EV Update speaks with Frost & Sullivan’s Sarwant Singh about the implications of the e-mobility 'mega trend' for electric transportation.Sarwant Singh is partner and global practice director for Automotive & Transportation at business research consultancy firm Frost & Sullivan. He heads up the firm’s Visionary Innovation Research Programme.
Sarwant is author of the new book, 'New MegaTrends.' which will be published later this week by Palgrave Macmillan. The book is based upon extensive research and tested with some of the largest Fortune 1,000 companies. It identifies the ten most important global Mega Trends that will redefine the world by 2020. On the list is e-mobility and the rise of the electric car.
EV Update: You identify e-mobility as a future mega trend. What is driving the move towards more sustainable transportation?
Sarwant Singh: We are seeing regulations globally becoming much stricter and this is definitely pushing more adoption of low-emission vehicles. The second biggest driver is around environmental awareness and sustainability. We see organisations becoming a lot more conscious about these issues. In fact, one of the things I talk about in my book is the “zero concept”, which is all about having zero emissions, zero carbon buildings, and so forth. I think that will push adoption [of EVs] too. The third major factor is customer acceptance. A lot of studies show that customers who buy or use electric vehicles tend to switch completely from being against the technology to being very favourable to the technology. They have to change their driving habits and driving behaviour. I think these three drivers together will be able to help push the availability of electric vehicles in the future.
EV Update: There are lots of business ‘trends’ books out there these days. How does this one differ?
Sarwant Singh: Well, firstly, it’s important to point out that this isn’t a future trend book as one would normally think of with mega trends. The book lists ten mega trends, but what we really highlight in the book is the micro implications of these macro trends. So what does e-mobility mean in terms of micro opportunities that it brings? The objective [of the book] is to identify “blue ocean” and contested marketplace opportunities. We look at the whole eco-system of electric mobility: you have new battery manufacturers in this market, you have new charging stations players playing globally, and so on. Battery recycling, for example, will be a $2 billion industry in the future. Batteries will find a second life after four years in the car. That could be with utilities, for instance, for load balancing and energy storage. So really the objective of this book is to identify and to size up these opportunities in the market.
EV Update: You see the EV market moving into a second generation of development over the coming years. Tell us more about your thinking in this respect?
Sarwant Singh: It's our belief that it won’t be the current Generation One model vehicles that will be the success for the EV market, but Generation Two models. We've seen that with the Prius. When the second generation Prius came out, it had a lot more important breakthroughs in it. You could look at the generation two version of the Chevy Volt as well. It will have a bigger range and we can expect the battery price to decrease by almost half of what it today – from $500/kWh to around $250-300. Performance will improve too. We expect to see these kind of second generation vehicles come out in 2016. That’s when we believe the market will take off. That said, we predict that 2018 will be the key tipping point for the industry. At that point, electric mobility will be at the heart of the industry for a number of reasons - legislation, emissions [targets], plus a huge push by OEMs and the perfection of the technology by then.
EV Update: Which sectors of the EV markets do you think will make the early running?
Sarwant Singh: We believe that by 2020 there will be annually about 45 million electric vehicles worldwide. Out of these, around 35 million will be electric two wheelers, 95% of which will be electric push bikes. The remaining 10 million will comprise light commercial vehicles, cars and buses. So we see electric mobility vehicles ranging from one wheel to six wheels or eight wheels. I think that the fleet customer is set to become the most important customer, at least in the beginning. Companies with large commercial fleets such as those in the telecoms and logistics industries, as well as large corporations that buy cars for internal use such as car sharing fleets and rental fleets - they will be the early adopters. They’ll be responsible for about 70% to 80% of the market early on.
EV Update: The EV market presents lots of new business models. Which do you think has the best chance of success?
Sarwant Singh: The interesting thing with electric vehicles is that you really need to decouple the sale of the energy package and position that with the customer. When you buy a car today, for example, you don't buy it with life-long gasoline. Likewise with EVs, what we're starting to see are certain business models that encourage you to buy the vehicle, but with a separate package for the battery and the energy. Better Place in Israel is a good example. They are targeting those customers who drive more than 20,000 km a year by offering them a $500 per month package. That [the package] includes your car, for which you pay a small down-payment. It includes battery swaps. It includes charging your vehicle at night, and a few extra services as well. We believe that this is a business model that will really work.
EV Update: If you had to pick one ‘silver bullet’ for the EV market over the next five years, what would it be?
Sarwant Singh: Wireless charging, without doubt. We see huge interest from German OEMs, especially the premium OEMs, who don't want their customers to plug-in and out the cars. What they really want is for you to drive in your driveway and park your car, and then for it to charge through an electric charging buried in the concrete. It’ll charge not at peak times, but off-peak. It will also understand your driving behaviours. So if you leave every morning at seven o’clock, it will ensure that the vehicle is 100% charged by then. We’re witnessing many organisations, like Qualcomm for instance, pushing this technology. If this technology does come down to the prices that the experts are predicting, then I think really it will help with customer acceptance. It really could be just the silver bullet needed to push this industry forward.