Automakers from Detroit to China to Silicon Valley have plug-in vehicles slated for commercial launch between 2010 and 2012. A lively ecosystem of technology developers, equipment makers and would-be service providers for these vehicles has started to emerge in preparation for an influx of electric cars. But while various types of grid-connected vehicles often get grouped into one potentially juicy opportunity for innovators, one of the keys to success in this space may be understanding the specific needs and opportunities associated with smaller niches in the market for electric mobility.
Within the category of plug-in vehicles are multiple variations, including battery electric vehicles (BEV), which run on electricity alone; plug-in hybrid electric vehicles (PHEV), which have smaller batteries and run on a blend of electricity and liquid fuel (e.g. gasoline); and extended-range electric vehicles (EREV), which have a “range-extending,” gas-powered internal combustion engine that kicks in to generate electricity when the battery charge depletes to a set threshold. According to Brett Williams, a post-doctoral researcher at UC Berkeley’s Transportation Sustainability Research Center, PHEVs demand a distinct set business models — or at least a variation on approaches to BEVs.
Pike Research forecasts that some 1.7 million PHEVs will roll out globally by 2015, including an estimated 640,000 in the U.S. alone. BEVs will deploy in slightly lower volume — an estimated 1.5 million by 2015, according to Pike’s analysis. Yet Williams argues that so much attention has focused on developing more energy-dense, lower cost batteries for BEVs (in other words, “squeezing that balloon of battery optimization”), that some of the business opportunities and challenges presented by those 1.7 million PHEVs — which are sometimes viewed as a bridge technology to full electrification — can be overshadowed.
Build Better Grid Services
The prospect of millions of vehicles with rechargeable batteries plugging into the grid for hours at a time every day opens the door for cars to serve as a new kind of distributed power source for the grid. In what’s known as vehicle-to-grid, or V2G, technology, information and energy can flow in two directions between the vehicle and the power grid, depending on the needs of the car owner and grid operator, as well as other variables.
When it comes to grid services, plug-in vehicles (BEV and PHEV) are best suited to what are called ancillary services — responding almost instantly to commands to feed energy to the grid for a short period, as little as a few minutes (see “Information Technology Opportunities in Electric Vehicle Management” for more information). Utilities already pay third-party providers for these types of services, generally based on the amount of time that a resource is contracted to be ready and available (in the case of vehicles, that would mean being plugged in with enough juice in its battery to respond to commands), plus an additional fee for the amount of energy that’s actually delivered (based on the cost of electricity at that particular time). In order to deliver these services, aggregators are needed to manage individual cars and fleets.
As researchers Steven Letendre and Willett Kempton have noted:
“PHEVs have larger battery packs than HEVs, and unlike a pure battery-only electric vehicle, the entire available energy in a PHEV can be used for V2G services given that when the owner begins the next trip the vehicle can use the liquid fuel to drive the vehicle.”
Plug-in vehicle service providers need to account for these differences in their algorithms, software and efforts to attract, educate and incentivize customers whose driving patterns (fairly regular, plugged in for extended periods) might make them a good fit for selling power through their vehicles.
Follow the Parking
Opportunities in this market are segmented by more than the breed of plug-in vehicle. Service providers can also find their niche through factors such as EV owners’ location and lifestyle. The bulk of the vehicle market, according to IBM Vice President for Energy & Utilities Allan Schurr, is made up of apartment dwellers, urban homeowners and others who don’t own a garage. Yet much of the early work to deploy residential charging infrastructure has focused on tackling solutions for a single-family home with a garage — for example, how to streamline interactions with the utility, speed up the installation process and reduce costs for the homeowner.
But many more pieces and players need to come together to help automakers tap the portion of the market that lacks access to a garage, and this is one place where smaller ventures or unconventional partnerships may be able to step in, helping building managers and real estate developers to evaluate and participate in opportunities related to vehicle charging and grid services.
One proposed solution comes from Mitsubishi and Japan Delivery System Corp (JDS), which sells and manages package delivery systems for large apartment complexes in Japan. Launched late last year, the partners’ so-called i-Charger system uses personal log-in for each resident and a billing and management system that runs on JDS servers, accessed through the same system that building supervisors have for managing package delivery.
New Life for Old Batteries
In addition to the who (garage owner or no?), what (PHEV or BEV?) and where (city or suburb?) questions to answer when honing in on a niche for plug-in vehicle services, there’s also the question of when — meaning at what point in the lifecycle. Following the useful life of batteries in vehicles, automakers will be “happy to retire those batteries out of the car and provide those same grid services,” Williams commented.
Secondary applications for rechargeable batteries after they’ve degraded beyond their useful life in vehicles remain at an early enough stage that new players can still get in. General Motors’ Micky Bly, executive director for global electrical systems, hybrids, electric vehicles and batteries, commented in a recent press briefing, that the automaker is working on a number of efforts to find end-of-life strategies for Chevy Volt batteries. Cell phone towers, uninterruptible power supplies, “you name it, everyone has been knocking on our door playing in this space,” he said. But since the automaker is designing the battery in its upcoming EV to last 10 years or 150,000 miles, he said, “If we do our job right, that’s not going to be an issue for a long time.”
Partner to Target Niche Markets
So how does a company that doesn’t have the heft of a Mitsubishi or IBM, but does have a unique technology, scale enough to reach its chosen niche? Partnerships with the heavyweights hold one key.
Overlooking the potential value of niche segments within the larger auto market is part of the reason electric vehicles “stumbled” in the 1990s, Williams argued on a recent panel hosted by Agrion in Palo Alto, Calif. California regulations at the time compelled automakers to launch electric models (most famously, GM’s EV-1), but the large automakers thought of themselves solely as mass marketers. According to Williams, the line of thinking went something like: “We’re not niche marketers, why would we sell to you?” referring to the niche of would-be EV buyers.
These days, Williams says automakers are thinking more like tech startups, vying for a foothold in the still-niche market of plug-in vehicles. While that means more competition, it also means more opportunities for startups to get in the game through smart alliances. For example, 2-year-old Juice Technologies recently partnered with conglomerate General Electric to create charging devices that will integrate with GE’s smart meters and Juice’s Plug Smart intelligent charging system, with the idea of helping drivers to recharge their batteries when power grid demands and electricity rates are lower.
Juice is contributing all the technology that will face an end-user through an online system that “will allow the plug-in electric vehicle owner to schedule specific times to charge.” Meanwhile, GE is designing and manufacturing the chargers as well as contributing all the metering and communication technologies between the utility and the charging device, a GE spokesperson told us. The pair is targeting full-scale production by year’s end, and eventually global distribution. Spun out of a company called BottomLine Resource Technologies in early 2008, Juice now has “dozens” of utility partners, a relatively small staff and a plan to let partners do “the heavy lifting.”
