Navigant Research Blog

Beyond Ultra-Fast Charging: Part 2

— June 1, 2017

The potential of automated drive has produced many a report theorizing about the likely impacts of automated drive technologies on the transportation system, the built environment, and more generally, society. Navigant Research is no stranger here; however, our tack is far more conservative than some others. The basic theory most of these reports (including ours) supports is that automation adopted primarily in passenger mobility schemes will drastically reduce transportation costs and increase passenger convenience. This leads to more transportation overall with higher dependency on automated light duty vehicles, but also less use (proportionally) of alternative transportation modes (bike, bus, rail, air, etc.).

The above means that automated vehicles are likely to be highly utilized and therefore automated mobility fleet managers are likely to desire durable vehicles with limited downtime for maintenance or refueling. To be competitive for automated services, battery EVs (BEVs) would have to rely on ultra-fast charging, which would make batteries less durable. Otherwise, they would require more advanced battery systems or significant increases in battery size (to bring charge rate [kW] and battery capacity [kWh] closer to a 1:1 ratio), either of which makes them more expensive.

More Pollution Regulations Are in the Future

At the same time, cities (where automated mobility services are likely to emerge) will probably adopt regulations limiting polluting vehicles within certain geographic boundaries. If they don’t, the ultimate impact of automation is likely more fossil fuel consumption. In such an environment, plug-in hybrids (like those employed by Waymo) may have the upper hand. Alternatively, this could be an opportunity for battery swapping.

Battery swapping notably has a poor record, but many of the barriers to battery swapping as a solution for the passenger BEV market don’t apply with automated mobility fleets. Battery swapping in part failed as a global strategy because it depended on OEMs agreeing on a common battery pack. In a managed fleet with vehicles from a single OEM, this is no longer a problem.

Is Battery Swapping the Answer?

Battery swapping solves reliability concerns, as the charge rate can be managed to optimize life and the battery can be enrolled in revenue generating grid services when off the vehicle. This would also make transportation electrification’s impact on the grid gentler. Additionally, swapping is a faster solution than the fastest wired or wireless charging solution and (as Tesla showcased) faster than liquid or gaseous refueling.

The last advantage is that in fully automated services, range is not as big of an issue as it is when there is a human driver. Theoretically, battery swap packs could be built smaller and added to the vehicle in increments to satisfy certain uses. As an example, instead of having two or more 200-mile battery packs per vehicle, managers could instead employ three or more 100-mile battery packs, which would further reduce overall system costs and risk.

It will be some time before such a solution might be employed. It is a later consideration in the evolution of mobility automation business models. The priority considerations are the development of the automated drive technology itself and the regulations to permit driverless vehicles. It is likely that initial services will leverage conventional refueling and/or recharging infrastructure until reliable business models have been produced. After that development, then competition within mobility services will drive such innovations.

 

Beyond Ultra-Fast Charging: Part 1

— May 31, 2017

Now that the continued decline in battery prices can make battery EVs (BEVs) cheaper to drive than the competition, ultra-fast charging is viewed as the final link to making them mainstream. Given that, the automotive industry is focusing on approximating the time it takes to gas up by rolling out ultra-fast charge networks in North America and Europe.

Tesla’s success with the supercharger network supports the above assumption, but there may be flaws in the ultra-fast charging concept relating to the basics of batteries. The primary component being that charging at a power capacity (measured in kilowatts) higher than the BEV’s battery energy capacity (measured in kilowatt-hours) stresses the battery, reducing its useful capacity over time. Most of the upcoming vehicles capable of accepting an ultra-fast charge will likely have battery capacities between 30 kWh and 80 kWh, whereas upcoming ultra-fast chargers can provide 120 kW-320 kW or more, 4-10 times the battery’s energy capacity.

Reducing Side Effects of Ultra-Fast Charging

Automakers and charging networks can develop systems to diminish the cumulative effects that ultra-fast charging has on batteries (as recently evidenced by Tesla). These solutions are effectively reducing the charging rate under certain technical and ambient environment conditions, limiting the value-add of the fast charging. Such limitations haven’t yet been seriously evidenced because the fastest charging today is only operating at around 2 times the battery capacity. Most charging generally occurs at sub-1X rates.

Only when BEV owners primarily rely on fast charging over slow charging will these limitations become more common and more concerning to potential customers. This is more and more likely given the increasing range of BEVs alongside the development of the ultra-fast charging networks. The advances in BEV and charging technologies mean that BEVs will no longer be limited to single-family homeowners with a reliable charging station in the garage. Indeed, many without residential parking spaces (and therefore charging equipment) may now view the long range BEV an option so long as they can fast charge.

Such ambitions should be tempered through consumer education efforts and/or the development of more modest slow charging options in long-term parking structures. This unfortunately further complicates an already complicated pitch to the mass market. It also threatens consumer consideration of electrification or limits use of the ultra-fast chargers themselves. However, such concern is warranted to avoid negative shifts in consumer perceptions.

Overall, as long as BEVs are primarily purchased by single-family homeowners, this potential problem is probably marginal. However, for the future transportation modes dominated by automated vehicles, it is likely a non-starter.

 

European Turn from Diesel Unlikely Due to Scandals

— April 10, 2017

The revelation of Volkswagen’s (VW’s) diesel emissions cheating is nearing its second anniversary and the automaker is well along in the settlement process. Yet, skepticism about diesel remains strong. Global governments have maintained a steady stream of inquiries into diesel automaker environmental compliance efforts. The latest investigatory announcements are emerging in France and Germany, where diesels accounted for over 50% and 45% of the 2016 market, respectively. Fiat Chrysler Automobiles NV (FCA), VW, Groupe Renault, and the PSA Group are being investigated in France, while Daimler is under investigation in Germany.

Surprisingly, the sustained scrutiny of diesel has not gutted sales in Europe at a high level. A rising vehicle market on the continent lifted all powertrains, including diesel, last year, though diesel’s rise was markedly low compared to other powertrains. The relatively low rise might be partially attributed to ongoing scrutiny, but this would ignore the fact that diesel share has been falling in Europe since its peak in 2011 at over 55%.

In 2011, diesel accounted for around three out of four vehicle sales in Belgium, France, Luxembourg, Ireland, Spain, and Norway. The next year saw the first deployment of plug-in EVs (PEVs); since then, diesel sales have dropped considerably. Diesel share lost over 20 percentage points in France and Belgium, over 15 in Spain, and over 10 in Luxembourg. Ireland remains unchanged, but Norway, which has the highest level of PEV adoption at 24%, is down by over 45 percentage points. Diesel share in the region is down 6 points overall and plug-ins have been the primary beneficiary, growing from effectively nothing in 2011 to around 1.3% in 2016. Hybrids have also made headway, especially in 2016, moving from 1.3% to over 1.5%.

Across the pond, impacts from the diesel cheat are more striking. VW previously led the diesel car market, and its retreat has had a substantial impact. That impact was partly offset by the introduction of diesel SUVs and trucks from FCA (now also under investigation by the US Department of Justice, the Securities and Exchange Commission, and several state attorneys general), General Motors (GM), and Jaguar Land Rover (JLR). Overall, diesel sales fell 30% in 2016. Unlike in Europe, plug-ins have had less of an impact in the United States on diesel. This is largely due to the fact that diesel in the United States is competing in larger vehicle classes where plug-ins do not perform well. Instead, PEV gains are mainly affecting the once robust US hybrid market that is primarily dominated by small vehicles, where PEVs have the strongest value propositions.

What this means is that, assuming ongoing US investigations do not uncover new revelations that would take the new class of larger diesel vehicles from FCA, GM, and JLR off the market, diesel is likely to return to its marginal pre-VW-scandal share in the United States with some upward potential. But in Europe, dominated as it is by smaller vehicles, diesel sales may continue to fall as other fuel efficient options compete in those segments.

 

Dwindling Smart Sales Spark All-Electric Shift

— February 17, 2017

I first observed the smart car while traveling through Italy in 2006. Later that same year, the Da Vinci Code debuted back home in the United States, with smart deftly taking a page from Mini Cooper’s marketing playbook (playing starring roles in the likes of The Italian Job and Bourne Identity) by nabbing prime advertising space as Sophie Neveu and Robert Langdon’s escape vehicle. At the time, I considered the idea of this car revolutionary, in that it provided the space savings of a motorcycle partnered with the safety and comfort of a car.

Though the car didn’t seem right for me at the time, I figured if I was in a city my perspective might differ, and I wondered why that car wasn’t yet available in the United States. Two years later, in 2008, smart arrived and netted nearly 25,000 sales. That year was the company’s best in the United States, its second being the year immediately following. However, since 2009, sales have bobbed laggardly between 5,000 and 11,000. In 2013, smart joined the modern plug-in vehicle movement with the electric drive (ED) version of its offering. The ED has done relatively well, accounting for 17% of the brand’s sales since its introduction in the United States. Fast forward to the near future and the ED will likely account for 100% of the brand’s US sales, as Daimler is discontinuing the gas powered version of the vehicle in North America for the 2018 model year.

Gas Power Not So Smart Anymore

For the brand, sales are likely to retreat further. A refresh of the fortwo ED along with the expected range increase will probably encourage greater sales of the ED in 2017 than were witnessed in 2016. But the range increase isn’t substantial next to 2017’s new competitors like the Chevrolet Bolt, the Tesla Model 3, and more. Therefore, sales are unlikely to recapture smart’s small 5,000-11,000 sliver of the market unless a serious range increase or dramatic price cut is on the way for 2018.

Though the move will result in initial losses for the brand, it will likely benefit the parent. To start, sales of the gas-powered smart have receded, with a compound annual growth rate of -14% since 2012. The current low oil price environment isn’t going to change the trajectory here. Add to that the ever increasing range and affordability of plug-in powertrains in the microcar segment, and it was only a matter of time before the gas version could not find any willing buyers.

Additionally, canceling the gas-powered version while there is still some demand will increase the effect the ED has on the Daimler’s Corporate Average Fuel Economy and Zero Emissions Vehicle program compliance efforts. The regulations, designed as both stick and carrot, penalize automakers for noncompliance and reward others for overcompliance. Up to 2025, both programs’ sticks will become increasingly sharp, making the share of plug-ins relative to other powertrains a vital metric by which automakers maintain viability through their highly profitable, less fuel efficient offerings.

 

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