Navigant Research Blog

Why Stop at Converting Hybrids?

— September 24, 2009

Converting hybrid vehicles — particularly the Prius and Ford Escape — into plug-in hybrids has become a profitable niche industry for a few specialty companies. But the net impact of this new mini-industry has been much greater by influencing consumer and industry opinions. Promoting the technical feasibility of PHEVs has been a significant factor in the auto manufacturers’ decision to develop the dozens of plug-in and all-electric vehicles now scheduled for delivery in the next five years.

But the earliest and strongest voice promoting PHEVs isn’t happy with that limited success. Felix Kramer, the founder of, says that getting to a million electrified vehicles by 2015 won’t do nearly enough to address climate change and energy independence, and now he’s setting his sights on electrifying internal combustion engine vehicles. He’s clearly on to something.

CalCar’s new “Big Fix” initiative wants to electrify some of the biggest emitters and gas-wasters — pickup trucks, SUVs and vans (PSVs). When used in delivery routes that are often well under 40 miles per day, they spend much of their time starting, stopping, and idling, and get among the worst MPG ratings around. Converting one of these vehicles to a PHEV or EV will reduce fuel consumption and emissions to a much greater degree than trading in a Sebring for a Prius.

PSVs, most notably the Ford F-150, have been among the top sellers for more than a decade, creating an inventory of millions of vehicles that could be converted. They also have much more space for battery packs, which makes for a simpler conversion than a compact car. Former Intel CEO Andy Grove and electric vehicle guru Andy Frank are fully on board, lending their considerable credibility to the idea.

The Japanese postal service has already begun converting its fleet of vehicles to EVs, and the U.S. Postal Service wants to do the same with more than 140,000 of its delivery vehicles. The cash-starved agency could save millions per year if the federal government decides to provide assistance, which would be more sustainable than a bailout.

The biggest impediments are the cost and potential resistance from the auto industry. The battery cost can be upwards of $20,000, making for a slow payback period if gasoline stays around $3 a gallon. The economics will improve over time, especially if conversion kits are produced in volume and battery manufacturing ramps up as the technology evolves.

But the harder sell will be convincing the auto industry that keeping vehicles on the road instead of buying new vehicles is a good thing, and that they should be a part of that business. Upgrading existing PSVs could be a multi-billion dollar business, extending the life of vehicles and preserving the energy cost sunk into building them. While Ford, GM and Chrylsler are best-suited to engineer conversions, this mass rethinking of the companies would be an even bigger shift than the current change to becoming manufacturers of PHEVs and EVs.

Convincing fleet operators to convert will likely be easier than the consumers, legislators and car companies needed to make it happen. It’s not impossible, but it will take an extensive and well-orchestrated effort.

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EV and IT Challenges Have Much in Common

— September 24, 2009

The arrival of electric vehicles onto a grid that is expanding its use of renewable power use provides many challenges for networking, communications, and resource management. Seasoned IT firms, viewing EVs as an integral part of the larger smart grid opportunity, are lining up to provide solutions that will enable renewable power and vehicles to help instead of hinder grid performance.

As referenced in my new research report published by Pike Research in partnership with GigaOM Pro IT and Networking Issues for the Electric Vehicle Market (subscription required), having companies like Cisco, IBM, GE and AT&T playing significant roles make sense because of their experience. Many of the challenges are strikingly similar to those faced when the Internet became a mainstream vehicle for business and commerce.

This revolution will likewise require first time interoperability between a myriad of operating systems, appliances, and proprietary and open protocols and standards. You could easily swap out the names of many of the challenges that large networking/computing companies have already stared down to today’s EV-IT world. Instead of packets, it’s power that is being transmitted over an increasingly congested network (transmission lines) that continually adds resources. Instead of ATMs, local area networks and airport kiosks that must be internet-enabled, it’s now charging systems, vehicles, and smart meters.

Renewable energy is a double-edged sword for electric vehicles. In theory, an excess of solar power could be stored in vehicle batteries, which could then be either used for transportation or uploaded to the grid during times of peak power. However, EVs are largely away from home when solar power is most abundant (daytime), and are ready to receive power at night. So the question of how to effectively shift and balance loads (something that networking engineers are all too familiar with) will require developing new algorithms and resource management tools.

Solar charging stations, like those being developed in Denmark could become self-sufficient islands that with local storage wouldn’t need to be grid connected. Batteries could store any surplus solar power for filling vehicles 24/7. Because the stations are remote, it is easier to justify a higher price for the energy, which could enable the extra cost of batteries to be absorbed while still running a profit.

Hawaii, with its high energy cost of petroleum-powered electricity could set the standard for powering EVs with renewable energy. Figuring out how to smart charge EVs while relying primarily on wind and solar power won’t be easy, but it could create a model for the rest of the world.

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Local Environment to Influence Transportation

— September 23, 2009

Sustainability advocates long ago adopted the mantra “buy local” to limit the carbon footprint of the goods purchased. Distributed energy that’s closer to the end user through smaller solar and wind power is having an impact on the energy sector. The next industry to become more geography-centric in purchasing will be transportation.

The automotive and petroleum industries in the U.S. are also relatively centralized as well. While the largest companies have U.S. central offices, the supply strings are often pulled from faraway places. But as electric vehicles and biofuels ramp up, their influence with local consumers and partners will become more significant.

For example, urban areas will receive the new plug-in hybrid and all-electric vehicles first and in disproportionate numbers. The distribution of the limited supply of vehicles during the first few years will follow behind the regional buildup of charging infrastructure as the auto manufacturers won’t risk selling to customers who don’t have ready access to charging. If you live in Carbon County, Montana you’ll have a much harder time finding an EV dealership or vehicle than those who live in the Bay Area.

Extreme weather (below -5 and above 40 centigrade) can significantly hinder lithium ion battery performance and life cycle respectively, so consumers in Fairbanks and Phoenix might need a sheltered garage to store their vehicles. It wouldn’t be surprising if auto manufacturers are initially very cautious in selling EVs into extremely hot and cold climates. Having to worry about where the vehicles will be used is a new concern for auto manufacturers, so expect some bumps along the way.

The biofuel industry saw an explosion (and then implosion) in small to medium-sized ethanol and biodiesel refineries. Today the economics work against transporting biofuels great distances. The biofuel industry will recover and switch to more non-food based feedstocks, but with a greater sensitivity towards what is available locally. Refineries will be optimized for the local resources, which will ultimately impact consumer choices and could influence vehicle purchasing decisions. If you live where switchgrass runs wild and ethanol is cheaper than gasoline, you’re likely to give flex fuel vehicles a longer look. Ditto for diesel vehicles in places with nearby biodiesel plants.

Buying local also has the added benefits of minimizing the carbon footprint due to reducing the fossil fuels used in transporting goods, and it also supports local economies. As more consumers make sustainable choices, expect this to matter more to consumers’ transportation choices.

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Mobility Hubs to Help Reshape Urban Transit

— September 19, 2009

Ford hopes access points for switching transportation modes in Cape Town can provide lessons for the U.S.

In Cape Town, South Africa, as well as in many U.S. cities, wealthy suburban dwellers choke roads driving into the city, eschewing the public transit that shuttles blue collar workers. The addition of bus and rail lines in the city’s center in anticipation of hosting the 2010 World Cup has city leaders increasing efforts to get people out of their cars and on to public transit.

In Cape Town, most white collar workers drive themselves to work, fearing crime on trains and on the 20-seat shared taxis that shuttle one-third of inner city commuters. Business leaders from the Cape Town Partnership, along with the University of Michigan and Ford, are working with the city’s largest employers to get more of the 400,000 daily commuters moving by alternative modes of transportation by establishing mobility hubs.

The mobility hubs will enable people to seamlessly switch between transportation modes, including getting off of trains and private cars and on to buses, green taxis, and bikes. These transfer points with heavy commuter populations will provide information to show the locations of the best transportation options for reaching their final destinations.

“The (transportation) grids are not aligned,” says Susan, Zielinski Managing Director of the Sustainable Mobility & Accessibility Research & Transformation (SMART) initiative at the University of Michigan, and a consultant on the project. Zielinski says commuters don’t have the ability to synchronize their traveling between buses and trains, and many don’t know that services like car shares and bike rentals exist.

The Cape Town project, which has involved 200 people from the public and private sectors, will identify 4-5 hubs that are critical transfer points with a bounty of commuters. The hubs will include signs to aid people getting around, and the city wants to add bike rental programs and car share programs nearby to encourage reduced-carbon commuting.

A proposal has been drafted to provide communications through a website to kiosks and mobile phones that would provide all forms of transit schedules and traffic information. Zielinski envisions creating a single payment system via a debit card for taking public transit and renting cars or bikes by the hour.

The problems of too many cars and underutilization of public transit are common across the globe, and Zielinski says the knowledge gained from Cape Town could be applied in Ann Arbor, Detroit, Atlanta or Los Angeles.

Ford, which has provided funding for the Cape Town project, as well as others in Bangalore and Salvador, Brazil, believes it can play a role in solving the IT and logistics challenges in better organizing urban commuting. David Berdish, Ford’s Manager of Sustainable Business Development, says the company will apply its experience in logistics in moving vehicles and freight to urban mobility. Ford is using the pilot projects to understand the business opportunities and see where it can play, because “cars aren’t always the answer,” according to Berdish.

Ford’s SYNC technology could potentially play a role in sharing mobility information between vehicles and the built environment.

Ford will gather information from the projects about traffic patterns, the concentration of commuters, and where they change cars for other forms of transportation. Berdish says that “NYC has a lot more in common with Bangalore than it does with Wyoming,” when it comes to urban transit.

Urban mobility presents a unique opportunity that crosscuts IT and automotive industries, and that’s why Ford, IBM, Cisco and others are eyeing the space. As vehicle ownership per capita stabilizes or even goes down in North America, auto companies need new methods to remain relevant. Urban mobility projects can also minimize the congestion from introducing more vehicles to emerging metropolises by keeping the cars out of high traffic areas. It may be a bit out of Ford’s comfort zone, but learning urban transit so that you can assume a new role is much smarter than thinking that the world of transportation isn’t changing.

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