Navigant Research Blog

A Robust Analytics Infrastructure Is Vital for Future EV Business Models

— May 1, 2018

The electricity industry is waking up to the prospect of large-scale deployments of EVs. And well it might, as all signs point to a future where EVs are increasingly common. Annual demand from EVs for electricity could exceed 400 TWh by 2035, creating the largest opportunity for new load growth in a generation. However, EVs will also pose significant problems to network utilities, particularly in areas where grids are already constrained. The future EV market presents many opportunities and sizeable threats to the utilities industry.

EVs Present Unique Opportunities and Challenges

EV integration is a complex and unique issue. When EVs charge, they are loads; when idle, they are storage; and when dispatching back into a network, they are sources of supply. They also move around, so utilities will never have full visibility of their location.

EV fleets and buses present different opportunities than individually owned cars. There is a complex and competitive ecosystem of stakeholders, some of which will be in direct competition with incumbent energy suppliers—there is little room for monopoly market thinking, even for vertically integrated utilities. The customer base is also diverse, with different needs and requirements. Complexity is only one issue. The future pace of change is arguably a tougher nut to crack. Utilities must prepare themselves for a dynamic and open future where change and uncertainty are the only constants.

Treat EVs Like Any Other IoT Deployment

A new Navigant white paper, Charging Ahead with EV Analytics, assesses the future EV market and details the many opportunities and sizeable threats they create. Its primary focus is on the data and analytics requirements of an EV infrastructure. Most if not all EV opportunities rely heavily on data and analytics. Likewise, analytics will also help mitigate many risks. While many utilities are excited about the opportunities presented by EVs, few have made significant investments in the data and analytics architecture that will support the diverse and rapidly changing processes that future EV business models demand.

One of the paper’s central messages is that the electrification of transport is in practice a digitization project. EVs and charging infrastructure are essentially IoT deployments. Consequently, EV business models rely heavily on IoT devices and an associated data and analytics platform. While a handful of utilities are actively planning their future IT infrastructure to support EV integration, many more recognize the EV opportunity but have not yet built solid strategies.

Now Is the Best Time to Start EV Planning

The business process requirements of EVs will change over the coming decades. It is a futile exercise to design and build an entire infrastructure around projected future requirements. Instead, a flexible approach to architecture will enable a utility to adapt to these changing requirements. A detailed roadmap that identifies specific inflection points in EV adoption will act as a signal for when to add or remove functionality.

2025 is often cited as the year EVs step into the mainstream. While this may seem a long way off, it is far better to plan now when EVs are not an operational problem than when they are. There is good reason to act now. There are strong arguments for EV adoption to follow an S curve. The further into the future, the faster the rate of adoption. Planning for EVs while there is time to spare can help avoid having to rush critical decisions once time is scarce.

 

Premium Auto Brands Lead the Way to 200+ Mile BEVs

— February 22, 2018

In the race to create long-range battery EVs (BEVs), premium brands are taking the lead. Navigant Research projects over 6 million BEV sales globally by 2026. Because range anxiety is a leading deterrent of consumers looking to purchase an EV, increasing the range of BEVs will be crucial to expanding the market.

Over the past few years, several premium brands have announced they would bring to market BEVs with capabilities of at least 200 miles, with many pushing that number to over 300 miles of range. Apart from Tesla’s Model S and Model X, no premium automaker has released these long-range BEVs. However, 2018 is anticipated to be the year we start to see these new models come to market.

Premium Automaker Electric Promises

The following timeline showcases the increase in announced/expected premium brand long-range BEVs:

Announced Premium Brand 200 + Mile Range BEVs

(Source: Navigant Research)

Audi and Jaguar will likely continue Tesla’s long-range trend in 2018 with the crossover style Jaguar i-Pace and Audi’s SUV e-tron Quattro. The i-Pace is expected to have a range of 220 miles, while the e-tron Quattro will have around 300 miles of range. Audi is also expected to release another all-electric SUV by 2019, along with Aston Martin’s RapidE, Mercedes Benz’s Concept EQ, Porsche’s Mission E, and the Fisker EMotion. Looking to 2020 and beyond, BMW, Tesla, Infinti, and Volvo are all anticipated to release long-range BEVs—in Tesla’s case, the revamped Roadster with 600 miles of range (and a hefty price tag).

Premium brand commitments to electrification comes in more than just the form of single vehicle announcements. Volvo, Aston Martin, and Jaguar Land Rover have announced plans to go all electric or hybrid over the next decade, with Volvo promising this lineup by 2019. In 2017, Porsche installed its first 350 kW charging station at its Berlin office. The ultrafast charger is being developed for the Mission E to allow customers to recharge quickly.

Affordable, Long-Range Vehicles Not Far Behind

More details of these long-range vehicles will be unveiled closer to the release dates, but it is already clear that premium automakers are committing to an electric future. As with many consumer markets, premium and luxury automakers are often early adopters of trends and technologies that are later picked up by economy brands.

While these premium brand long-range BEVs will have a hold of the market for the time being, economy brands like Ford and Hyundai are announcing their own long-range BEVs, which will likely have a substantially lower price tag. Some premium brands, like Tesla, have begun offering less expensive electric models to meet this demand for non-luxury long-range BEVs and to compete in both market segments. If automakers stick to their electric promises and all begin producing EVs, we will continue to reduce emissions from the transportation sector and move toward a greener, cleaner future.

 

The Door to Sharing EV Charging Data Is Now Open

— January 30, 2018

Industry players agree that understanding the interaction between plug-in EVs (PEVs) and the grid is critical to growing the PEV market. Utilities are interested in the analysis of charging behaviors and their impact on the daily load cycles so that they can plan for the additional load. In the US, with the exception of government-funded enterprises such as the EV Project, charging data collected by utilities, automakers, and charging service providers (CSPs) has remained proprietary to their organizations.

Electrify America Leading the Way

However, in the foreseeable future, investments by the likely largest funder of EV charging infrastructure in the US will spur greater openness by CSPs on charging data. Electrify America, the Volkswagen (VW) company that was created to comply with the terms of the diesel settlement with the Environmental Protection Agency, has been selecting CSPs that support open standards to enable the sharing of charging data.

On January 23, Electrify America, which will spend $2 billion over 10 years on charging infrastructure, awarded a contract to Greenlots to be the operating platform for an upcoming network of high power DC fast chargers. According to the press release, “Greenlots’ technology will enable Electrify America to effectively build, operate, and manage its high power charging network by providing real-time charger health status, utilization data, dynamic pricing capabilities, and predictive analytics.” In addition, Greenlots’ CEO Brett Hauser said that the company’s SKY platform will roll up data from all of the charging hardware, regardless of the vendor.

Installing Chargers

In December 2017, Electrify America announced that it would install 2,800 Level 2 chargers in workplace and residential locations in 17 of the biggest metropolitan areas across the US. For the project, which also includes multifamily and designated low income and disadvantaged community areas, Electrify America selected Greenlots, EV Connect, and SemaConnect as its CSP partners.

Both Greenlots and SemaConnect are participants in the Alliance for Transportation Electrification, a group that launched in November 2017 to promote open standards, help shape state policies and rate structures, and facilitate expansion of EV infrastructure. The open standard that the group supports is the open charge point protocol (OCPP), an international standard with origins in Europe that is gaining momentum in the US. OCPP is supported by Greenlots, EV Connect, and many of the largest global CSPs, as well as BMW.

Observing Results and Driving Adoption

By selecting vendors focused on storing and sharing data in a standard format, Electrify America will be able to see what is happening across its network, regardless of which vendor’s equipment is being used or which CSP is managing the equipment. For example, it will be able to track patterns of how electricity consumption from PEVs is influenced by weather, how the hourly load impact differs by region, or how charger utilization in different geographies can inform future investments in charging infrastructure.

While not all EV CSPs have embraced the notion of standardizing and sharing data, the size of Electrify America’s investment will likely encourage greater adoption of this notion from charging companies looking to get in on the action of VW’s substantial investments. The next formidable hurdle is for automotive manufacturers to also embrace open charging data. It is an encouraging step that Britta Gross of GM is among the participants in the Alliance for Transportation Electrification. Industry observers will be watching to see who joins this movement next.

 

Even If It Doesn’t Survive, the Tesla Vision Has Already Won

— December 14, 2017

Whatever the ultimate fate of Tesla as a business, the vision of its founders seems assured to come to fruition. They set out nearly 15 years ago to build an electric sports car that would show a skeptical public that EVs aren’t the car form of broccoli (good for you, but not much fun). The envisioned electric car would be a gateway to electrifying all transportation.

With every new job at an EV maker, we are moving closer to that goal. Sales of the Chevrolet Bolt EV climb steadily with each month, Nissan is about to launch the second-generation LEAF, and more options will arrive in the coming months. Perhaps most importantly, the future combination of automated driving and electrification will provide great synergy in making transportation clean and safe.

The Bolt and LEAF are examples of automakers taking inspiration from Tesla and mixing traditional expertise in mass manufacturing and support. These automakers and most others are now aggressively developing and planning deployment of automated EVs like the Chevy Bolts being tested in San Francisco, California by GM unit Cruise Automation.

Can Tesla Stay Afloat?

Sadly, Tesla’s own quarterly financial statements don’t bode well for the brand that kick-started this next era of mobility. The company has shown an inability to execute on the core task of profitably building consistently reliable, high quality products to customers. The 3Q 2017 report showed the company was spending more than $2,000 per year per vehicle providing service while only generating $1,000 in revenue. Given the reduced maintenance an EV should require compared to an ICE, this is a clear indicator of Tesla’s spending on honoring warranties. As the in-service vehicle fleet grows, this problem will grow rapidly unless the company can come to grips with the basics of mass manufacturing.

As Tesla attempts to ramp up production of the Model 3, it must first address these challenges—or the reputation the brand has built around Elon Musk’s cult of personality will be squandered.

The Quandary of Some Typical Tesla Customers

Take, for example, a Northern California couple that can afford to buy a Tesla, including the Model X they own. He loves technology and is the definitive early adopter, often buying the latest life-enhancing gadgets. His CEO wife is far more pragmatic, though she also appreciates what technology can do to make life easier and better. She wants to replace her current premium German performance car with an EV when the lease is up in the next month. On the surface, another Tesla would be the obvious choice, but they’ve had numerous issues with it that have taken multiple service trips to resolve. Some issues, like an Autopilot system that has a predilection for randomly shooting toward guardrails, remain unresolved.

They looked at the 2018 LEAF this week, and she is seriously considering it. While it lacks the performance of the Tesla, she expects it to be far more reliable, coming from a company that knows how to bend and weld steel. Despite the problems with the Tesla, her husband wants to stick with the brand to support the vision. Fortunately, he’s in a financial position where he can do that. Most of the car buying public can’t afford to be so tolerant.

If Musk wants Tesla to remain a viable business after he rockets off to Mars, he needs to start listening to frustrated Tesla owners like this pragmatic CEO rather than reveling in his adoring fans.

 

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