The keys to commercialisation of EVs?
By: Dr Peter Wells, Wednesday, July 29, 2009, AutomotiveWorld.com
In a provocative recent report by Thomas Becker of the Center for Entrepreneurship & Technology, University of California, Berkeley it has been argued that the automotive industry and its partners are now technically ready for electric vehicles and all that is needed is the right commercial approach. The commercial approach advocated as the basis for the forecasts for the growth in the electric vehicle fleet is the use of switchable batteries and charging networks financed by pay-per-mile contracts.
The results of the analysis are startling. Even in the baseline scenario, without significant government subsidy for electric vehicles Becker forecasts that:
- Electric vehicles will account for 64% of US light vehicle sales by 2030 and fully 24% of the total fleet in circulation.
- US oil imports will be 18-38% lower by volume by 2030 than would be expected if internal combustion engine cars took all the sales (even allowing for improvements in fuel efficiency).
- Similarly, the annual US trade deficit attributable to importing oil could be between US$94 and US$266 billion lower by 2030.
- There is a net employment gain of between 130,000 and 350,000 jobs by 2030.
- Health care cost savings (due to reduced air pollution) of between US$105 billion and US$210 billion.
- Greenhouse gas emissions of between 20% and 69% by 2030 when non-polluting sources of electricity are used compared with 2005 US light vehicle emissions.
These are impressive claims and compelling evidence. Of course, it is possible to criticise the assumptions and modelling techniques used, particularly given the low rate of vehicle sales in the US at the moment, which must cast some doubt on the anticipated replacement rates for conventional vehicles, but the outcomes are indicative of the scale and pace of change that might be attained. Indeed, it is prospects like this that are encouraging locations around the world to sign agreements with Project Better Place and it is notable that Renault-Nissan for one is getting behind these projects and designing vehicles with switchable battery capability. The more that governments are concerned about oil prices and CO2 emissions, the more impetus there will be for these developments.
The question is; what do these developments mean for the automotive industry? The essence of the pay-per-mile concept is that it reduces the initial purchase cost for consumers, and amortises those costs over a long time period, thereby making it affordable. The industry, on the other hand, has to take on a bigger share of the risk and sink more capital into the projects. Revenue flows could change substantially, from the almost one-off hit of a vehicle sale to an annual lease-plus-miles revenue stream that per vehicle could continue for many years.
In the longer term, this scale of electric vehicle adoption could trigger a fundamental change in design priorities towards light-weight, long-life vehicles capable of retrofitting and refreshment. Simultaneously, all those assets in conventional vehicle construction and engines are going to look increasingly redundant. These will need to be written off while new assets and capabilities are developed. Particularly given contemporary circumstances, it is by no means clear that the automotive industry can actually afford this future.
Dr Peter Wells is a Reader at Cardiff Business School, where he is a Co-Director of the Centre for Automotive Industry Research and leads the automotive industry research programme within BRASS, also in Cardiff University. Dr Wells is also a director of AutomotiveWorld.com's sister website AWPresenter.com. He can be contacted on wellspe@cardiff.ac.uk.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Published on Wednesday, July 29, 2009
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