When doggerel flowing from my pen,
(disgusting pun, so lame and terse)
Evokes your snarls and groans again,
Remember friends--it could be verse.
Thursday, April 19, 2012
Electric car battery costs have never been revealed to the public—until now. According to an April 18 Wall Street Journal article by Mike Ramsey, entitled Ford CEO: Battery is Third of Electric Car Cost, the CEO of Ford Motor Company, speaking at Fortune Magazine’s Brainstorm Green conference, said that the battery pack for an electric Ford Focus costs between $12,000 and $15,000. He said, “When you move to an all electric vehicle, the battery size moves up to around 23 kilowatt hours, and it weighs around 600 to 700 pounds. They’re around $12,000 to $15,000 [per battery] for a type of car that normally sells for about $22,000, [referring to the price of the gas powered Focus] so you can see why the economics are what they are.”
Since the electric Focus sells for $39,200, the battery cost alone accounts for a third of the cost of the car. The all electric Nissan Leaf price starts at $35,000, and the Chevy Volt, a plug-in hybrid, sells for about $40,000. But at these prices, none of these cars will achieve much market penetration. The plug-in hybrid and the full electric car will remain niche products until the price of batteries comes down. That’s both good news and bad news. It’s bad news because this means it’s unlikely that we will see much action in electric cars in the next year or two. But it’s good news in that, though the price of batteries has to drop, it does not have to drop by orders of magnitudes. The present price is about five or six hundred bucks per kilowatt hour of capacity. If they could just get it down to about a third of that figure, I think we’d be home free.
The Dept of Energy, which is subsidizing the building of battery factories, hopes to bring the price down to $300 /kwh by next year. They apparently feel that this figure would be a tipping point, and it might be. Part of the high cost of the electric Focus is that even though they build this car on the same production line that builds the regular Focus, they make so few of them that they have all of the cost disadvantages of a “limited edition, handmade car.” But if falling battery price were to allow them to drop the price to $32,000, then the radical increase in sales would allow sufficient economies of scale to drop the price by another $10,000, and this would place it in the price range of the cheap family car. Remember, as rising gas prices create a market demand for non-petroleum cars, it is probably not the Cadillac buyers who really worry about the price of gas. The natural market for electric cars is with people who feel they can’t afford to pay $4.00/gal for gas. But if you can’t afford four dollar gas, then you probably can’t afford a $40,000 car. But if the cost of these high tech batteries follows the same trajectory as other high tech electrical equipment, we may expect, over time, to see sharp decreases in price, once the market expands.
When we get to the point that the typical new Ford sold is an electric vehicle, we will have traveled full circle to where Henry Ford wanted to go in the first place. The gasoline powered cars that Henry put on the market were not his first choice in propulsion systems. Since Henry had been a supervisor of a power house before he went into the car business, an electric car would have been his first choice. But at that time, the available batteries were not up to the task. At one point, Ford hired Thomas Edison’s company to develop a better battery, but the best Edison could come up with, an advanced NiCad, could still not store sufficient energy per pound. But today, we have the right battery. And soon, we will have it at the right price.
So; when will the electric car begin to change your life? It already has. Or, to be more precise, the “threat” of the electric car has changed your life. For many decades, Detroit was content to offer us the same old V-8 engines and three speed transmissions. Product development was all about different styles of fins, and a little more chrome. But that was then and this is now. The modern, front-wheel-drive, four cylinder car delivers efficiency beyond anything we imagined 20 years ago. In WWII, the “holy grail” of engine design was to build an engine that could deliver one horsepower per cubic inch of displacement. And only the P-51 Mustang ever achieved this standard, and it did it with a supercharged engine with compression so high that it ran on 150 octane fuel. In 2003, I bought a new Ford Focus with a 100 cubic inch engine which was rated at 120 hp. This is a small in-line 4-cylinder engine, with no supercharger, that runs on regular gas, and was available in Ford’s cheapest cars.
And yesterday, I traded in my 1995 Ford Escort for a new Ford Focus. Even with 287,000 miles on it, the Escort still runs fine, and I received a decent trade-in allowance on it. (And since I was trading in a Ford on another Ford, I got a Ford buyers loyalty bonus.) In all the 17 years I’ve driven the Escort, I’ve done very little to it other than put gas and oil in it. It’s never had the head off, and other than totally rebuilding the brakes at 200,000 miles, no major mechanical work has ever been done. It even has the original exhaust system. My only complaint was that it had only very modest amounts of acceleration. (I don’t remember what it would do from zero to 60, but in measuring this, you don’t actually use a stop-watch—you use a calendar.)
But the new Focus I just bought, with its little 2 liter engine, delivers 160 hp. And with a six-speed automatic transmission, it has acceleration adequate for anyone except a maniac. I pulled onto the freeway entrance ramp from a dead stop, and was doing 70 when I got off the ramp and merged into the traffic.) For me, that’s good enough. And yet this thing has an EPA fuel rating of 37 mpg average, and maximum highway mileage up to 44mpg. And this is a comfortable, four-door family car. What I’m trying to say--is that American cars have gotten better—radically better. That means that Detroit has actually spent serious money improving engine efficiency. Why did they finally do this? They looked in their rear view mirror, and what they saw creeping up behind them was the electric car. And it scared the hell out of them.
Wednesday, April 11, 2012
First, a bit of background material: Here in Iowa, as in most of the United States, public employees and public services are under attack by organized business interests and by their lackeys in government. The scope of this attack is so broad as to include all forms of public services--even police and fire fighters. But nowhere is this antisocial wrath focused more strongly than on public education. For the forces of “organized money,” the teachers’ union and the tenured professor are now the poster children for all that they see wrong with the world.
Their enmity toward public education has many roots, not all of which are economic, and their desire to pay lower taxes may be but one part of a complex mosaic of motivational factors. Educators, if they perform their function well, have a responsibility to disseminate the truth, including all those inconvenient truths which established interests would prefer to ignore or perhaps deliberately conceal. And of course, there are cultural wars which can entrap educators no matter how strongly they attempt distance themselves from this kind of controversy. Explaining to students how the photo decay of uranium inside a cubic zirconium crystal can tell us that the earth is about four and a half billion years old would not, to most of us, seems like a very controversial thing to do. But to the sanctimonious lunatics who teach their children that God created the world in seven days, any teacher who would dare to say such things is clearly a servant of Satan. Yet it is the actual tax expenditure for education where these smoldering hostilities to the tellers of truth boil over into the political sphere and begin to have real world consequences.
Education has always been expensive. But a generation ago, if anyone seriously suggested that it would be possible to maintain a modern, industrial state without continuing to make these expenditures, he would have been laughed out of any political party in the U.S. or any other Western country. And till the end of the cold war, the most influential conservatives would still advocate increased educational expenditures--because education was one area where the Soviets were leaving us behind. But that was then, and this is now.
The University of Northern Iowa has just suffered radical funding cuts, imposed by the GOP controlled state legislature. About a third of all major programs have been discontinued, and the Malcolm Price Lab School, (at one time the premier pedagogical research facility in the country) will be closed. The faculty has returned to the administration a vote of no confidence, and the local debate is bitter and spirited. As part of this ongoing debate, Jim Offner, the business columnist for the Waterloo Courier, wrote a March 25 column which said, basically, that while the goals of a well rounded education were valid goals, the employers’ demand for highly specialized workers makes the liberal arts degree impractical in today’s business environment. On April 1, a guest article, Liberal Arts Majors Are Very Hirable, by Professor Martha Reineke of the UNI religion department and Professor Margaret Holland of the philosophy dept, appeared in the same paper in reply to Mr. Offner’s remarks. They offer evidence that if you look at mid-career salaries, liberal arts grads actually do much better in the job market than business grads. They cite data from Pay Scale’s annual survey of salaries, which lists salaries of graduates according to major. This survey shows that at mid-career, philosophy majors have higher salaries than business management majors. Reineke & Holland also show that liberal arts majors do better on all tests required for admission to advanced graduate programs, including law, management, and medicine. They wrote:
“*Philosophy majors are No 1 on the LSAT; business majors are No 24.
*Philosophy majors outperform business majors by a margin of 15% on the GMAT.
*Philosophy majors, on average, do better than all other majors on the GRE, LSAT, GMAT, and MCAT.”
Also, they quote the president of Babson College, (a business school) who claims that, due to the pace of change, business skills acquired in the classroom expire in about five years. By contrast, he claims that skills learned in liberal arts disciplines such as history and philosophy are long lasting—and indispensable to business. And they also quote Marissa Mayer, a Google vice president who studied philosophy and psychology at Stanford. Mayer says that of the 6,000 people Google hires every year, 4,500 are liberal arts or humanities majors.
(By the way, if you imagine that philosophy majors are students who spend most of their college years studying the writings of philosophers, or that they expect to be hired upon graduation to perform philosophy, let me correct your misimpression. The beauty of a philosophy major is that it is the one major which allows you to study almost any subject and still apply it towards your major. Why? Because almost any field of study can be considered a branch of philosophy. Those who declare a philosophy major are simply those students who wish to acquire the broadest possible range of knowledge. )
While Reineke and Holland did their homework well, and made a very convincing case for the continued value of the liberal arts, this is precisely what I would expect them to do, because their own department is one of those under assault. What did surprise me is that a few days later, I saw an article in the April 5 issue of the Wall Street Journal , Wealth or Waste? Rethinking The Value of a Business Major, which said exactly the same thing. In fact, The WSJ piece makes the point even more strongly than Reineke & Holland do. The article begins by saying: “Undergraduate business majors are a dime a dozen on many college campuses. But according to some, they may be worth even less.” They say that more than 20% of U.S. undergraduates are business majors. But faculty, school administrators, and corporate recruiters are beginning to question the value of a business degree at the undergraduate level. The biggest complaint is that business majors focus too much on the nuts and bolts of finance and accounting and fail to develop the critical thinking and problem solving skills that are the hallmark of liberal arts courses.
Top business schools are taking the hint. The business schools at George Washington University, Georgetown University, and several others are now tweaking their undergraduate business curricula to integrate history, ethics, and writing--into courses about finance and marketing. At George Washington U., they are planning to use the expertise of their philosophy and psychology depts to teach business ethics. And they plan to use the engineering dept to help teach sustainability. So, just as pro-business lackeys within the state legislature are trying to reduce or eliminate the liberal arts in favor of the study of business, (believing that this will be doing a favor to business interests) the top business schools and corporate recruiters are beginning to embrace the liberal arts as the only cure for what’s wrong with American business. Ahh, the irony of it all! I will provide a link to both the Courier article and the WSJ piece, but you may hit a pay wall on WSJ.
Wednesday, April 4, 2012
In the Monday, April 2, 2012 issue of The Wall Street Journal, there was an article by Justin Lahart entitled U.S. Jobs Rebound Still Leaves Work for Ben Bernanke. (I'd provide a link, but you'd just hit a pay wall.) In the U.S., recently published statistics on total jobs have showed significant improvement over the last year. The Labor Department payroll survey says that the U.S. has added an average of 245,000 jobs in each of the last three months. That same survey says that we have added 2,000,000 jobs, over the last year. The payroll survey is a survey of 6% of U.S. employers. But this survey only questions those employers who are well established--it overlooks start-ups that are often an important part of any recovery. A lesser known, but probably more accurate survey is the Household Survey. In this poll, they simply ask a small number (60,000) of householders to tell them who in that house is working. According to the household survey, there have been not 2 million, but 3.2 million jobs added in the last year. And in any previous recovery, the Household Survey has turned out to be closer to the real picture. So while the official job picture is finally starting to look good, the real picture is probably even better. And remember, we have 4 years of pent up demand.