Navigant Research Blog

A New Culture for Carsharing

— February 8, 2017

Carsharing continues to make the transition from a startup or non-profit culture to a corporate culture. More and more large companies are entering the space and acquiring smaller carshare services, and automaker services are adding high end vehicles to the quirky two-seaters. But the bigger news may be that carsharing is starting to show traction outside its traditional markets of highly developed car cultures—namely North America, Western Europe, and Japan.

A spate of recent announcements from automakers reflects continuing interest in on demand mobility services—not just carsharing, but also ride-hailing services like Uber and Lyft. The latest automakers to announce carsharing expansions are AB Volvo, the PSA Group, and Daimler AG. Volvo has been in the carsharing business since the late 1990s through Swedish carshare service Sunfleet. In January, the automaker announced it would create a business unit for global carsharing based on the Sunfleet service.

The PSA Group will be supplying EVs for a new carsharing service in Paris, targeting professionals as its primary customers. This mainly seems to entail offering larger vehicles such as the Peugeot Partner and Citroën Berlingo, both small panel vans. Daimler is also making a play for carshare users who want larger vehicles than the tiny smart fortwo vehicle that has made up its car2go fleet to date. But Daimler is going more upscale than panel vans. The company announced that it would begin incorporating Mercedes Benz sedans and SUVs into its car2go fleets in seven US cities.

Experimental Phase

These announcements reflect the wide range of approaches to carsharing that automakers are pursuing. Although automakers are demonstrating real interest in carsharing, they are still largely in an experimental phase, trying out different business models to see what gains traction and what best supports their respective brands. While some will likely find that the service does not suit their customer base or business strategy, the trend of establishing a separate business unit for shared mobility suggests that automakers are taking the carsharing market seriously.

Automakers that see shared mobility as a first application for automated vehicles will certainly continue to pursue these services. Small, quirky startup carshare companies may find it difficult to compete in that environment. It is likely that some small carshare companies will be acquired by automakers looking to establish a beachhead for carsharing in new markets. Note that consolidation is also happening through other big players in the shared mobility space, including Europcar. Through mobility startup Ubeequo, Europcar recently acquired a Milan carshare service called GuidaMi.

But it is even more interesting to see carsharing starting to break through in new geographic regions such as Thailand, India, the United Arab Emirates, and Kazakhstan. These are not necessarily locations that would seem obvious for carsharing—in some cases due to a lack of public transit, which is seen as a supporting pillar to a shared mobility environment. Perhaps most significantly, China is seeing a surge in on demand mobility services, as the government has begun encouraging shared mobility as one of many tools to combat congestion and pollution problems. These new markets have the potential to help the carshare market continue to grow as the mature markets become saturated.

 

Forward Momentum in EV Charging

— February 7, 2017

Let me join the many analysts writing to declare that “the private sector will move forward with XX energy innovation even if the US federal government stops supporting it.” This insight has gone from a contrarian hot take to conventional wisdom in record time. And it is a perspective that occasionally carries with it a whiff of wishful thinking.

That said, I can offer the projection that the deployment of charging infrastructure to meet the demands of a growing plug-in EV market will be pushed forward by the industry regardless of any changes in federal policy.

There is something to be said for industry stakeholders acting as if they are on their own in pursuing this goal. Not that the US federal government role has not provided momentum for the EV charging market. Federal funding helped fund the first rollout of public charging, though that program’s results were decidedly mixed. Some installations proved to be poor long-term opportunities and poorly maintained. But many others did help form the backbone of a nascent US public charging network.

The US Department of Energy’s (DOE’s) Workplace Charging initiative supported significant growth in workplace charging growth from 2014 to 2016. In its Mid-Project Review from December 2015, the DOE reported that “the number of planned and installed charging stations has increased by 70% since June 2014.” Granted, that was from a small installed base initially, but that did amount to over 2,000 stations. Most recently, the DOE collaborated with an effort by the US Department of Transportation to identify a network of locations that can be designated as ready for installing direct current (DC) fast charging.

Moving Forward

The EV market has changed significantly since 2009. Major automakers are planning to offer EVs in multiple segments over the next 5 years. Battery EVs (BEVs) that have over 200 miles of range are coming to market at more moderate price points. Automakers in Europe are already partnering to roll out ultra fast charging infrastructure. In the United States, utilities are waking up to the potential for EVs to provide new revenue.

In this environment, stakeholders are ready to work together to move the US market forward—and there is some benefit to industry not looking at the federal government as a white knight. This can direct focus toward coming up with innovative solutions to challenges like developing business models for the needed public fast charging infrastructure, managing spikes in electricity load, recognizing the potential for demand charges, and educating consumers about EVs in a compelling way, to name a few. If the federal government continues to play a role, that will be a bonus to any industry efforts, but industry seems prepared to take action regardless.

 

Examining EVs and Their Impact on the Retail Refueling Industry

— November 7, 2016

EV RefuelingI recently presented at NACS Show, the annual conference for the national association representing the convenience and fuel retailing industry. And by fueling, I of course mean liquid fuels. The more than 20,000 attendees of the conference included the operators of retail gas stations that help fuel the vehicle market, as well as the petroleum companies that supply them.

I spoke about the future of fuels in the United States, mostly related to electric vehicles (EVs). The primary message of my presentation was that EVs will be a significantly growing segment of the US passenger car market, but that petroleum will still be king in terms of total fuel consumed in the country through at least 2025.

While retailers operate because of our need to fill our tanks with gas or diesel, that is not what drives profit—that task falls to convenience store sales. Attendees emerged from the conference expo laden with samples from exhibitors showing the huge array of snacks, beverages, and other goods sold to drivers stopping for gas.

A New Model Needed

This model doesn’t work for most of EV charging. EVs fundamentally disrupt the fueling landscape since they shift the fueling dynamic away from centralized retail locations. Not only will most drivers just charge at home, but any away-from-home charging will only occur at places where the driver has already planned to go for an extended time. Basically, EV drivers refuel wherever they park for 2 or more hours. This means never—or in the case of plug-in hybrids, rarely—having to drive somewhere like a gas station to fuel. Once consumers are used to this new dynamic, it’s going to be a feature, not a bug, for potential EV buyers.

High-power fast charging networks are the one application where the retail fuel industry’s insights are highly relevant. Long-distance driving will require stopping for at least 10 minutes (or potentially 20-25) to recharge. Right now, fuel retailers are not focused on this as a market, as it’s much too small. But this is where their business model is most likely to be adopted, as fast charging stations will need to provide services to occupy drivers during their 10-25 minute wait. Food service seems the most likely option. And it doesn’t need to be the grab-and-go style of service found in most convenience stores—instead, it could be more akin to a coffee bar or café.

Although the fast charging network is still in its early genesis in the United States, it’s an inevitability. Automakers are committed to creating such a network, which can be created with as few as 722 sites, as Navigant Research found in its DC Charging Map for the United States report. While OEMs may well fund this network initially, that seems unlikely to be a permanent solution. These stations will need a viable long-term business model such as the one today’s fuel retailers have worked out. They could be valuable partners for this effort.

 

The EU Continues to Lead EV Charging Policy

— November 4, 2016

EV RefuelingThe European Union (EU) continues to be at the forefront of policies to spur plug-in electric vehicle (PEV) charging. Since 2014, EU countries have been under a directive requiring member states to develop a plan to install PEV chargers on a broad scale by December 31, 2020. Public and semi-private charger availability is extremely high in the Netherlands and Norway, with other countries like the United Kingdom, Finland, and Denmark having increasingly high levels of public charging networks. The EU is also leading on interoperability and roaming, which lets drivers easily access public chargers across many networks and multiple countries. This is a key feature if the growth in public charging is to lead to greater PEV sales—which is, after all, the EU’s real goal. This has led to Europe outpacing North America in charger sales in Navigant Research’s Electric Vehicle Charging Services near-term forecasts.

Now the EU looks to be pulling another lever for the charger market: a draft directive requiring new homes to be built with charging infrastructure. The draft directive reportedly says that any new or substantially renovated home will need to be equipped for EV charging beginning in 2019. It also indicates that starting in 2023, buildings must have one out of every ten parking spaces at a building equipped for EV charging.

This directive can help drive PEV sales for several reasons. First, home buyers will be made aware of EVs and EV charging by the presence of infrastructure in new homes. Secondly, having the infrastructure installed removes some of the friction that can hinder interest in PEVs among consumers, such as understanding how home charging occurs, whether it requires an electrical upgrade, and the potential cost of such an upgrade.

Details Yet to Be Determined

However, the devil is in the details, which are yet to come. A few key points:

  • This directive could well create a scrum among charger providers looking to gain some advantage through a mandate-driven market. The directive should avoid specifications that favor certain charging companies, which would effectively hand them the new home EV charger market.
  • It should also ensure that the requirements will allow for meeting the needs of an evolving PEV market. For example, longer range battery EVs will be increasingly prevalent and would benefit from higher power charger capability.
  • Coming innovations in charging should be considered. For example, how will wireless charging be accommodated? By the time this directive goes into effect, several OEMs will be offering wireless charging as an option with their PEVs. Will the directive attempt to encourage smart charging capability, or leave that to the end user? Smart charging will become increasingly important to manage growing EV loads, particularly in the 2023 timeframe when the parking space mandate would go into effect. Indeed, there could be opportunities for building owners to aggregate PEVs for grid services.

Combined with ongoing efforts in Europe to install more public infrastructure and fast charging networks, this directive should make Europe a surging market for EV charging, potentially outpacing North America beyond 2017.

 

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