Glimpses into the future of clean vehicles are already here – they’re just not evenly distributed: Automakers have in recent years launched a multitude of clean(er) vehicle technology platforms ranging from increasingly efficient traditional gas guzzling vehicles to electric vehicles (EVs), to hybrids and fuel cell vehicles (FCVs).
On January 19, SV Forum’s Annual Cleantech Conference brought together entrepreneurs, investors and the business community at large to discuss a range of topics including electric vehicles, green building, new technology opportunities and the investment climate for early-stage cleantech deals. In my years of attending cleantech conferences I have found the sense of realism refreshing and there was a real back to the basics roll up the sleeves mentality among the audience.
Electric Vehicles will take time to have a profound effect on the market.
“EVs primarily face a market adoption problem, not an infrastructure challenge, to move from early adopters to mainstream buyers,” said Thilo Koslowski, vice president and distinguished analyst at Gartner, as he recapped Gartner’s 2011 report about EV readiness in the US.
More information about the Gartner EV report (for a fee) can be found here.
His predictions are that EVs will be an increasingly important part of the drive train mix but growth will be slow and they will not make a significant impact until the 2020 time frame (3-5%). Note that the overall market for hybrid electric vehicles is about 2% of all vehicles sold in the US, about 270,000 in 2011 and over 2 million sold since their introduction in 1999. On the Gartner hype cycle, EVs are on the downswing but have not reached bottom yet as EVs have not been able to meet the unrealistic expectations placed on them as a magic bullet for all consumers. Gartner notes anecdotally that interest and enthusiasm seems to be waning both on the consumer side and among the auto manufacturers. Nissan Leaf and Chevy Volt have sold less than expected and there have been technical challenges for the Volt.
However, Gartner’s pessimism was countered by a panel that included EV manufacturers Coda Automotive and GM. They see 2011 as laying the groundwork for a very bright future with over 18,000 EVs sold even though only 3 options were available (Tesla Roadster, Nissan Leaf, Chevy Volt). 2011 EVs are 3x what hybrids were in 2000 and there has been overwhelming positive consumer response from those who have purchased EVs. In addition Gartner themselves forecast EV sales to reach 100,000 in 2012 and a wide range of new models to be launched.
Byron Shaw of GM noted that if you look at it from the perspective of % of total vehicles sold then it doesn’t look good. But if you look at it from the perspective of year on year growth, 2012 will be a huge year. Most of the major auto makers are launching EVs in the US in 2012 including 4 in the next 12 months by GM alone.
He noted that while many EVs will not meet all consumer needs, among vehicle-owning homes, two thirds of them have 2 or more cars and an EV can be seen as viable commuter car in most urban areas.
Challenges moving forward
While batteries (price and range) are the main limiting technical factor, more importantly, public awareness and education are the biggest barriers to moving from the relatively small early adopter market to wider acceptance in the mainstream market.
There has been early success in putting the vehicles out there, but it seems like the excellent driving experience has been undersold and there is still anxiety about lack of public charge points. Furthermore, the automakers have not succeeded in raising consumer awareness about the benefits and limitations of EVs. The operational benefits are not well documented and depreciation is still unknown. Upfront costs vs. operational savings are not a main buying factor for vehicles today and will require rethinking auto purchases.
Silicon Valley is overflowing with experts on cleantech. Last week, a few of them met to discuss the future of green transportation. I listened in on their discussion ranging from an already existing technology on personalized airplanes to general skepticism about cleantech’s role in transportation.
Listening in on the SVForum’s ‘trends in Green Transportation’ event last week, one popular opinion was that Americans don’t drive electric vehicles simply because they don’t have an incentive to do so. The electric vehicles in the market already are not driven to save cost nor the environment. Rather, as venture capitalist Matt Trevithick jokingly said, “a Tesla is someone’s 7th car”. Ian Wright of Wrightspeed who was actually one of the co-founders of Tesla, added that not only are EVs not a particularly attractive choice for consumers, EV researchers and scientists are working on the wrong technologies. Instead of spending vast sums on trying to improve the mileage on the Prius, researchers should look into improving the internal combustion engine instead.
Improving the Prius by 100% would make less of a difference than improving trucks such as the Ford-150 series, from 10 mpg to 10.2 mpg, Wright argued. This however, is true only because Americans still love their trucks more than the hybrid alternative. In 2010, America’s favorite vehicle sold almost 530,000 trucks. The Prius came in at 140.000.
Breakthrough or Behavior?
There seems to be two ways of changing this state; one is through breakthrough innovation that will radically change incentives for consumers, the other is a question of behavior. How do we get Americans to use public transportation. According to the panel, Americans’ need to drive their own car is a cultural aspect linked to a sense of freedom. As such, Americans would rather sit alone in their own car – and be stuck in traffic – than save the time and money from taking the bus or train. Therefore, it would seem wiser to put your money on breakthrough innovation.From an investment point-of-view also, public transportation was seen as a very risky investment. “They are all subsidized and none of them are making any money”. The heavily subsidized industry risks being changed unfavorably for investors “at the stroke of a pen” as Matt Trevithick put it.
One of these could be the Green Flight Challenge which Brian Seeley from the CAFE Foundation brought up. The foundation is currently setting up a technology competition for an automated safety system for personalized airplanes. The NASA project which was recently further funded by Google hopes to put 30% of road traffic in the sky, eliminating the worst congestion. Instead of cars, commuters would fly silent, 200 mile-ranging ‘green’ airplanes for up to 6 people. Who knows, maybe we’ll have airplane pool lanes in a few years.