It is predicted that by 2030 half of cars sold will be electric. This, plus Tesla’s September announcement, should surely spur on many parties to ramp up their electric vehicle (EV) strategy. Drivers who have already made the switch are enjoying innovations such as software and connectivity-enabled features, plus, of course, a lower carbon footprint. This is a huge selling point, with many consumers keen to do “the right thing” and drive a car that has, at worse, a net zero impact on the environment. If uptake is really to increase as the decade progresses, the current barriers of cost, battery range and lack of viable charging points all need to be addressed urgently.
Although considerably more expensive to buy when compared to internal combustion engine (ICE) models, EVs are currently eligible for government subsidies in most advanced countries and offer savings in other areas like servicing and tax. With technological innovations, such as Tesla’s batteries, plus the growth in EV manufacturing and therefore choice, costs should drop exponentially and soon stop being a barrier altogether. In the short term, support and improvements on the customer purchasing journey are more the problem, one that could be helped by cost comparison tools like that from Pacific Gas and Electric and more support, communication and relationship management by automakers.
Whoever corners the market in new model production and reaches an economy of scale first has a big decade ahead
Theoretically, Tesla has answered concerns around battery range—a million miles far exceeding the lifetime of any car, plus even the existing batteries are outstanding when it comes to mileage. The real barrier here is fear. Consumers still need convincing that they won’t run out of charge. This worry can be addressed through better education from manufacturers, better coordination between charge point providers and improved usability and reliability of charging points.
It is the infrastructure of charging points which is the third and final barrier. They aren’t yet widespread and car/plug compatibility, functionality and payment can be hit and miss. Ubitricity, a German charge point business, is rolling out on-street charging points retrofitted into existing streetlights, which will hopefully be replicated across the globe. Creative solutions like this could solve the issue of cost too. Take the UK for example, where prices range vastly between £0.05 and £0.20 per kwh when charging at home and £0.12 and £0.68 per kwh at public charging points. With collaboration between and support from automakers and energy utilities, or a unified charging ecosystem, industry should soon see the democratisation of consumer access to charging points, throwing open the EV market to all.
As touched on, automakers will be pivotal in making EVs affordable and attractive to customers and many are already starting to invest, despite the fact that EVs are not yet profitable. Whoever corners the market in new model production and reaches an economy of scale first has a big decade ahead. This new EV platform can then be used to build deeper relationships with consumers, as already seen by Tesla. Its website offers test drives, customisation and purchase all without a dealer, and an in-car ecosystem and app that allow for direct payments and access to charger stations.
The real barrier here is fear. Consumers still need convincing that they won’t run out of charge
At a time when especially European energy utilities companies are suffering due to regulatory changes and intense competition, EVs bring exciting opportunities. Home charging is an obvious opportunity, but there are others. They can command greater customer loyalty by diversifying their set of services—offering access to third-party charging stations and selling energy stored in EV batteries back to the grid. There is still considerable education needed around EV vehicle ownership, but energy utilities can also use Tesla’s announcement and future developments in their own communications to help consumers overcome their concerns about range limit and cost to help drive market growth.
And the decade won’t just see a boom for the automotive, manufacturing and energy companies. The net of opportunity spreads as far as oil companies seeking to invest in charging point infrastructure to backfill lost gasoline revenues, insurers providing additional policies and telecoms companies wanting to increase connections to their 5G networks. So, watch this space. It looks like a world where roads are dominated by EVs is not a million miles away.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Craig Gosling is Director of Energy & Commodities at Publicis Sapient
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