Navigant Research Blog

Report Card: Pike Research’s 2012 EV Predictions

— January 9, 2013

Source: WikimediaThe end of the year is not only a good time to look ahead with a new set of electric vehicle predictions; it has also become our tradition to look back at our projections from the previous year.   Here’s a quick summary of how our predictions from a year ago panned out.

The global availability and increasing sales of EVs will put an end to the “are they for real?” speculation.  B.

While plug-in electric vehicle (PEV) sales for 2012 will be less than half of the 257,000 we forecast in 2011, a market of 120,000 PEVs this year verifies that they are here to stay.  Sales in North America weren’t off by that much, but Europe (thanks to austerity measures and the generally crappy economic environment) and Asia Pacific (lack of consumer demand in China) both fell far short.  While some automakers (Toyota, Honda) continue to hedge their bets, Nissan, Ford, Audi, BMW, and GM are all expanding production of PEVs.

Car sharing services will expand the market for EVs and hybrids.  A+

In Paris, the Autolib project has been a great success story using PEVs, Daimler is expanding its Car2Go carshare cities, BMW brought PEV carsharing to San Francisco, and so on.

Battery production will surge ahead of vehicle production.  A

The aforementioned lagging PEV sales resulted in excess inventories, falling prices, and struggling battery makers such as A123 Systems heading for the (bankruptcy) exit.

Road tax legislation in the United States that will require PEV owner contributions will fail. INCOMPLETE. 

Legislators were too busy with other things, such as keeping their state and federal governments from insolvency, to bother with proposing (let alone passing) any mileage tax legislation.  Fiscal crises in many areas will eventually make this a polarizing issue.

The Asia Pacific region will become the early leader in vehicle-to-grid (V2G) systems.  A

Japan continues to be the test bed for many vehicle-to-grid and vehicle-to-home projects, thanks in part to broad automaker support, and Hangzhou China is beginning a test of 20,000 EVs for V2G.   Hurricane Sandy’s impact on distributing gasoline was worse than the impact on the power grid in many towns, which has more companies in the United States  thinking about the benefits of EVs.

PEV prices will continue to turn off many consumers.  A

The $10,000 or more price premium for PEVs continues to frustrate consumers who might otherwise be interested in buying a PEV.  Ford’s entries into the market hasn’t helped, and both Tesla and Nissan are raising prices on their vehicles.

Third-party EV charging companies will dominate public charging sales.  D

After piling up deals (often involving DOE money) in 2011, EV charging service company 350Green  got very quiet in early 2012, and then agreed to be acquired by competitor CarCharging Group.  CarCharging, which recently snagged former presidential hopeful and New Mexico Governor Bill Richardson as Chairman of its Board of Directors, and fellow competitor EV Connect continue to make inroads with hotels and property management companies.  However, this business model requires rapid subscriber growth and is running out of steam faster than anticipated.

Germany, South Korea, and Japan will see the most progress toward the commercialization of FCVs and rollout of hydrogen infrastructure in 2012.  B

Daimler, Hyundai and Toyota, which continue to push for fuel cell vehicle commercialization, recently toured Germany and other European countries to tout the technology’s viability.  Germany’s Clean Energy Partnership continues to gain momentum.  The Japanese government continues to push for hydrogen fueling incentives and is streamlining the process of building stations.  The fuel cell sector is also heating up in the United States, as Air Products had a busy year building out hydrogen infrastructure.

Employers will begin to purchase EV chargers in large numbers.  C

With a few notable exceptions (Facebook, Google, Microsoft) employers are waiting for the penetration of PEVs to increase before committing to large purchases of EV charging stations.  It will happen, but perhaps not until 2014.

EVs will begin to function as home appliances.  D 

The integration of EV charging equipment into the home is happening more slowly than anticipated.  While communication standards, such as ZigBee and HomePlug,  for connecting EVSE to smart meters or home energy management systems are in place, EVSE manufacturers have yet to enable their products to work as smart appliances.


GE Demos Lower-Cost Fuel Cell Bus

— January 7, 2013

GE Global Research recently demonstrated its new battery dominant fuel cell bus, which attempts to address a sticky problem for fuel cell buses: cost.  Fuel cell bus system costs have dropped, but the buses are still expensive (the costs aren’t just in the fuel cell system, but also the hydrogen storage tanks, the hybrid battery and the system controls).  The U.S. Departments of Energy and Transportation jointly set a target bus price of $1 million by 2016, which is still pretty steep.  The long term goal is $600,000, which would put the fuel cell bus in the range of today’s hybrid buses, which have captured significant market share in the United States and are making inroads in Europe.

In my report this year on the global electrified bus market, I forecast that sales of fuel cells buses will experience good growth, with a 55% CAGR from 2012 through 2018.  Nevertheless, they will remain a niche technology, accounting for well under 5 % of global transit bus sales.  Pure battery buses and plug-in hybrids will see higher sales rates, but this is driven almost entirely by the muscle China is putting into battery bus development and deployment.  Indeed, it should be noted that the costs of both batteries and fuel cells must come down to move these technologies beyond niche status in the bus market.  As I have discussed earlier, transit agencies in North America and Europe are already struggling to make do with less, with tax revenues down or austerity measures kicking in.

Which brings us back to GE’s fuel cell bus.  Its development was supported by the U.S. Federal Transit Administration’s fuel cell bus program, which has funded a range of development and demonstration projects to help this technology meet the cost target noted above as well as key performance targets.  GE has integrated the fuel cell with not one battery (as other fuel cell buses do) but two: a lithium ion battery for acceleration and launch assist and GE’s own Durathon battery for load leveling of the fuel cell.  Putting together three different power and energy storage devices seems complicated, but each can then be downsized, reducing its cost, and operated in its preferred mode – steady state in the case of the fuel cell and power in the case of the lithium battery.  GE is gung ho about its Durathon battery for a variety of energy storage applications.  What is less clear is how gung ho the company is to move this bus concept beyond a demonstration.  Their FTA funded project has been underway for 4 years, suggesting that there is no great urgency.  So, though we’re still a long way from commercial viability, the GE program provides an interesting approach to addressing the cost conundrum for both battery and fuel cell buses.



For Energy Storage, A Low Cost, Low Margin Future

— December 26, 2012

On December 12, one day before SolarCity had a successful initial public offering, the Solar Energy Industry Association released its third-quarter installation numbers for the United States.  Through the first 9 months of the year, more than 1.9 gigawatts (GW) of photovoltaic systems were installed.  SEIA expects that, by the end of the year, that number will be above 3 GW.

So are we in the midst of a solar bubble?  Hardly.  Most module and inverter manufacturers are just barely profitable or losing money right now.  Even installation aggregators like SolarCity are having their share of financial struggles, thanks to potential conflicts with the Internal Revenue Service.

The solar industry, nevertheless, is expanding rapidly: Pike Research forecasts that more than 31 GWs of solar power will be installed globally in 2012.  It just isn’t the type of success that many venture capitalists expected when they first invested in the sector.  They wanted Facebooks and Googles.  Instead they got First Solars and Suntechs: big manufacturing giants that didn’t exist a decade ago but that are now scraping by on minuscule margins.

The paradoxical situation of suffering solar market players who are treading water in the midst of a boom market is a good lesson for battery manufacturers to study.  The industry once featured brilliant MIT professors building future manufacturing giants around darling chemistries.  Now, its news cycle is dominated bankruptcy hearings and empty factories.  The last time that happened was when the solar industry appeared to have finally exhausted its ninth life, back in 2005.  What happened next was a decade-long super expansion that saw the solar industry grow by about five orders of magnitude.

Curving Downward

That could still happen with the battery industry.  But it won’t as long as investors and battery company executives still buy into the concept of a miracle technology.  In the energy field, miracles don’t happen very often.  But new energy industries do rise up from seemingly nowhere and disrupt existing players.  It happened with wind power.  It happened with solar power.  It happened with natural gas.  And it can happen in energy storage too.

But it won’t happen with expensive, high-margin battery cells.  For energy storage on the grid and in electric vehicles to reach the inflection point, the batteries themselves must get significantly cheaper.  We expect that to happen: According to an upcoming Pike Research report on automotive batteries, current lithium ion cells have already reached the $400/kWh cost level, and that cost should drop over the next decade.  Additionally, balance-of-system parts for battery packs—from the inverters to the insulation to the busbars—are on a similarly declining price curve.

When the glory days of batteries for grid storage and electric vehicles arrive, it will means that the batteries themselves have gotten cheap enough to allow buyers to afford them.  This also means that the battery manufacturers will endure an inglorious business environment—much like the current lead acid industry players that pull in enormous revenues and very little profit.  In other words, the future of cleantech energy storage companies looks more like East Penn or Exide than Facebook.  But, as the solar industry has taught us, just surviving in the energy industry can, in itself, be a worthwhile endeavor.


In London, EV Charging Loses the Wires

— December 14, 2012

Sometime in the next few weeks the most significant trial to date of wireless EV charging will begin in London.  Mobile software and chipmaker Qualcomm, which acquired New Zealand-based HaloIPT, a developer of wireless EV charging technology, in November, 2011, will be piloting wireless-enabled vehicles from Renault and racecar designer Delta Motorsport (maker of the E4 coupe EV) in various parts of the British capital.  I interviewed Qualcomm’s London-based senior director for strategic marketing, Joe Barrett, for Pike Research’s just-published research brief, “Wireless Charging Systems for Electric Vehicles.”

Building on its long experience in microchips and software for mobile devices, Qualcomm has developed a customized architecture for its wireless EV charging system based on coils, made of a ferrite material that has very low resistance to magnetic fields, arranged in a double-D shape and embedded in a rectangular charging pad.  This technology, Barrett claims, allows for higher degrees of misalignment between transmitter and receiver than other systems under development.

Qualcomm is also pushing a more ambitious business case for the technology.  The standard line of companies developing wireless EV charging is that it will spread because it’s more convenient: drivers would rather simply pull the car over a charging pad, and have it connect automatically, than have to get out and plug in a charge cord.  That makes sense, as far it goes – many people in this fledgling sector compare it to garage door openers, a simple convenience that fuels a sizable global market – Barrett offers a rationale for the technology that goes beyond convenience alone.

“The growth of EVs has been slow because of two things,” Barrett told me.  “No. 1 is always range anxiety.  But the real reason is cost: an EV is a lot more expensive than a comparable conventional vehicle, by $15,000 to $20,000. That’s a barrier. Wireless charging has the potential to address that.”

Briefly, Barrett’s argument is that EV charging must shift from once a day, usually overnight, to many brief top-offs throughout the day.  That will allow automakers to install smaller, and thus cheaper, batteries.  The battery accounts for most of the price premium for an EV over a conventional car.  Seeding big cities, like London, with many wireless EV charging stations (which can be installed more easily and less expensively than conventional, wired charging facilities) would enable that shift.

Seen in this way, wireless EV charging is no longer simply a timesaving device; it’s a potential enabler for the entire EV market.  That’s an intriguing notion, if still some years away.  New forms of infrastructure can spread very rapidly, given sufficient demand – think of how fast WiFi hotspots sprang up – and big cities have a definite interest in enabling new forms of clean transportation, particular in Europe.  Assuming the London trial is successful, Qualcomm plans to have systems available, most likely as a dealer option, by 2015 at the latest.


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