Do Electric vehicles have a future?
The perfect storm of bad news the whole industry received recently should trigger some fundamental questions; the survival of a whole nascent industry is at stake.
Some are convinced that the EV day has arrived.
The Paris Auto that ended last week and should have been a showcase of the explosion of Electric vehicles, unfortunately gave us some evidence of the opposite. EV sales are very disappointing.
Pioneer car manufacturers such as Toyota are slowing but surely speeding down
and governments are pulling the plug on not so ambitious initial targets
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After so many years of thinking and so many billions invested, no one would bet for sure that EV’s have a future. Let’s hope at least that this crisis will trigger a debate, that has become more necessary than ever, on the three hurdles that are impeding the development of EV’s; price, autonomy and charging time; These three factors make the EV’s far less competitive and convenient than conventional cars. Why consumers should settle for less than what they already have in terms of convenience and cost?
Most EV manufacturers do not seem to get it. With a $39000 starting price, a GM Volt is more than twice as expensive as a Cruze (starting at $16000) and 50% more expensive than a Malibu (starting at $22000). Maybe encouraged by the very relative success of its Smart two-seater, Daimler Benz is launching an electric version of it
for the supposedly attractive price of $25000!
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Considered from the cost of ownership angle, the math remains very unfavorable to EV’s.
According to a recent DOE’s report
most electric vehicle available in the US do not make sense economically as long as gas costs less $5 a gallon.
Autonomy is the other issue. True, most people use their car for commutes and short errands and when a family owns two cars, they could actually cope with one short range car as long as the other one can be used for occasional long travel. But this is only theoretical. This configuration makes no sense if the electric car is not cost competitive. It makes no sense also because cars represent freedom and car drivers want to have the freedom to drive long distances even if this never happens and they expect sufficient autonomy from any of their cars.
Charging time adds another big freedom restriction to low autonomy. Six hours charging time (or even one hour for fast charging) is unacceptable.
OK, the Better Place battery switch model is supposed to address both issues. Furthermore, Renault (Better Place’s car manufacturer partner) is making a noticeable effort in offering its vehicles for a price that is very close to conventional cars.
Unfortunately, news from this front is not good either. Shai Agassi, Better Place’s charismatic founder and CEO was just ousted and replaced by the company’s board. The concept in taking much longer than expected to roll out and Better Place has burned $500M of cash so far. This situation should not come as a surprise. The development of a network of charging stations is a key success factor. No one will buy a car if they are not sure they will be able to charge it when needed. Such a network takes a lot of time and money to deploy; a typical chicken and egg dilemma.
Is the Better Place idea dead? No, of course, but all depends on the direction the new CEO will take, a new direction that needs to be drastically different from the current approach.
Better Place needs to find partners that will be able to speed up the development of the network. These partners should potentially be already have a presence everywhere. They could be oil distribution chains, or come from other environment, such as big retail, fast food restaurant chains, hotel chains and so on…
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Further down the road, potential customers will very likely expect a broader choice of vehicles than the two models offered by Renault and a broader choice of makes. Both Better Place and Renault need to open their technology and let other car manufacturers develop battery switch models based on it.
Why should they do so? Because no one wants to become the new Betacam.
No matter what happens with Better Place, we now all know that it will take a while before Electric Vehicles become a mass market. Manufacturers should revise their EV strategy accordingly. They should switch for the time being to a niche approach that will help them capture opportunities where the concept can already work well. Short term rental is one of them. It is boosted by the growing reluctance of the new generation to own cars money.cnn.com/2012/09/17/news/economy/young-buying-cars/index.html which makes them much more likely to rent. It is associated with growing urbanization, at least in the US.
And how about developing a whole service industry around EV’s ? Airports, local governments, the military, postal services and many others would certainly be interested? And how about making an effort to develop faster a CaaS (Car as a service) concept based on electric cars similar to the one that was launched in Paris a year ago?
Only out of the box thinking will help the EV industry overcome the very difficult years ahead.