Electric Vehicles: When, Where, & Who
This post considers the factors on timing (when), possible long-term winners (who) and geographic areas that may gravitate to electric vehicles EV (where).
WHEN?
Although EV is a solid concept, adoption could be delayed with products that are over-complicated. For example, it took PALM to create a simple and viable PDA that was accepted by the market after several failures, most notable Apple’s Newton.
Should gas prices remain low, the fuel efficiency benefit is less compelling.
Technology based products typically experience downward trend in costs which makes the product more attractive to more consumers. A great way to drive down costs in EV is to attract more suppliers. As Jon Ferris from GM pointed out, many of the parts in EV are new and the base of suppliers is small with limited experience in mass manufacturing. If the industry adopts open standard, it will attract more suppliers and more competition.
For example, a major cost component of EV is the battery. It could be analogous to a car stereo where the consumer can purchase the car manufacturers or from a third party.
Mike DiNucci, vice president of strategic accounts for Coulomb Technologies, which sells networked charging stations, shared that, “We strongly believe that any system that’s going to be adopted by the mass market has to be an open system. There has to be interoperability. You can’t lock people into a particular type of technology or a type of subscription model, or it’s not going to work.
Government may provide a nudge with an outright cash incentives or other benefits such as car pool lane access for extreme fuel efficiency. In California, this benefit gave the traditional segment (who may have had little interest in fuel economy or green benefits) a reason to buy the Prius.
WHO?
It is the rare firm that takes enough risks to kill its own cash cow. GM’s near death experience may make it a true believer.
Others such as BMW and Toyota seem to be taking the lessons of earlier tech giants who missed the next wave to become irrelevant.
Consequently, current auto leaders are investing their significant in-house engineering talent while reaching out to technical pioneers in the new space to develop EV and other low carbon vehicles.
China and developing world are also good candidates to take the leadership position since their auto industries are just developing and they have the least investment in traditional cars. They may find it easier to ramp up.
Early leaders don’t always finish first. Sometimes they are outmaneuvered by later entrants with a leapfrog technology or marketing and finance savvy.
WHERE?
Europe’s macro-economics are more favorable with higher fossil fuel prices and a more developed renewable energy generation that could leverage car battery as grid storage. Smaller geographies make it easier to achieve coverage of refueling points.
California’s most bought car in September 2009 is the Toyota Prius. Government may gave EV a boost by extending commute lane privileges to vehicles greater than 65 mpg (or the equivalent)
CONCLUSION
Thank goodness for early adopters who are willing to pay more, try new methods, live with some inconvenience, and are more understanding of quality issues.
In the early days of automobiles, the intrepid owner carried his own fuel, made his own repairs when the car broke down on the road, and dealt with limited infrastructure such as few roads, service stations, and maps.
Likewise the early cell phone range when outside of urban areas was poor, the cell phone was a brick and required more frequent and longer charging.
Hopefully EV will attract sufficient of early adopters to allow the industry to work out the kinks to make it attractive to traditional market.
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