcompact they dubbed the "Megacity" car. It will approximate the MINI E in size, and while I doubt it'll be powered by ACP motors, one can hope.

Considering how many cities the world over are crushed with clogged arteries coursing with pollution-spewing internal combustion vehicles that continue to pollute while sitting in traffic, the thought of a small, easily maneuvered and quick off the line, city car that doesn't pollute at all, will appeal to millions.

Remember, it's never about who can't use a car like that, it's about those who can. Turns out, there are tens of millions who fall into that category.

Tens of millions.

I don't know about you, but I can't wait till the day when it's rare to see an internal combustion car. At some point, they'll be anachronistic reminders of a day when people didn't think twice about spewing poisons into the common airshed. Like smoking in line at the grocery store, you won't believe people used to do it everywhere.

Battery value in the afterlife

This story is about the economics of EVs, but it addresses a mostly unknown aspect that is only recently getting some attention.

What is the value of the battery pack when it can no longer give you the service you require?

"Lithium-ion batteries have a limited number of charge cycles in electric vehicles, but once a car’s battery pack goes kaput, it can be recycled or find new life in less demanding applications — storing renewable energy generated during off-peak hours, for example."

This is precisely what Ed Kjaer of SoCal Edison told me when I toured the SCE "smart garage". The large battery packs will have a long afterlife storing kWh from off peak charging at night in your garage or anyplace you can safely store the batteries. In the near future, we will all be on Time of Use (TOU) utility rates, so any energy we use during peak load times will be much more expensive than energy used at night.

Charging these large battery packs at night on 8 cent/kWh energy and using it to offset 40 cent energy the next day could prove quite lucrative. Therefore, when you replace your EV's battery pack with a new one after 7-10 years, the old pack may be worth hundreds, or even thousands of dollars as a storage pack in your house, or at a commercial building where many packs are strung together. It's this value that Nissan, and everyone else, wants to know.

This "afterlife" value affects the cost of EV ownership in a positive way since any value attributed to the battery pack increases the value of the car at the end of the lease, or when a used car is sold.

Nissan wants to take advantage of this value by offering to finance the cars themselves, at least for the initial rollout. As Josie Garthwaite astutely observed in her article, this will let Nissan set the residual value higher based on its internal assumptions of the battery's value and longevity which will mean a lower lease price.

A potential downside was highlighted in the article when Larry Dominique, VP of product planning for Nissan, was quoted saying, "We want to be able to control the residual value; we want to be able to control the end value, so at the end of a lease or loan we have the vehicles back and we can decide what to do with them."

Whoa! I had a flashback to March, 2005 on the rainy sidewalk in front of the Burbank GM facility when GM hauled 12 truckloads of EV1s to the crusher. I'm sure Nissan would never do such a thing-again. All the same, I would encourage Nissan, and all the other carmakers, to always offer the option to buy the cars outright. Those of us who understand the EV and how to operate it, may think it's a better bet to own that battery. We at least want the option.

Speaking of taking EVs back after the lease expires, I'm already hearing talk of some action against BMW should they decide to take their wonderful Mini Es away and destroy them after the one-year-only lease program. Whatever happens with those cars, it'll happen in time to be included in Chris Paine's upcoming "Revenge of the Electric Car".

Paul
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