Preparing for the Mobility Revolution
Electric mobility’s new ecosystem: structure, players and trends
The global fleet of battery electric (BEV) and plug-in hybrid electric vehicles (PHEV) reached 1.26 million units at the end of 2015, double that of 2013. As the market is picking up, carmakers have recently announced significant growth in their BEV and PHEV portfolio. The most aggressive manufacturers anticipate that up to 25% of their 2025 global sales will come from BEVs and PHEVs, with many new models to be introduced between 2020 and 2025. China will represent the largest BEV/PHEV market in the near term, followed by Europe and the US. Whereas the development of the Chinese market stems in high regulatory pressures, that of the European and US markets will depend more on the customers’ willingness to switch to electrified vehicles. The three key conditions for such a switch are (1) the price of EV battery packs, (2) the time needed to “fill up” and (3) the density of the charging infrastructure. The removal of these roadblocks, the last two of which we analyze here, give way to the emergence of a new ecosystem. What are its components, its main players and success factors?
Whereas the movement towards electric mobility is accelerating for all mobility solutions, from one wheeled vehicles to passenger buses and delivery trucks, this article focuses on passenger cars.
The charging station
It all starts with the station itself. Products range from 3kW (wall mounted AC solutions for homes) to 120 kW (Tesla’s fast charging DC station for intercity corridors). Much more powerful solutions have recently been announced, rated at up to 350-400 kW for super-fast charging. Prices range from about $500 for a home charger to an estimated $200k for the 350-400 kW stations that begin to get rolled out.
Whereas current station design relies on a hand-operated cable, high power stations will require heavy, cooled cables that will probably require a robot to handle the connection to cars. In parallel, induction charging is available as a stationary solution, with maximum rating currently at 11 kW, thus suitable for overnight charge. Similar solutions are also being tested as a mobile charging option — electromagnetic loops are embedded in the road. It seems thought that we are still a long way to commercial applications.
Companies offering charging solutions include ChargePoint (400 kW station announced at CES and available this summer), ABB, EVBox, EverCharge, PowerDale or DBT. Players involved in induction charging include WiTricity, Momentum Dynamics or Evatran.
The charging infrastructure
There were one fast, publicly available charging station (> 43 kW) for every 45 BEV/PHEV and one slow station for every 8 vehicle globally at the end of 2015; these ratios vary largely between countries, e.g. 115 (fast) and 140 (slow) in the US. In Europe, there are currently about 100,000 charging stations whereas about 480,000 BEVs/PHEVs were sold there in the past 3 years. The European commission estimates that one public charging point per 10 cars is required in addition to private chargers. The charging network has room to grow!
The charging infrastructure can be segmented according to time available to charge. There are three main segments: home, destination (mall, office, ..) and en-route (mainly along main corridors). Each segment presents a unique use case, with available charging duration ranging from 15-30 min en-route, minutes to hours at destination and the whole night / weekend at home. Charging solutions vary greatly between segments, from a power rating of 3-11 kW / AC at home (overnight charge), to 22 kW / AC (30 miles in 30 min.) at destination, to 43-120 kW / DC currently (up to 170 miles in 30 min.) for stations located mainly on corridors.
Power is critical for stations located on intercity corridors as a fast charge is expected. Ideally, stations installed there should provide 2 hours of driving (150-200 miles) in 15 minutes. To this end, the industry is working on a 350-400 kW charging infrastructure. Yet, on-board power electronics will not be able to cope with the projected this level of power for a couple of years, when on-board voltage will likely increase from 400 V to 800-1000 V — this still generates a high current of 400 to 500 A. In the meantime, these high powerful stations will be used to charge multiple vehicles at a time (e.g. 3 x 120 kW).
Infrastructure investors and operators
Carmakers have nothing to do with refueling vehicles with internal combustion engines. It is a very different matter with electric mobility as oil companies are not willingly venturing in the deployment of charging stations — it radically challenges their business model. In addition, public funds are not massively available to invest in this infrastructure. This is why carmakers are playing an increasing role in the EV charging network; they must address both station density and charging speed issues if they are to largely increase EV sales, a condition to achieve CAFE targets (-4% per year).
Tesla invested in its proprietary charging network from the beginning. They now offer the fastest chargers, rated at 120 kW, which deliver about 170 miles of range in 30 minutes. As of last November, Tesla had 4,600 such supercharging points worldwide (of which 800 in Europe), located in 800 stations. Interestingly, they announced recently that charging would no longer be free for cars ordered after Dec 31, 2016 (prepare for the arrival of Model 3?). Another early investor, Nissan, co-financed a program to install 2,000 stations in Europe between 2013 and 2016.
More recently, Ford, VW Group, BMW Group and Daimler announced in late 2016 a plan to set up charging stations along major highways in Europe, seeing the need to address the underdeveloped German market and boost the rest of the continent. The consortium aims for increased density with high-powered charging points, adding 1,000 stations rated up to 350 kW by 2020. In the US, Volkswagen will invest $2 bn over 10 years in EV infrastructure and awareness program as part of the Diesel-gate settlement. In parallel, office building managers and mall operators are also investing in charging stations, the latter as a way to retain shoppers on site longer. As for home charging, US-based EverCharge has been focusing its station deployment efforts on apartment complexes and parking structures.
Electric utilities and car/home energy management
Electric utilities are obviously key players in the development of electro-mobility. It does not just represent growth their business. It also creates a potential challenge in the management of their grid — will it resist if all BEVs/PHEVs charge at the same time just before a long holiday weekend? On the positive side, battery packs can provide storage capacity, in particular as an increasing share of power will be generated from intermittent sources such as wind and solar.
One interesting example of utilities investing in the infrastructure network is Denmark’s Clever. Owned by several utilities, the company has already installed 750 charging points in Denmark and Sweden and will soon deploy 350 kW stations with Germany’s E.ON. As far as the grid load is concerned, it is possible to anticipate when BEV/PHEV owners will likely connect their vehicles to a charging point. But can individual charging patterns be centrally orchestrated in order to minimize the overall impact on the grid? Can charging times and locations be influenced, possibly with pricing incentives, in order to avoid massive investments in the grid? These are questions BMW and PG&E, the electric utility in the San Francisco area, are trying to address with their on-going experimentation. Lastly, the use of car batteries for energy storage requires that the on-board electronics allow reversibility (electricity flowing back to the grid). Renault has partnered with The Mobility House to experiment vehicle-to-grid, but no commercial solution is expected for a couple of years. Even so, this is promising and will go hand-in-hand with charging optimization.
The home offers unique conditions to coordinate local power generation, electricity storage and charging optimization. Tesla has clearly understood this, as demonstrated by their complete home package. Other home/car energy management solutions are coming to the market, such as Energy Box offered by Germany’s EnergiDienst. This is certainly a promising space as both BEVs/PHEVs and decentralized power generation will be increasingly common.
The charging station represents a new and critical contact point with drivers. Therefore, it offers a unique opportunity to generate new business. Companies have emerged to provide services such as referencing stations, informing on their availability, invoicing across networks (incl. cross border roaming), connecting parking services at destination or with other mobility modes, etc. German company Hubject (investors are BMW, Bosch, Daimler, Siemens, energy provider EnBW and VW Group) seems to have a head-start in this space in Europe. As of Dec. 2016, they had brought together 240 partners. They also collaborate with competitors around Europe to jump-start the deployment of the charging infrastructure. In the US, PlugShare offers a crowd-sources database of charging stations along with the availability status.
A market for used car batteries
Autonomy being a critical factor, no significant drop in battery capacity can be accepted. This is why Renault, the BEV market leader in Europe, replaces their battery packs once actual capacity has dropped to 70-75% of its nominal value, which occurs after about 10 years in operation. At that time, batteries still have a life (about 5 years) in stationary packs for use in homes or by electric utilities. Renault is partnering with France’s Bouygues to put such packs on the market in 2018. More such initiatives will emerge as BEVs and PHEVs accumulate an increasing number of miles.
The development of electric mobility will accelerate over the next five years. It will transform the way we use cars and the way they are integrated in our environment. This will result in the emergence of a completely new ecosystem as briefly outlined above, with new players and business models. It will also impact the development of smart cities. Autonomous driving will develop in parallel, with the introduction of small commercial fleets announced for 2020-21. These will be necessarily electric. Then, one can imagine that it will be easier to tell a driverless car when and where to charge! What other synergies can we expect? The future is around the corner.
Also published on LinkedIn (https://goo.gl/LSFIF3)