Navigant Research Blog

New Business Models and OEM Products Grow the Electric Power Two-Wheeler Market

— November 30, 2015

The electric power two-wheel vehicle (e-PTW) industry is expected to achieve stable and continuous growth during the coming years as new business models and several large OEMs permeate the market. According to Navigant Research, global annual sales of electric motorcycles (e-motorcycles) are expected to grow from 1.2 million vehicles in 2015 to 1.5 million in 2024, while sales of electric scooters (e-scooters) are expected to grow from 4.1 million to over 4.4 million.

Gogoro Brings Battery Swapping to Europe

In the e-scooter market, battery swapping startup Gogoro is transforming urban mobility by offering its e-scooter customers a battery swapping network, removing the range anxiety common to most types of electric vehicles (EVs). Gogoro has sold over 2,000 of its e-scooters over the past few months in Taiwan (using an infrastructure base of 90 GoStation battery swap stations), and the company has raised an additional $130 million in Series B funding from Panasonic (its battery supplier) and the National Development Fund of Taiwan.

Forbes reported that Gogoro will be expanding its program (which is currently only in Taipei, Taiwan) to Amsterdam in early 2016. As a city with narrow streets, a general lack of available parking, and a government looking for ways to reduce the number of four-wheel vehicles on the road, Amsterdam is a great fit for the electrification of two-wheelers. Aligning with Amsterdam’s smart city initiatives, Gogoro is aiming to become more of an energy company rather than solely an e-scooter manufacturer. The company’s GoStations are cloud-connected and are expected to coordinate with electricity grid demand in Amsterdam, charging batteries only at times when energy demand is low.

Gogoro is becoming a disruptive force in the industry, and the company has now raised over $180 million since being founded back in 2011. If the company’s business model can prove successful in Amsterdam, there’s no limit on the number of large European cities that could benefit from congestion-reducing e-PTWs.

OEMs Show New e-PTW models

Large OEMs are unveiling new e-PTW products that will serve an important role by increasing product availability in key markets. The sleeping giant in the industry, Honda Motors, plans to launch an electric scooter in 2017. This will be the first time Honda will sell an e-scooter to consumers, as its previous EV-neo e-scooter was a short-term project (2010-2013) that focused on leasing e-PTWs to fleets. Sales are expected to be concentrated in Japan, China, and other Asian countries where population density is creating congestion and air pollution problems. Meanwhile, BMW Motorrad unveiled a new e-motorcycle concept called the eRR. This high-performance motorbike is a further expansion into e-PTWs since BMW first released the C Evolution Maxi-Scooter back in 2014.


Detroit Versus Silicon Valley

— November 24, 2015

October 29, Keith Naughton of Bloomberg Businessweek described how the established auto industry of Detroit is competing against the fast emerging auto industry of Silicon Valley (SV). Naughton’s article focuses on autonomous vehicle (AV) systems and examines the different R&D strategies of General Motors and Google, which essentially amounts to a comparison between gradual adoption and rapid innovation strategies to automotive technology. Naughton’s AV focus provides interesting insights, but it’s impossible to ignore the relevance of his comparisons beyond just AVs. For instance, Detroit and SV (the latter including Tesla and perhaps Apple) are each pursuing a different approach to that other disruptive force in the auto industry: electricity.

Detroit’s philosophy regarding electricity is similar to its approach to AV systems. The city has been gradually electrifying existing vehicle platforms, and this is evidenced by the fact that most of the plug-in vehicles Detroit has put on the market have been plug-in hybrids, and the fully electrified vehicles are mostly limited to markets where states have zero emissions vehicle mandates. Alternatively, the SV mantra has been the aggressive pursuit of a fully electrified alternative requiring no customer sacrifices in terms of range or convenience.

Regional Rivalry

The differing approaches have bred a regional rivalry that is demonstrated by occasional quips from industry leaders. Elon Musk often makes headlines with statements that imply Tesla may one day be bigger than GM and that Detroit needs to have a more aggressive electrification strategy. In response, Detroit calls out SV for naivete—when rumors first started to leak that Apple may be developing an electric vehicle, former GM executives Bob Lutz and Dan Akerson both publicly cautioned Apple on the struggles of entering the car business. Additionally, Lutz has continually critiqued Tesla’s business and sales model, assessing a high probability of Tesla’s ultimate downfall despite high praise of the product.

To be fair, these critiques have a strong foundation in reality. Detroit has been historically slow to adopt and produce fuel efficient or alternative fuel vehicles, creating opportunities for other global players like Toyota and Honda to grab significant chunks of the market through hybrids. Arguably, Detroit is likely to lose market share on fully electrified vehicles to other more aggressive global automakers (Nissan, BMW, BYD, and now Tesla).

Meanwhile, SV’s aggressive approach has led to challenges regarding market regulations. Tesla’s struggles with state dealership laws are well known, but Tesla has also run into trouble on software upgrades and referral programs. Additionally, though Tesla’s stock quote is impressive, its record with profits and deadlines is not. The end Lutz has assessed for Tesla has also been well played out by other California automaker startups.

Regardless of the different approaches these two regions characterize, the future U.S. auto industry is not going to exist without Detroit or SV. Detroit needs SV’s tech innovations and probably a little more SV chutzpah when it comes to investing in a new vehicle technology, and SV needs Detroit’s extensive supply chain, manufacturing expertise, and 100 plus years of market knowledge. Notably, however, SV does not need Detroit’s internal combustion engine.


Battery Makers Preparing for Post-Lithium Ion Era

— November 6, 2015

Lithium ion (Li-ion) batteries, we hardly knew ye.

Today’s mass-marketed light duty plug-in electric vehicles (PEVs) uniformly rely on batteries with Li-ion chemistries, but advancing the technology will hit an upper limit of performance by the end of the decade. Battery makers that spoke at the late October eCarTec conference in Munich stated that the energy density can be doubled while cutting the cell cost of PEV batteries in half by 2020, but that beyond that, battery makers will need to shift to other technologies.

Energy storage and automotive power electronics company Robert Bosch and automaker Renault both presented similar timelines for the beginning of the phaseout of Li-ion batteries. Li-ion cell prices will come down thanks to efficiencies in volume manufacturing at plants run by companies such as Tesla and LG Chem and reductions in the amounts of precious metals used. According to Navigant Research’s report Advanced Energy Storage for Automotive ApplicationsLi-ion pack prices (which include the battery management systems, cooling systems, electronic controls, and wiring) will continue to decline by 5%-6% annually through the remainder of the decade.

Once manufacturing and raw material costs have been optimized, other technologies such as lithium-air, lithium sulfur, and solid-state batteries will begin to take over as the technologies that will offer increased performance in PEVs, said Dr. Holger Fink, senior vice president of Engineering at Robert Bosch Battery Systems GmbH. Fink said that solid state battery technology is the most likely of the alternative battery technologies to be commercialized in the short term, with lithium sulfur unlikely to be commercially viable until closer to 2030.

Bosch is developing solid state battery technology based on the intellectual property it acquired when the company purchased startup battery company SEEO in September 2015. Fink said the solid-state batteries that Bosch are developing feature lithium metal anodes that have increased storage capacity and replaces a flammable liquid electrolyte with a safer dry polymer. One challenge for solid state batteries is the high minimal operating temperature of at least 80°C, which Fink said the company is focusing on in its research.

According to Navigant Research, and as seen in the chart below, by 2020, the global market for Li-ion batteries in automotive applications will reach $25 billion.

 Total Light Duty Consumer Vehicle Li-ion Battery Revenue by Powertrain Type, World Markets: 2015-2024

John Li-Ion Blog Chart(Source: Navigant Research)

Masato Origuchi, chief battery engineer for EV/HEV at Renault and another speaker at eCarTec, echoed Fink’s comments about the 5-year timeframe for Li-ion battery performance gains peaking. He said that improvements in energy density in Li-ion batteries will be able to provide 200 miles of driving range in battery electric vehicles (BEVs) such as the Nissan LEAF (a Renault-Nissan Alliance partner) by 2020. Origuchi said that further improvements in energy density via other technologies could extend the range of a BEV to 600 km (372 miles) or more.

Disruptive innovations in energy storage and many other automotive technologies often takes years longer than initially expected to gain market share over the incumbents due to higher prices and the cautious nature of automakers. As a result, the market share for Li-ion batteries can be expected to erode slowly, even after better performing technologies are first commercialized.


New EV Chargers Balance Solar, Home Power Demand

— October 30, 2015

Homeowners looking to minimize their carbon footprint and reduce their energy costs often buy plug-in electric vehicles (PEVs) in tandem with solar panels. In most instances, any excess solar power produced is sent to the grid at a fixed price per kilowatt-hour or subtracted from the households’s overall power demand via net metering.

However, new residential chargers from electric vehicle (EV) charging equipment manufacturers Etrel and Circontrol have advanced load monitoring features that enable EV charging to automatically be timed with residential solar power production. Both companies exhibited their products at the recent eCarTec conference in Munich, Germany, which featured automotive companies, Tier 1 and Tier 2 suppliers, and EV charging hardware and software companies from across the globe.

Etrel, which hails from Slovenia, continues to impress me with its ability to stay at the forefront of EV charging management technology. When I first met with them nearly 2 years ago, the company had the most sophisticated backend EV software platform. Etrel’s residential Smartcharger is paired with a load monitoring device that senses the power draw from the rest of the home as well as any power being produced by a home solar array. Homeowners can program the Smartcharger to optimize charging for when solar power is being generated, or allow the power to be sold back to the grid if that would have greater economic benefit. The sensor detects the overall household power demand and varies the vehicle charging rate to ensure that the maximum amount of household power draw is never reached.

This feature seems obvious, yet it is only now arriving in residential EV chargers. Etrel’s Rok Kralj said the charger/power monitoring product will be available in 2016. He also said the company has sold several hundred units to date, split between residential and commercial chargers.

Similarly, Circontrol of Barcelona, Spain showcased its eHome residential charger, which also dynamically varies the vehicle charging rate depending on what is going on in the home. The company’s BeOn sensor, due out in January, is coupled with the eHome charger and monitors home energy consumption to make sure that the EV charging rate doesn’t add a load that would surpass the recommended safe level. And as with Etrel’s product, the sensor detects when solar power is being produced and will time EV charging based on customer’s programmed preferences.

Both Circontrol and Etrel include mobile and web applications that let consumers see how much power is being used and generated and also allow them to schedule EV charging. Circontrol offers both commercial alternating current and fast direct current chargers.

Some utilities are similarly experimenting with timing EV charging power output to the level of solar being produced in the area so that customers can similarly boast about driving on 100% renewable power. While this is a premium feature today, power producers can prevent excess wind or solar production from being wasted by aggregating EV charging loads.

Despite operating in a smaller EV market than North America, European EV charging companies including Circontrol and Etrel continue to innovate in the charging market through intelligent hardware and software platforms. It would benefit EV owners if global competitors kept pace with these load balancing features.


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