Future Tense did an interview
with author Ron Adner, who published a book on innovation on March 1, 2012.
The book covers the topic of how companies can fail even if their technology is good. Let’s see what insights he has for the EV industry.
Future Tense: What are some of the other critical pieces that they are missing?
“They are trying to offset the failure points of what we have seen at the turn of the millennium”
Well fortunately carmakers don’t have to address that. The main failure was that electricity was definitely not ubiquitous at the turn of the last century. Rural electrification did not even begin in earnest until the 1930s. Electricity is much more widespread now, although, clearly apartments, condos and the like may be problematic in setting up a charging situation. Still, there is a sufficiently large population of homes with ready access to sustain a significant EV industry right now.
“Reselling an electric car is going to feel more like selling a used computer than a used car.”
This statement is in fact the exact opposite of the reality. In a standard car, failure of the gas engine or the transmission is the inevitable big ticket item that typically and effectively ends the useful life of the vehicle. One of the beautiful things about electric motors is their astounding durability. Electric motor longevity is typically measured in decades. This is not terribly surprising given the low temperatures at which they operate and the very limited number of moving parts.
With a gas engine efficiency degrades throughout the life of the vehicle, something most cost operation calculators fail to take into account. On an EV your range may degrade over time, but your electric motor will continue to give very consistent performance year after year, so your efficiency remains roughly the same.
We are just past the first full year of EV production and already we are seeing the fruits of battery R&D and investment in battery production infrastructure. When the current crop of batteries begin to expire in 10-15 years there can be no doubt that prices for the same level of performance will be at a minimum half of what they were and more than likely less than a quarter of the original prices.
Indeed Adner argues that because new batteries will be so much cheaper and perform better no one will want an older model. I argue that fact will make the older models even more attractive because you can have brand new range performance for only the cost of installing a new battery.
EVs will function and still be economically viable on a time frame that people simply can’t yet imagine.
The only problem I can see is that people will get tired of looking at the same car for so long.
Future Tense: Are there any companies out there that you think are exploring interesting ways to the battery problem? " A Better Place has an approach that mirrors what we see with the mobile telephone operators. The same way AT&T can give you a really expensive phone and not have you worry about reselling it [because you sign] a long-term contract. "
Why is that people who have no experience with electric vehicles find this battery swapping idea so appealing?
Personally I deplore the cell phone pricing model. I am not fooled one bit, and realize that the “low” price charged for the phone is more than made up for by inflated prices for service. And the 2 year contract system effectively negates real pricing competition.
Income stream. It is the pricing scheme that corporations seek to foist on us at every turn. No longer content to simply sell us a good or service outright, the idea is to get the thing in the consumer’s hand for a low price and then generate a steady stream of income, which in the long run ends up costing the consumer much more than if they had just bought the thing outright.
Indeed, if you look at the prices being suggested for battery swapping, you will find that those prices make burning gasoline more economical. For most of the car driving population battery swapping is not a solution it is a pricing gimmick.
There may be a small subset of people for whom the current range of electric cars does not work, but as the battery range increases this population will only become smaller.
We are not in the EV1 situation of the 1990s where CARB can kill this thing by changing its rules. CAFE requirements alone would necessitate an electric effort. Growing awareness by the public that importation of foreign oil has real consequences also make this a reality. Something perfectly summed up by a poster on the Chevy Volt Owners facebook page who expressed the sentiment that after his brother was killed in Iraq, he was determined not to keep giving money to people who hate us.
The EV1 was one company going out on a limb. The reality of 2012 is that every major manufacturer has either a working electrified vehicle or has committed to producing one. Finally GM and Nissan have made it clear simply by the scope of their investment that these are not vehicles they will walk away from.