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Bolstering the buzz: how to spur mass adoption of electric vehicles

Bolstering the buzz: how to spur mass adoption of electric vehicles

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What are the hurdles to mass adoption of electric vehicles? Price, range, knowledge and even the business model, say experts at the 2011 ARPA-E Energy Innovation Summit.

WASHINGTON -- What will it take for electric vehicles to move beyond early adopters to mass appeal: time, or something greater?

According to industry experts at the 2011 ARPA-E Energy Innovation Summit, it's obvious indicators such as price, range and strength out of the gate -- but also a rethink of the business model through which people buy cars.

Each panelist took a view on the issue based on their own specialty.

THE BATTERY

First, Yet-Ming Chiang, chief scientist at 24M Technologies, said the price of the battery is rapidly deflating, enabling electric cars to move within financial reach of more and more consumers.

"The cost of automotive pack batteries has come down by a factor of three over the past few years," he said. "There's nowhere to go but down."

Chiang said he believed that lithium-ion technology will be around for "a long, long time" and hold its own against emerging, disruptive new technologies.

"With electric vehicles, you are developing incumbent technologies," he said.  Incumbents don't stand still. They are very hard to displace. There's still innovation in lithium-ion."

Mary Beth Stanek, director of federal environmental and energy regulatory affairs at General Motors, predicted that batteries would reach a "commercially viable" cost for the mass market in six to 10 years' time.

"We're certainly on a Gen 1 battery. We're trying to get to Gen 3 as quick as we can, and bring costs down," she said. "I don't think we have mature chemistry or ceramics. You're going to see maturation occur at a rate never seen before."

Dennis Beal, vice president of global vehicles at FedEx Express, said while the cost of electric vehicles must come down as well, there must be separate conversations for batteries and the machines that use them.

"When I was buying batteries for electric vehicles three years ago, I was buying an 80 kilo battery," he said "Today, I'm able to buy the vehicle and the battery for pretty close to what the battery cost three years ago."

A novel idea recently proposed: Better Place's "battery swap" scheme, in which customers would visit service centers to have their batteries swapped in about 60 seconds.

"When we look at that battery, we see a mini oil well that's going to deliver a number of miles," said Mike Granoff, head of oil independence policies at the company. "It brings the cost of the car down, and we believe it will come well below the cost of a gasoline-powered car."

The company demonstrated the technique using taxi cabs in Tokyo last year, Granoff said. What Better Place learned: people require battery swaps less frequently than expected because they usually charge vehicles at home where it's more convenient.

"There are a lot of misconceptions about the battery-switching process," he said.

THE BUSINESS MODEL

Chad Bell, a senior director at electronics retailer Best Buy, suggested that the industry shouldn't just rethink how it fuels up its vehicles -- rather, it should reconsider how it sells them in the first place.

"We think these will be sold the same way electronics are sold today: as a piece of hardware that we can service," he said. "We believe we can help democratize this process for the consumer."

He added that Best Buy was looking into offering charging and home energy management services.

"It's really an elongated sell for us," he said. "The idea is taking the fear out of someone so they can say, 'Someone's going to help me.' "

Bell said electric vehicles are a way to expand the company's brand, without necessarily becoming a car dealer.

"There are lot of things that we think we can do to be an incubator," he said. "Ninety percent of people have heard of EV -- that's a high percentage of [awareness]. Our role can be many. We really want to solve a technology problem for the consumer."

Best Buy sees itself as part of the distribution chain, Bell said.

"We can do a lot: work locally with dealers. Use part of a store to showcase EVs," he said. "The issue here becomes: what is the need of the consumer, and do they understand that a [Chevrolet] Volt at a certain price is a tremendous value?"

Stanek said future success of mass EV adoption depends on the quality of work already underway with early adopters.

She outlined three things that GM is focusing on:

  1. "We want you to be delighted with your product. We don't want something to go wrong with your [charging] install."
  2. "The price of the vehicle really has to come down a little bit, but so we're still making our margins at well. Early incentives are helping, but the next group of consumers need to see validation that these products work, that they won't get stranded."
  3. "We need to ensure that we can do large-scale manufacturing. We are retooling our factories. This is a very new area for all of us."

"It's really about educating the consumer," Granoff said.

THE BIG PICTURE

What else must fall into place to help EVs take off? What kind of innovation must happen elsewhere?

Moderator David Sandalow, assistant secretary for policy and international affairs at the U.S. Department of Energy, asked the panelists to identify hurdles just beyond the auto industry's reach.

"Getting renewables linked to the grid is so key," Stanek said. Also, "Driving vehicles that don't crash, different types of propulsion, dense cities, driving hands-free, using commuter models for small cities."

Bell reiterated that business models must be reexamined.

"As we continue to urbanize, what role does the EV play to make that process work? What function: a four-wheel car, or a modular device?" he asked. "The way the consumer consumes the vehicle -- will there be new business models? EVs could change the way consumers purchase a vehicle."

Chiang noted that technology wasn't really a hurdle for mass adoption -- it's sustainability.

"Constraint is not at the battery level. Constraint is at the pipe," he said. "As we go to longer range, the fast charge is going to require a lot of power. It's not a battery question. It's really an infrastructure question."

Stanek added that finance remains an issue in a cash-strapped American economy, making it difficult for manufacturers to produce low volumes of product.

"Money remains timid in this country," she said, adding that automakers, OEMs and universities are working together to share risk. "The goal is to commit to certain amounts of production."

2020 OUTLOOK

To close, Sandalow asked each panelist to predict how many EVs would be on the road globally in a decade.

They said:

  • Bell: "25 million."
  • Stanek: "20 to 40 million."
  • Granoff: "Greater than 50 million."
  • Beal: "20 to 50 million."
  • Chiang: from the battery view, "75 factories in nine years."

More from the 2011 ARPA-E Energy Innovation Summit:

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Andrew Nusca

Editor Emeritus

Andrew Nusca is editor of SmartPlanet and an associate editor for ZDNet. Previously, he worked at Money, Men's Vogue and Popular Mechanics magazines. He holds degrees from the Columbia University Graduate School of Journalism and New York University. He is based in New York but resides in Philadelphia. Follow him on Twitter. Disclosure