Five Lessons from the Big EV Rollout
Electric cars have moved beyond the future technology stage and are on the market now, which means we can learn some useful lessons from the early sales experience. This is the way it looks now, based on limited and preliminary evidence—the next time I write something like this it could be very different.
There will be shakeout. Obviously, not all the startup EV companies are going to make it. Aptera (which hoped to go wide with its fanciful three-wheeled 2e) is a probable casualty, and the Norwegian EV company Think—a veteran in this space, founded in 1991—declared bankruptcy (for the fourth time) earlier this week. Think fell apart, this time, because, after expanding to the U.S. and opening a plant in Indiana, it lacked a plausible business plan. A strategy based on selling its overpriced $40,000 two-seat cars to large corporate and government fleets (who could buy the Chevrolet Volt or Nissan LEAF for the same money) was wish-fulfillment at best. Survivors need to rethink their pricing plans and marketing strategy—what will make people want to buy our cars? Hoping for the best isn’t a viable option.
The early buyers are there. The supply of EVs is still limited by production constraints, regional availability and parts shortages resulting from the Japanese earthquake. You can’t—yet—look at sales numbers as meaning very much, because the cars are still in short supply, and far outnumbered by the eager early adopters who want them, It won’t take long for the companies to run through the advance order lists, though, and they’d better be ready with mass-marketing plans. The Smart experience is instructive here. According to Mercedes CEO Dieter Zetsche, the company was so taken aback by the flood of early orders for the Fortwo that it did little more than process reservations. When they ran through the pile, it was “What do we do now?” time.
Cold weather is a problem. Both the LEAF and Volt suffer in the winter, because the electric heater is a big draw—far bigger than air conditioning, for example. East coast buyers report 25 to 30 miles of range in the Volt, 65 to 70 in the LEAF, while their west coast counterparts are seeing 50 and at least 100, respectively. Until EVs either have better heaters or more robust batteries, this phenomenon is going to limit EV penetration in places with cold winters. This is one of several reasons I think California will have 50 percent or more of the early EV volume.
EV companies need reliable charging partners. Companies that sign “turnkey” deals that promise to simplify the whole process of buying, installing and obtaining permits for home-based chargers will have grateful customers. That’s why a number of companies have gravitated to experienced players like AeroVironment, and it’s why Fisker Automotive announced a deal with EV Connect this week. Fisker, which plans to roll out the Karma in July and August, doesn’t need to know the subtleties of hiring electricians in New York and Los Angeles, but its partner definitely does. EV Connect is only two years old, but its headed by executives with deep roots going back to charging the GM EV1.
It’s all about the batteries. That’s not a new lesson, of course, but it’s increasingly clear that battery tech rules in this space. That’s why Tesla Motors has forged partnerships with (and could be acquired by) Toyota and Daimler. It knows more about batteries than either one of them, and it’s able to deliver more range. I’m still impressed that the Tesla Model S will roll out of the gate with 300-mile batteries. Those packs weren’t due until a year after the car was out. Sure, the packs are undoubtedly huge (95 kilowatt-hours, anybody?) and expensive, but if 300-mile range were easy to achieve, other automakers would be offering it as an option. For the short term, the challenge will be getting as much out of lithium ion technology as possible. Research into better alternatives—lithium air comes to mind—is proceeding, but is still in very early stages. Lithium ion has at least five, and maybe even 10, years of supremacy ahead of it. Sakti3’s solid-state batteries have made enough progress for GM Ventures to put $5 million into the company, but even founder Ann-Marie Sastry isn’t making claims about taking over the world—yet.
Those are the lessons now, but the whole industry is standing on constantly shifting ground.
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