NEW LIFE OF ELECTRIC VEHICLES Table of Contents Executive Summary …………………………………………………………………………… 3 Introduction...

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NEW LIFE OF

ELECTRIC VEHICLES

Prof. Oded Nov

(By Ekta Shah

Poly ID: 0490904)

MG 9703: PROJECT IN STRATEGY AND

INNOVATION MANAGEMENT

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Table of Contents

Executive Summary …………………………………………………………………………… 3

Introduction …………………………………………………………………………………… 4

Companies and Competition …………………………………………………………………. 6

Technology and Innovation ……………………………………………………………………. 7

Market Analysis ……………………………………………………………………………….. 8

Challenges ……………………………………………………………………………………... 10

Government and Infrastructure ……………………………………………………………... 12

Recommendations and Conclusion ………………………………………………………….. 13

References ……………………………………………………………………………………. 14

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EXECUTIVE SUMMARY

In 2012 transportation comprised of nearly 28% of greenhouse gas emissions that came mainly from

burning petroleum based fossil fuels such as gasoline and diesel [1]

. The effects of global warming like

rising temperatures, natural calamities have been in the news for quite a while, but few practical

mitigation steps have been taken towards it. Renewable sources of energy like wind and solar power,

comprise of mere 10% in world energy consumption[2]

.Extensive use of such forms can help us from

adverse effects of global warming.

The report presents a history of electric vehicles and how this technology which was long ignored is

slowing picking up growth with the help of government and automobile giants. It explores the benefits of

widescale implementation of electric vehicle and its contribution in reducing global warming. The report

emphasizes on a bright future of the electric vehicles in the coming 10 - 15 years. This will play a key role

in reducing dependency on fossil fuels and green house gas emissions which will have a positive impact

on the environment.

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INTRODUCTION

The first real electric motor was first built in 1834[3]

and several developments followed after its invention

that eventually led to better batteries with improved storage capacity.

Electric vehicles include all those vehicles that include atleast one electric motor and commonly called as

EV

Rise of EV

EVs gained immense popularity between 1899 and 1900[4]

, as countries like U.S became flourished with

better roads and infrastructure.

The traditional gasoline still in it’s research and development phase (around the same time) was

struggling with issues like noise, smell and vibrations causing people to opt for EVs. The EVs benefitted

from the good roads and price range affordable by the rich.

Death of EV

With time, development continued connecting remote areas and towns to cities. Factors like

1) Discovery of crude oil

2) Mass production by Henry Ford

3) Invention of the electric starter

helped the gasoline cars to get rid of all its shortcomings. Cars were no longer limited to the rich class of

people as education brought up new employment opportunities and a new class of middle class people

emerged who could afford some of these luxuries.

After 1900, gasoline cars surpassed the sale of EVs with it affordable prices and disappeared completely

by 1935 and were completely invisible until 1960[5]

.

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Return of EV

Several issues concerning air pollution and the fear of natural resources getting depleted severed as an

alarm for the need of clean source of energy. This caused the revival of the electric vehicles that would

reduce dependency on fossil fuels and also help to preserve the environment.

There are three main types of electric cars:

a. Hybrid Electric Vehicle: The battery is recharged by the gasoline engine and regenerative

braking. It also has a small electric battery to supplement a standard internal combustion engine.

b. Plug-in Electric Vehicle (PHEV): The electric motor and internal combustion engine propel the

car with batteries which can be charged from an external source.

c. Battery Electric Vehicle: They don’t have any internal combustion engine and must be charged

through an electric power grid.

Electric vehicles represent one of the most promising ways to increase energy efficiency and reduced

emissions of greenhouse gases and other pollutants. EVs tap into a source of electricity that is domestic

and relatively inexpensive.

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Companies and Competitors

A major breakthrough occurred in 1998[6]

with the release of ‘EV1’ by General Motors ( GM ) that

received favorable reception in the public came. Although the car received favourable review, the project

was discontinued by the company considering it to be unprofitable. However, again, in late 2007,

recession and fuel shortage and government laws forced car makers to manufacture hybrid and electric

cars.

The following three companies have done significant contribution for this industry and their cars have

gained good number of sales. This reflects the intensity of competition and also the scope of products that

will give these companies the required momentum and enthusiasm and belief in a market dominated by

traditional gasoline cars.

Tesla: The company gained immense popularity with its first fully electric sports car. The strategy of the

company is to make premium products targeted a particular class of buyers. It sells directly to the

consumers without dealerships.

Even with its luxurious models and high prices, Tesla has achieved significant success with its

performance and excellent customer service.

Toyota

The Rava4 EV uses zero gas and doesn’t emit any tail pipe pollution. The EVs are designed in such a way

that two vehicles can fit in one parking space[7]

.

Nissan

This Nissan Leaf has been highly popular because of its price and characteristics similar to traditional

cars. Its marketing strategy of ‘no charge to charge’ program received good and positive response.

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TECHNOLOGY AND INNOVATION

Companies like Tesla, Toyota, Nissan, BMW, GM and many more have employed good amount of

resources to get electric vehicles with long lasting batteries.

BMW’s all – electric ‘i3’ comprised of plastic reinforced with carbon fibre reduces the vehicle weight by

30% - 50 % which offset the battery weight giving it comparable characteristics of a conventional cars[8]

Tesla has invested around $5 billion in its Giga Battery that will built 500,000 cars / year by 2020 and

also reduce battery cost by 30%[9]

.

Toyota has come up with a fuel cell technology that will be out about by 2015, that would replace the

gasoline engine with a fuel cell stack. Within this stack, hydrogen will combine with oxygen to produce

electricity to power the vehicle[10]

.

AllCell Technologies, producer of safe and long-lasting lithium-ion batteries is working to improve

impact during collision[11]

.

TECHNOLOGY S CURVE

Figure 1

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From all the information stated above, it can be inferred that the Electric Vehicle industry is experiencing

rapid advancements and is in the ‘growth’ phase of the technology curve. There is plenty of scope and

issues which are to be addressed that can make this product suitable for daily and long distance

commutation purpose.

MARKET ANALYSIS

Figure 2 (Source: http://cleantechnica.com/2014/05/07/us-electrified-car-sales-update-april-sales/)

This analysis clearly shows the close competition between the companies to dominate the market. This

gives the buyer a good amount of choice to choose from depending on preferences of performance and

money.

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Porter’s 5 force analysis will simply this explanation.

Rivalry among Competitors: High-

Threat of New Entrants: Low – This industry involves a lot of R & D as it is still in it’s growth stage.

High investments cost and uncertain results limit the number of new entrants.

Buyer Power: High - An array of vehicles to choose from increases the options available for consumers.

Supplier Power: Low – The switching cost for the customer is very low and hence the auto makers are

not left with much choice as the products are expensive and currently involves few users compared to

traditional gasoline cars.

Threat of Substitutes: Low – The electric/ hybrid vehicles are valuable products considering the

consequences if the environment is detoriated further and also the fact that natural resources will

eventually exhaust one day.

What it means for us?

The huge development in progress does seem to generate employment for engineers and factory workers.

For instance, the Tesla gigafactory has forecasted employment to more than 6000 workers[12]

.

True Cost of Driving an EV

The user of an electric vehicle can enjoy cost benefits as explained below

The data is from an actual user of BMW’s electric ActiveE and 128i (gasoline version of AciveE ) who

drove for 57,000 miles [13]

.

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Active E 128 i

33 kwh/ 100 miles 22 mpg

18 cents/kwh (residential rate) $ 3.75/ gallon

True Cost: $ 3385.8 True Cost: $ 9715.90

According to the US Department of Energy fueling an electric car is about 3 times cheaper than fueling a

gasmobile[14]

. Users can choose lower cost electricity plans (generally offered at night) without changing

supplier and enjoy the luxury of charging at home.

CHALLENGES Charging Time and Charging Stations

Figure 3: (Source: http://www.edmunds.com/hybrid/?mktcat=green-car -

101712&kw=electric+vehicle+comparison&mktid=ga61910893 )

Electric vehicles have to be charged at regular intervals to function. This is the reason why EVs ccouldn’t

become the first choice of any buyer when purchasing a new car. The chart above reflects data regarding

the latest electric cars for 2014. The Nissan Leaf model is highly popular as it comes around an affordable

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figure for most average income people. However it can only operate for 7 hours. This implies the need of

a charging station which has to be available every few miles or use a hybrid car.

Using the U.S Department of Energy website, we can locate nearby available charging stations as shown:

Figure 4 (Source: http://www.afdc.energy.gov/fuels/electricity_locations.html)

This may seem very simple, but in real world this may not be the best available solution depending on our

current location. The figures are not that impressive, considering the number of vehicles being driven.

Issues like the station being far way, long queues can cause consumers to go for traditional cars as it

comparatively easy to find a gas station to keep the car running.

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GOVERNMENT AND INFRASTRUCTURE

Companies like ChargePoint and Tesla are major contributors in providing charging stations. However

their reach is only limited and particularly in the U.S. which is a developed country. For EVs to be

popular in developing countries like Asia and Africa, heavy investment in infrastructure development has

to be done to make it available to common people. This investment means providing excellent roads,

better public mode of transportation, efficient utilities such as electricity.

Government laws such as Clean Air Act Amendment of 1990, Energy Policy Act of 1992 regulations

issued by California Air Resources Board have played an extensive role in pushing the companies to

produce energy efficient cars. Similar laws need to be imposed in developing nations that can speed the

process of infrastructure development..

Renewable sources like wind and solar power are other useful source of energy that can be utilized for

this purpose. It can reduce the cost on electric utilities and also dependency on companies like ConEdison

which are the only dominant players in the U.S.

Safety

Electric cars use Lithium - ion batteries that have a tendency to catch fire if it gets heated to a point which

can cause an explosion. But in an electric car these batteries are placed beneath the vehicle, making it safe

to handle and use. According to the 1999 study by U.S Department of Energy, electric cars have lower

magnetic fields than conventional cars[15]

.

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Recommendation and Conclusion

From all the research I did, I think electric vehicles will enjoy its peak period in coming 10 years. The

problem of charging it frequently can be solved with more installments of stations or may be something

that is portable. This, along with the ongoing research to improve batteries in terms of capacity, faster

charging times and reduced prices will make us parallel to use an all - electric vehicles. Hybrid cars can

be used in the meanwhile to get people ready and used to this technology when it will be available widely

in the future.

Although the EVs available now are only meant for short distance commutation, substantial amount of

research will surely increase its range. We need to push our efforts to make all the necessary equipments

available in every corner so people are convinced to use it. This way we can do our bit in saving the

ecosystem from gas emissions in transportation sector.

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REFERENCES

[1] Sources of Greenhouse Gas Emissions retrieved from:

http://www.epa.gov/climatechange/ghgemissions/sources.html

[2] How much of world energy consumption and electricity generation is from renewable energy?

retrieved from :

http://www.eia.gov/tools/faqs/faq.cfm?id=527&t=1

[3] Timeline: History of the Electric Car retrieved from:

http://www.pbs.org/now/shows/223/electric-car-timeline.html

[4],[5],[6] Timeline: History of the Electric Car Retrieved from:

http://inventors.about.com/od/cstartinventions/a/History-Of-Electric-Vehicles.htm

[7] Toyota Electric Vehicles retrieved from

http://www.toyota-global.com/innovation/environmental_technology/electric_vehicle/

[8] Electric Vehicle new retrieved from

http://www.electric-vehiclenews.com/2014_02_01_archive.html

[9] Tesla Gigafactory could help your car last for decades retrieved from

http://cleantechnica.com/2014/05/12/tesla-gigafactory-make-car-last-decades-selling-new-batteries-

old-teslas/

[10] The Fuel cell vehicle retrieved from:

http://www.toyota.com/fuelcell/

[11] AllCell Technologies working on advanced EV battery development retrieved from

http://www.electricvehiclesresearch.com/articles/allcell-technologies-working-on-advanced-ev-battery-

development-00006490.asp

[12] Tesla’s $5B Giga Battery Factory and Deep Politics retrieved from

http://www.greentechmedia.com/articles/read/Teslas-5B-Giga-Battery-Factory-and-Deep-Politics-in-

AZ-TX-NV-and-NM

[13]The True Cost of Powering an Electric Car retrieved from

http://www.edmunds.com/fuel-economy/the-true-cost-of-powering-an-electric-car.html

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[14] Reevaluating Electric Vehicles retrieved from:

http://theenergycollective.com/zachshahan/237916/electric-cars-much-cheaper-you-think-cheaper-

gasmobiles-charts

[15] Do plug-in vehicles emit electromagnetic radiation? retrieved from

http://www.pluginamerica.org/faq/do-plug-vehicles-emit-electromagnetic-radiation