Electric dreams

Published in The Market magazine, 2012. Original article.

edElectric dreams
The electric car is stepping out of its niche as a green product, as numerous new launches from mainstream manufacturers is making the eco choice look increasingly attractive. We take a look at the challenges for the next generation car.

If we want to keep driving we have to get creative, as fossil fuels will not last all that much longer. Running a car from the electric socket is emerging as the next step in automobile evolution, as eco cars are breaking out of the tree-hugger niche and into the mainstream.

“Global trends are changing the automotive environment and causing structural shifts,” says Claire Tracey, manager of Smart operations at Mercedes-Benz UK. The electric mini-car from Smart, which operates under the Mercedes-Benz division of Daimler, is a familiar face on the eco car scene. Until now this arena has been dominated by environmentally conscious drivers keen to reduce their carbon footprint, but, says Tracey, the growing market means an increasingly diverse groups of drivers are starting to think electric.

Vauxhall, Renault and Peugeot are just a few of the manufacturers now launching zero-emissions electric cars, most of which can run 100 miles on a single charge. But while choice and range is improving, we are a long way away from electric cars becoming the default choice. Driving 100 miles for £1.25 in electricity is remarkable, but the upfront cost is significant and the battery only lasts about six years. In order to help with this, the UK Government will chip in a good chunk of money to help those keen to make the change, and the number of public charging points is expanding to ease the transition to the plug-in habit.

The big picture
“While the automobile has advanced significantly during the last 100 years, the one factor that has not evolved is the dependence on fossil fuels,” says Bambos Kouyiounta, category manager of electric vehicles at Nissan Motors. “To date, attempts to find alternatives have been rather half-hearted, but with environmental issues now escalating rapidly there is a genuine motivation to develop alternatives.”

Kouyiounta welcomes competition in the electric car arena, as more choice will improve credibility and acceptance. Equally important is how it will help dispel the perception of eco cars as a fad or the purview of the climate brigade; the realities of dwindling oil reserves and the climate change threat are issues that concern us all. Kouyiounta quotes Nissan CEO Carlos Ghosn: “Nothing can stop the car being the most coveted product that comes with development, and more efficient conventional engines are not the answer. We must have zero-emission vehicles. Nothing else will prevent the world from exploding.”

Ahead of the launch the 3rd generation Fortwo car this summer, Smart takes a similar big picture view: “Shrinking oil reserves, rising energy prices, a growing urban population, and intense demand for mobility are all factors now driving the transformation of the automotive industry,” says Tracey.

Bridging the gap
“It is still very, very, very early days for the electric vehicle industry as being something that could replace a regular car,” says Gian Avignone, country manager for the UK and Ireland at Tesla Motors. Established in Silicon Valley in 2003, Tesla’s stated goal is to “prove that electric vehicles can be awesome”, and the company certainly managed to turn a few heads with the launch of the Roadster, its zero-emissions luxury sports car.

“Tesla set out to build something a car enthusiast would want to buy. The Roadster is fun and fast,” says Avignone. As a sports car that just happens to be electric, the Roadster appeals mainly to the luxury market, but Tesla’s role in pulling the electric car out of its traditional niche has been valuable: “We are using the Roadster to try and catalyse the broader market, to show that electric cars can be something desirable.”

Most of Tesla’s customers are what Avignone describes as sustainability-conscious but unwilling to compromise on style: “Buying an electric car is both a rational and an emotional decision.” The Tesla Model S, a luxury saloon car, will launch this year, followed later by the Model X, a SUV. Unlike the Roadster, the Model S will be applicable for the UK government grant.

The expansion of the eco car market will see people attracted to electric cars for a variety of reasons, following early adopters who, says Nissan’s Kouyiounta, “are mostly relatively well-off, technologically savvy individuals with a strong sense of social duty”. He expects the financial benefits to become more of a motivator for buyers, however the high upfront cost means people will still need to be driven at least partially by environmental concerns.

The Plug-In Car Grant
Buyers of ultra-low emission cars can get up £5,000 off the sales price through the Department for Transport’s (DfT) Plug-In Car Grant. The funding, guaranteed until 2015, applies to cars with emissions of no more than 75g of CO2/km.

“The DfT has a number of strategies in place to encourage the uptake of low-emission vehicles,” says a spokesperson for the DfT, whose policy is not to provide names of staff below ministry level. “One of these is the Plug-In Car Grant, but we are also funding technology advancements and providing money for the roll-out of the charging network.”

A total of 2,610 electric cars were licensed in Great Britain by the end of 2011, 1,204 of which were registered for the first time last year. The Government has set aside £80 million to support research and development, with £30 million allotted for charging points in public places such as shopping centres and car parks. Over 2500 charge points are now in place, 765 courtesy of the DfT, with 4000 more committed by the private sector to be installed by the end of this year.

“An important point is that we need to change people’s mindsets about how and when they fuel their cars,” says the DfT spokesperson. “People are used to going to petrol stations, but with electric cars they can charge overnight, while at work or while shopping. We will need to think a little differently.”

The range problem

As electric cars now typically run 100 miles between charges, the power problem is put into perspective by considering 70% of drivers travel less than 50 miles per day.

“The problem of charging has been exaggerated a bit, yes,” says Tesla’s Avignone, when asked if this is the case. “But the reality is that the consumer is not yet psychologically ready for a short-range vehicle. A car represents the idea that you can go anywhere you want.”

Nissan’s Kouyiounta concurs: “Infrastructure exists as a problem mainly because of the ‘what if’ scenario. Most people will charge at home and never use public infrastructure, but they still fear finding themselves in a situation where they needed to charge remotely, and there is not sufficient accessible infrastructure to ensure they can get home.”

The technology exists to make cars that can run 300 miles without charging, but cost is preventing manufacturers from pushing forward with these yet. “To do what we do is enormously technically challenging,” says Avignone. “We have made huge technological advancements, and part of our remit is to help other car companies bring their own models to market. By 2015 we should start to see some very interesting cars coming along.”

Steps to the future
PSA Peugeot Citroën, on the market with the Citroën C-Zero and the Peugeot iOn, believes electric and hybrid vehicles could make up 15% of the market by 2020. Consequently, over the next few decades we will likely see a mixture of technologies, with electric cars existing alongside petrol cars, synthetic fuels and vehicles running on alternative technologies such as hydrogen-powered fuel cells.

Fuel cell technology is an interesting possibility for the future, concedes Avignone, but Tesla will focus on near term technologies: “An electric vehicle with a hydrogen fuel cell range extender may be the holy grail, but we are a long way away from that. […] We intend to focus solely on building long-range electric vehicles.”

Hybrids will play an important part by bridging the gaps, and Toyota’s contribution to the green car arena is the upcoming launch of the Prius Plug-In Hybrid. This car has a standard engine to supplement the shortcomings of the electric engine. A spokesperson for Toyota said: “We feel this is the answer to eco cars for the short to medium future.”

Bigger manufacturers such as Mercedes-Benz are taking a multi-pronged approach. Says Smart’s Tracey: “Mercedes-Benz’s aim is to create an intelligent mix of technologies, to offer the right solution for every mobility requirement from urban commuters to long-distance drivers.” Nissan’s Kouyiounta also expects to see a mix of technologies in the future: “We do not anticipate the new technologies will fully replace fossil fuel vehicles. We expect there will still be a place in the market for high efficiency fossil fuel engines, albeit in much lower volumes than today.”

As the Government subsidises the rollout of low-emission vehicles in the name of battling climate change, there is also a compelling argument for supporting UK manufacturers to ensure they can claim their share as the next generation automotive industry is taking shape.

“Electric vehicles are the arrowhead for a low carbon revolution in motoring, and as more models come to market we will begin to see sales gather pace,” said Transport minister Norman Baker as the Plug-In Grant was extended to include vans in January. Buyers receive up to £8,000 when buying a van, a significant step to encourage business uptake. Added Baker: “It is radical initiatives like these which will allow us to create a transport system that both cuts carbon and is an engine for economic growth.”

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