Navigant Research Blog

Preparations Continue for Tesla Model 3 Launch

— November 21, 2016

Electric Vehicle 2For the hundreds of thousands who put down a deposit on the upcoming Tesla Model 3, the future can’t come soon enough. The much anticipated EV, which is scheduled to start shipping sometime between the end of 2017 and the beginning of 2018, is one of several vehicles due out in the next 18 months that are expected to push plug-in EVs (PEVs) into the mainstream.

A new book, Getting Ready for Model 3: A Guide for Future Tesla Model 3 Owners by Roger Pressman, details many of the expected technical details about the car’s performance as well as considerations for keeping it charged. For those who like the minutiae of how cars function, the chapters on performance and autonomous vehicles give digestible overviews of how EV and assisted driving technologies work in general, as well as Tesla’s likely implementation.

One aspect of PEVs that is often overlooked or misunderstood is the efficiency of electric motors in providing more torque at low to medium RPMs than conventional vehicles. Pressman does well in explaining the details about this feature, which alone should have prospective Model 3 owners excited. Tesla’s prior vehicles are admired for their speedy and nimble driving, and bringing that capability to the Model 3 helps explain the long reservation list.

Autonomous Driving

Tesla’s Autopilot feature has gained praise for its role in pushing the edges of driver assistance (as well as a fair amount of notoriety), and Pressman provides an overview of the levels of autonomy and underlying technologies. The Model 3 will include the hardware and software for Tesla’s self-driving technology, though customers of Tesla’s least expensive vehicle to date will have to pay to unlock the feature. A recent survey of Tesla owners indicates that while the vast majority understand the limits of the technology, the minority who believe Tesla cars can fully drive themselves can have serious consequences. With the Model 3 likely to outsell all previous Tesla cars combined, barring an expanded education push, the number of misinformed drivers putting too much faith in Autopilot could skyrocket.

For those who haven’t owned a PEV before, how to keep the 215-mile-range, all-electric car sufficiently charged is worth reading up on. As my colleague Sam Abuelsamid correctly anticipated, Model 3 owners (and all Tesla buyers who purchase a vehicle after January 1, 2017) won’t have unlimited use of the Supercharger network, but will be capped at around 400 kWh worth of free charging, with a pay-as-you-go model kicking in after that.

To supplement the Supercharger network, Tesla has been busy working with partners to build out its Destination Charging network. As pictured below, this network provides slightly above Level 2 (up to 16 kW) charging at hotels, parking garages, restaurants, and other locations across the United States.

Tesla’s Destination Charging Network


Source: Tesla Motors

Tesla will also be introducing a new type of glass in the Model 3 as the company continues to expand its research and development efforts to leverage the synergies with recently acquired SolarCity. There is justified enthusiasm surrounding the Model 3 and other more affordable PEVs coming out in the next 18 months. It will be interesting to see to what degree that excitement turns into growing sales.


Costs of Fossil Fuel Use on Society Much Higher Than Expected

— November 11, 2016

Electric Vehicle 2According to a new report from the American Lung Association (ALA), if the climate and health costs of gasoline-powered vehicles were accounted for, the average 16-gallon gasoline tank fill-up would cost an additional $18.42 for consumers (that’s on top of the average price of $35.68, raising the total price to around $54). The ALA estimates that these health expenses account for $11.82 per tank and $6.55 for climate costs. Because these costs are not being accounted for, the public is essentially subsidizing the use of gasoline-powered vehicles through higher healthcare costs and an increased need for climate adaptation efforts.

Carbon Tax and Transport Technology Solutions

While the possibility of a carbon tax being instituted in the United States is highly unlikely in the near term, several other countries around the world have begun to mandate these programs in order to assign a dollar value cost to fossil fuel use that affects public health. Canada announced last month that a national carbon price will be implemented in 2018. The Canadian government has proposed a minimum price of C$10 ($7.50) per ton of carbon pollution in 2018, rising by C$10 each year to a maximum of C$50 ($37) per ton by 2022.

Advanced transportation technologies also offer an opportunity to reduce the health and climate impacts of personal vehicles. While EV adoption continues to be a modest portion of overall vehicle sales, there are some encouraging signs for growth when considering studies on consumer behavior and the enormous interest. According to PlugInsights Research, once drivers have bought or leased an EV, 97% do not go back to gasoline-powered vehicles.

The survey indicates that once drivers have experienced the benefits of EVs, such as reduced operation and maintenance costs, they are extremely unlikely to return to combustion engines. There are also currently over 400,000 reservations for the Tesla Model 3, which looks to be the first mass-market EV designed to drastically increase the number of EV adopters. As suggested by the survey, high Model 3 sales could play a significant role in getting more consumers engaged and committed to the electric driving experience. Additionally, new transport solutions such as Hyperloop One’s high-speed tubes could drastically reduce the need for personal vehicles and help cut down on the health and climate impacts of cars.


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.


Audi Motorsport Marks the End of an Era as It Shifts to Formula E

— October 26, 2016

Car driving fastOver more than 3 decades, few companies have demonstrated more consistently how to “Win on Sunday, Sell on Monday” than Audi. Since at least the 1980s, Audi has used its involvement in motorsports to demonstrate the efficacy of its latest technologies. In the process, the Volkswagen (VW)-owned premium brand has risen from a niche player to being considered on par with its chief competitors at Mercedes-Benz and BMW. However, as a direct result of the VW diesel emissions scandal, the Audi racing program is making its biggest pivot in nearly 20 years.

The modern era of Audi motorsports began in the early-1980s with the introduction of Audi’s Quattro all-wheel drive system. Drivers such as Michel Mouton, Walter Rohrl, and many others demonstrated that, from that time on, all-wheel drive would be essential in order to win in the World Rally Championship. But since most drivers don’t spend their days driving through forests at high speed, Quattro was then proven on tarmac in series like Trans Am.

Since 1999, Audi has been developing its latest powertrain technologies in endurance racing, including 13 overall victories in 18 years at the 24 Hours of Le Mans. The various evolutions of the R8 that competed from 1999 to 2005 demonstrated the efficiency of gasoline turbocharged direct injected (GTDI) engines that Audi brands in its production models as TSI. While most casual observers consider racing to be all about speed, efficiency can be just as important—especially in 24-hour endurance races like Le Mans. The more time a car spends in the pits getting refueled, the less time it is racking up miles on the circuit. Increasing the number of laps between stops from 10 to 11 and eventually to 14 or 15 laps makes a huge difference in the ability to win.

Performance and Efficiency

As a premium brand, Audi customers are often as interested in performance as they are in efficiency. In 2006, the company set out to prove that you don’t have to sacrifice one for the other. The new R10 and its successors, the R15 and R18, have been powered with a series of TDI turbodiesel engines that quickly came to dominate everywhere they ran—including the first ever victory by a diesel at Le Mans. Thanks to the particulate filters used on the R10, it was both smoke free and quieter than most gasoline racing engines.

In 2012, Audi launched the final series of its endurance racer with the R18 e-tron that paired a smaller TDI V6 with an electro-mechanical flywheel hybrid drive system. Like its predecessors that became the first Le Mans winners with GTDI and diesel engines, the R18 was the first hybrid to win Le Mans.

Following the September 2015 revelation that the VW Group (including the VW, Audi, and Porsche brands) had been cheating on diesel exhaust emissions on millions of vehicles around the world, the promotion of diesel was no longer viable. In the past year, the VW Group has made a major commitment to electrification, announcing that it will introduce 30 new plug-in models in the next 10 years. It is unlikely that any VW-owned brand will ever sell another diesel-powered light duty vehicle in the United States.

Following the final two races of the 2016 World Endurance Championship, the Audi effort will end entirely. It is now all about electrification, so from 2017 onward, Audi will focus instead on the battery-powered Formula E championship with a full, factory-backed effort launching in 2018. As the technology improves, electric racing will expand; by the 2020s, it’s likely that we will see full EVs at Le Mans and possibly the return of Audi.


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