An industrial joint venture to series-produce plug-in hybrid cars

INTERVIEW – In June, Swedish energy company Vattenfall AB and auto-maker Volvo Car Corporation, announced a first-of-its-kind joint venture that will introduce plug-in hybrids by 2012. The development of the cars is being carried out and financed jointly by the two companies. The Volvo Car Corporation will manufacture the cars and Vattenfall will develop charging systems and supply the cars with electricity.

“We are investing in an industrial joint venture to series-produce plug-in hybrid cars in Sweden in 2012, cars that can be powered by both electricity and diesel. This is an important business development for us and our partnership with Vattenfall allows us to take a giant step toward offering our customers cars with an even smaller environmental footprint,” said Stephen Odell, President and CEO of the Volvo Car Corporation.

The biggest plus-point of the Volvo-Vattenfall JV is that the plug-in hybrids will be able to charge their batteries from regular household wall sockets. “We want to reinforce electricity’s importance in society and its key role in solving climate issues. Through this cooperation we hope to be able to speed up the introduction of electric cars. Together we are developing the next-generation technology based on Plug-in cars and various charging alternatives,” said Lars G. Josefsson, president and CEO of Vattenfall.

Volvo’s and Vattenfall’s plug-in hybrids will be driven by a powerful electric motor fuelled by a lithium-ion battery. The battery will take around five hours to charge from a standard wall socket plus the battery will be also be charged every time the car’s brakes are applied. 
Says Odell: “Most car journeys are short trips, for instance to and from work. We will be able to offer a product that fulfils this transportation need. In order to cover longer distances as well, the car will also be equipped with one of Volvo’s fuel-efficient diesel engines.”

Three Volvo V70 demonstration cars will be on display this summer which will help both Volvo and Vattenfall gather information on consumer needs. Further, Vattenfall will test various concepts for high-speed home charging and also for charging stations in public places, where owners pay to fuel with electricity instead of petrol or diesel. Vattenfall will offer customers the opportunity to sign an agreement for renewable electricity sourced specifically from wind power or hydropower, as an alternative to the regular mix of electricity sources. Both Volvo and Vattenfall see major environmental advantages to the plug-in hybrid project even if the electricity does not come from renewable energy sources. “Through electric power, we avoid the emissions from each individual car. Instead of petrol or diesel, the energy is derived from a few large power sources and Vattenfall is working hard to eliminate carbon dioxide emissions from all electricity production. In Sweden, virtually all Vattenfall’s electricity production is emission-free,” explains Lars G Josefsson.

The plug-in hybrids will be priced higher than conventional cars – this is partly due to the high battery costs. But both Volvo and Vattenfall feel that the high price will be offset by fuel cost savings.

Automotive Industries spoke to Paul Gustavsson, vice-president, business development at Volvo Cars.

AI: How did the JV with Vattenfall come about?

Gustavsson. It started as a cooperation in 2007, where Vattenfall, Volvo, Saab Automobile and the Swedish Energy authority agreed to develop a small number of PHEV demo vehicles. Eventually Saab left the cooperation, and the other three parties finished. During this work VCC and Vattenfall mutually came to the conclusion that we wanted to initiate a major industrialization program of PHEV cars, in high volume.

AI: What are some of the new technologies being incorporated in the plug-in hybrids?

Gustavsson. A 50kw electric engine, a lithium ion battery, electric rear axle drive,

AI: Will the high cost prove a spoiler to the plug-in hybrid’s popularity?

Gustavsson. We think the higher cost to the consumer will be balanced by much lower (60-70% lower) running cost. Initially we also expect government incentives, which will drive volume, and hence decrease product cost quickly.

AI: Please give us some details on the cars you are developing for this project.

Gustavsson. A well proven Volvo 5cyl diesel is combined with a 50kw electric engine over the rear axle. The electric engine is driven by a battery, placed in the rear trunk. The battery can be charged at home, using the normal household electric socket. Electric range is up to 50km, after which the diesel engine comes in effect. Certified fuel consumption is expected to be approx 1.9l/100km (<49g CO2/km). Automotive Industries also spoke to Lars Strömberg, Professor & VP Research & Development, Vattenfall. AI: What are some of the technological challenges facing Vattenfall in developing charging systems for the plug-in hybrid project? Since we foresee the PHEVs to mainly be charged at home or at the work place we know that charging the vehicle will be like adding another electric device to your household and so this is no big challenge. And since you always have the “range security” of the diesel engine PHEVs will have little need for public charging. However we are working together with Volvo to develop options for faster charging. This is already being tested on the demonstration cars that are being operated right now. The most important issue to focus on right now is to develop joint standards for charging, most importantly in Europe but optimally for the whole world. This is important to make plug-in-hybrids and electrical vehicles in general internationally useful, so that you can buy a car in Sweden and charge it even if you take it to Denmark or Italy. It is also of high importance in order to open up all European markets for our jointly developed car. We are looking at future generations of electrical vehicles and more intelligent ways to communicate between the car and the electric grid. For example, the grid needs to recognize the car and be able to offer the fastest charging speed possible at the given time. Cars should also be able to start charging at times when electricity prices are low or when there is a surplus of wind energy in the system. Since more and more electricity is and will be produced from wind, the electricity buffer batteries from electrical vehicles can offer would give us an important option to balance the grid. In addition to that we are also looking at different metering and billing solutions for the future.
AI: What kind of pressure will plug-in hybrids place on your electricity supply grid?

With plug-in hybrids or other electrical vehicles starting to enter the market, we will se a slow and modest increase in electricity demand. In fact, if all vehicles in Sweden switched fuel to electricity, the electricity consumption would only increase by 7-8 per cent. This increase will be more than covered by the expansion of wind power over the next ten years. Besides that the EU has set quite strong targets to increase energy efficiency in Europe by 20% until 2020 which is intend to reduce the overall energy demand in Europe. In addition to that, the total energy consumption would decrease since electric propulsion is about four times as efficient as the internal combustion engines of today’s vehicles.

The electricity grid is a robust system constructed in order to handle large variations. Since an individual PHEV demands little power, comparable to a dishwasher or washing machine, the initial impact on the grid will be small.

AI: How much of your electricity comes from renewable energy sources and by how much do you expect this to go up by in 2012?

For the whole Vattenfall Group, and all our operations in Europe, approximately 25 per cent of electricity comes from renewable sources. Another 28 per cent is from low emitting nuclear power.
In 2030, our plans are to produce about 80 per cent of our electricity from climate neutral energy sources such as ocean energy, hydro and wind power, and also from fossil fuels with CCS.

AI: What was it like to work with an auto-manufacturer? What did both companies bring to the project? Do you see the Volvo-Vattenfall JV proving to be an inspiration for others to follow?

This can absolutely be an inspiration to others. Instead of each company having to hire new people or venture in to new fields of expertise, we have efficiently combined our different competences. The result is a strong partnership where we can look at electricity as a fuel for cars from two different but equally important angles. Also, it is always interesting to team up with another business, as it let’s us see through someone else’s eyes and broaden our own view.
Both Vattenfall and Volvo have ambitious environmental targets, so we are very much striving towards the same goals. At Vattenfall, we are working towards becoming climate neutral. To achieve this goal, we need renewable energy, nuclear power and coal with CCS. Mitigating emissions from the transport sector is an integral part of curbing climate change.

Another positive aspect for Vattenfall is of course the opportunity to cooperate with our end customers in order to reduce their CO2 footprint.