This market-based approach should also increase the interest in electrification by auto manufacturers, which must produce cars that people want to buy. As we've seen, simply claiming that a particular car purchase is "good for the planet" has not significantly moved the proverbial needle. A dedication to incrementally and consistently raising the electrification factor in transportation will do more in the long run to reduce carbon dioxide and other greenhouse gas emissions than simply preaching about the virtue of all-electric cars.
Make no mistake about it, I very strongly believe in all-electric vehicles. However, since consumers purchase cars based primarily on emotional attachments and perception, the coolness factor in EVs is of significant importance. The good news is that electrified vehicles have tremendous opportunity to be cooler than conventional internal combustion engine (ICE) vehicles. Both engineering design and marketing to consumers must be done right. We'll then see a far bigger uptake of EVs.
The long road ahead
Substantial increases in the electrification factor, however, will require us to travel a long road. Transportation 2.0 is a fundamental paradigm shift that will take years. The technological challenges are many, and we are working on them with a broad array of stakeholders. I find it far more effective to work with OEMs (original equipment manufacturers) to increase the electrification factor over time than to berate them for not moving fast enough.
One important policy factor will aid our quest: new CAFE (Corporate Average Fuel Economy) standards will be doubled by 2025, from today. The efficiencies enabled by increasing the electrification factor will be an attractive path for OEMs to achieve this marked increase in fuel economy.
Let's distinguish between two distinct opportunities to raise the worldwide fleet's electrification factor. First, after-market efforts are increasingly focused on converting internal combustion engine vehicles -- the installed base on the road today, which is perhaps 1 billion vehicles -- to hybrid and plug-in hybrid and electric vehicles.
The low-hanging fruit in this case are large vehicles -- the proverbial "gas guzzlers" such as pickup trucks, SUVs, vans, delivery trucks, and buses. Conversions cost roughly half that of a new electric-drive vehicle. The conversion effort is being promoted by various government programs, partnerships, and NGOs such as California's CalCars.
The other big opportunity is to shift manufacturing of new vehicles to models with ever-higher electrification factors. New manufacturing accounts for perhaps 60 million passenger cars each year; that's nearly 75 percent of all vehicles produced each year.
Obviously, addressing the installed base, comprising older, less efficient vehicles that produce the most emissions, would produce huge environmental gains. Conversely, new vehicles contribute to the turnover of the installed base and represent a fundamental opportunity to get it right from the start, before a vehicle hits the road.
In both cases, however, we can make vast improvements in performance and reduce emissions by making incremental improvements. Targeting a vehicle's propulsion system will result in big gains, but even a step-by-step process in that area will yield significant results.
A vehicle with an internal combustion engine has one electric motor that acts as a starter, and another electric motor that acts as an alternator. The starter cranks the engine. The alternator acts as a generator that charges the battery. The two could be combined -- an electric motor could behave both as a motor and a generator, since the two roles don't occur at the same time -- into an integrated starter-alternator.
This hasn't been done at mass scale yet, because the sizes of the two machines are different. One is low-speed, high-torque; the other is high-speed, low-torque; and combining them has not been cost effective. As we pursue an increase in the electrification factor, the alternator gets bigger, and the opportunity arises to integrate it, too. The result is an integrated starter alternator or a battery starter generator (BSG).
Now we can target propulsion. When one stops for a traffic light, say, the engine shuts off. When it starts again, the BSG could crank the engine at a higher than traditional RPM (revolutions per minute) that results in efficiencies, better mileage, and reduced emissions.
That's the low end of electrification, but we're targeting propulsion. Add a second machine that can take turns propelling the vehicle, and a hybrid results. It's not all electric, but it has a significantly higher electrification factor than the typical passenger car. Auto manufacturers are more comfortable with these incremental (yet significant) changes: They produce cost-effective products, and that's why we're seeing hybrids sold at a growing rate.