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| Questions, questions. |
The cost of an EV will remain higher than a conventional car for the next five years or so because the low volumes lack economies of scale, and because the cost of the electric propulsion system - the batteries (mainly), motor, charger and energy management system - is more expensive than the cost of a conventional car's powertrain.
As a result some companies are de-coupling the batteries from the vehicle and leasing or renting the batteries as a monthly fixed or variable cost. This strategy removes the ownership risk from customers concerned about battery life and reliability, particularly with less expensive battery options. This brings the price of the EV down to around the price of the equivalent conventional vehicle, whilst the battery lease is positioned as a mobility or fuel package, equivalent to, or less than, the equivalent average monthly liquid fuel expenditure. In other words, in simple terms, the value proposition is no additional cost and zero emission mobility. At one extreme is Better Place, which adopts the mobile phone model, whereby you pay for miles instead of minutes with a variety of plans and in theory it could be possible to acquire an EV for free in exchange for an extended subscription. (Don't hold your breath).
Next up are the charging station models. Most people will charge at home most of the time, typically around 80% to 90% of charges. Here, EV dealers, charging station companies, utilities and new entrants may sell outright the home charging point (some, such as Duke Energy in the US are giving them away currently), or, give the charging station away as part of an extended subscription service in order to capture and lock-in the customer, in a cable TV model. Or, electricity may be bundled with other services from battery rental to vehicle lease, servicing, to add-on telematics subscription services such as OnStar or in-car entertainment.
Outside of the home we have yet to see any major initiatives for Charge@Work, which I believe to be the next big venture battleground. This would enable people who live in apartment blocks and who don't have access to dedicated parking spaces to charge during the day instead of at night, facilitated by solar canopies and other renewable electricity solutions, many of which will be off-grid. Car park, EV Charge stations (like conventional fuel service stations) and on-street charging are also in the frame, where pay and use premium rate fast charging may become the norm.
We are certainly seeing new alliances and joint ventures as manufacturers, utilities, municipalities, dealers, electricians, finance houses, car park operators, advertising and media companies and aggregators enter the fray. As this fluid situation evolves, the concept of buy vs lease vs pay and use (mobility as a service) will become clearer. The growth of car clubs and vehicle clubs (have a look at Peugeot's Mu operation) may lead the way in this regard. We will see how consumers react and to what extent environmental, financial or convenience considerations drive this market.
