Navigant Research Blog

Don’t Get Too Fired Up Over Tesla Mishaps

— November 14, 2013

Despite being named 2012 Car of the Year by Automobile Magazine and Yahoo! Autos, and chosen as one of Time magazine’s best inventions of 2012, recent media headlines in 2013 haven’t been quite as kind to Tesla Motors’ Model S.  Over the past two months, three fires in Tesla’s vehicles have gained widespread attention.  The fires have significantly contributed to the 20% slide in Tesla’s stock price this month, although the stock is still up more than 300% since the beginning of 2013.

Pushing aside the media hysteria, let’s take a look at the facts.  On average, 17 automobile fires are reported every hour in the United States (194,000 on average every year between 2008 and 2010), killing an average of four people every week.  Of particular importance, mechanical or electrical failures or malfunctions were reported in roughly two-thirds of automobile fires.  As for the Tesla fires, all three involved car crashes; the fires did not begin spontaneously as the result of electrical failures or malfunctions, and in all three incidents the driver walked away without injury.

Technology Comparison

For a deeper comparison of electric and internal combustion engine (ICE) vehicles, it’s useful to analyze the safety of the vehicles more generally.  This can be achieved through analyzing vehicle fires and deaths per billion miles driven.  EVs are approaching 1 billion miles driven.  The Chevrolet Volt (300 million), Nissan LEAF (323 million), and Tesla Model S (100 million) represent the majority of these electric miles driven.

According to the U.S. Federal Highway Administration, roughly 90 highway vehicle fires and 0.15 highway vehicle fire deaths occur in ICE vehicles per billion miles driven.  Conversely, EVs have had a total of four reported fires and zero fatalities for the first near one billion electric miles driven.  Thus, ICE vehicles are 22.5 times more likely to catch on fire than EVs.  It’s also important to keep in mind that EVs are the first models of their kind, essentially experimental vehicles, and have still been able to far surpass the safety record of ICE automobiles.


So why is there so much attention and scrutiny on Tesla? Considering the frequency of car fires, perhaps the fact that Tesla went so long without having any is the main reason for the Model S making headlines.  Consumers may also hold EVs to a higher safety standard than traditional vehicles, due to the absence of gasoline in EVs.  However, not all are expressing distrust or skepticism around the Tesla fires.  Panasonic, manufacturer of battery cells for the Tesla Model S, has recently come to the aid of the automaker, and the company’s chief financial officer expressed confidence in Tesla and the performance of its batteries.  Panasonic ranked as the fourth best overall lithium ion battery manufacturer in the world in Navigant Research’s Leaderboard Report: Lithium Ion Batteries for Electric Vehicles.

Regardless of the recent media concern over EV safety, one issue remains clear : if your car does go up in flames, having an electric battery under the hood is much safer than a tank of gas, any day of the week.


What’s to Be Learned from ECOtality

— September 26, 2013

In a move that had been expected since the U.S. Department of Energy (DOE) suspended funding of the ECOtality-administered EV Project in mid-August, ECOtality filed for bankruptcy early last week.  The company’s collapse will serve as yet another talking point that media outlets will use to question the wisdom of federal government support for clean and renewable energy technologies.  While that debate is important, there is much to be learned from the wealth of information that ECOtality provided through its role in the EV Project to the national and global electric vehicle supply equipment (EVSE) industry.  Primary among these lessons is the currently weak business case for Level 2 alternating current (AC) public charging, an area in which ECOtality was a major player.

ECOtality made and installed charging units for residential and commercial (publicly available, workplace, fleet) applications.  Other companies in the same business have had success by partnering with plug-in electric vehicle (PEV) manufacturers to bundle EVSE costs with PEV purchases.  The first failing of ECOtality was its inability to gain a partnership with a PEV maker in the above manner, thus becoming dependent on the EV Project.

Additionally, ECOtality developed and managed the Blink Network, made up of more than 4,000 charging stations, including 87 direct current (DC) fast charging stations, most of which were in place because of the EV Project.  While other companies are also invested in this space – AeroVironment, NRG, Tesla, ChargePoint, etc. – it is currently not considered a significant revenue-generating enterprise (Tesla gives it away for free!).

As the 2Q 2013 report from the EV Project indicates, publicly accessible AC charge points were connected to a vehicle on an average of 4% of the time they were available.  During the course of the 91-day quarter, this amounted to 20 charging events per Level 2 EVSE, with the average connection being 4.5 hours.  At the Blink membership rate of $1 per hour, this equates to roughly $361 of annual revenue per installed unit.  Assuming an even split of charge events occurring at Blink member rates and guest rates ($2 per hour) and subtracting the cost of electricity taken at the average commercial electricity rate per the United States in July ($0.108 per kWh), any Blink Network site host could expect $430 per unit annually.  That is, of course, without network management fees, maintenance costs, and any profit-sharing agreement with the EVSE manufacturer.

Total installation costs of public Level 2 installations vary widely, as they depend on a number of variables.  Estimates fall between $3,000 and $11,000.  With those costs, it takes 7 to 25 years to pay back the investment.  At the lowest estimated installation cost, chargers need to be used more than twice as often to net a return on investment in 3 years.  Therefore, outside of government programs that pay for the station’s installation, there is not a strong case for property owners to install publicly accessible Level 2 AC EVSE based on direct revenue – especially not with the low number of PEVs on the road in 2013.  Instead, property owners must justify EVSE installations through the benefits of attracting more business to their locations and differentiating from competitors to attract EV drivers.  Additional value-adds are emerging in the form of utilizing the installed EVSE space for advertising.

EVSE manufacturers survive by selling their EVSE to service providers, property owners, and/or PEV drivers.  The commercial market is growing, but in most cases, publicly accessible Level 2 stations are used too rarely to make them financially viable for most property owners.  Installations at workplaces and for fleets make more sense, as the EV Project data shows these stations are used more than twice as often as publicly accessible stations.  While this market is growing, it is still a small market, and ECOtality was just one of many players.  ECOtality’s troubles may be a harbinger of things to come in the larger EVSE industry as it continues to mature.  However, PEV sales are just starting to take off and increasing densities of EVs per public charge point may significantly improve the business case for publicly accessible AC charging infrastructure.

Plug in Electric Vehicle Sales, World Markets: 2013-2020

Untitled (Source: Navigant Research)


Urban Arteries to Get Even More Clogged

— August 14, 2013

For those who would like to spend even more time behind the wheel, the future looks bright.  According to a new study from the International Energy Agency, the increase in urbanization across the globe will further overload roads and increase emissions.

With apologies to Dickens, the “A Tale of Renewed Cities” report finds that road transport kilometers from passenger and freight travel will double between 2010 and 2050.  Despite improvements in vehicle fuel economy, all of that extra driving will increase transportation emissions by 80% during that period, which is not a promising statistic for people who plan on inhaling on a regular basis.


(Source: International Energy Agency)

The IEA’s report includes a plan to mitigate some of the impacts of increased congestion.  The report recommends the following “avoid, shift and improve” policies:

  • “Avoid” policies address transport energy use and emissions by slowing travel growth via city planning and travel demand management.
  • “Shift” policies enable and encourage movements from motorised travel to more energy efficient modes, such as public transit, walking, cycling and freight rail. 
  • “Improve” policies can reduce energy consumption and emissions of all travel modes through the introduction of efficient fuels and vehicles.

The IEA estimates that between now and 2050 implementing these strategies could lower global spending on vehicles, fuels, and transport infrastructure by as much as $70 trillion.

The “shift” policies – moving people out of cars and into buses and onto bikes – are the toughest for lawmakers to implement.  Increasing funding for mass transit is tough politically in the United States and other countries that have restricted federal spending due to reduced revenues.  While bicycles (including electric ones, as documented in Navigant Research’s report, Electric Bicycles) are growing in popularity with consumers, policymakers haven’t been keen historically on providing rebates on two-wheel purchases.

One of the IEA’s underlying  assumptions that contributes to their dire outlook for urban commuters is that the number of vehicles on the road is expected to double between 2010 and 2050. Navigant Research, however, expects that vehicle sales will plateau in some regions, as was highlighted during our recent webinar on Peak Cars.

One of the travel management technologies that will help to relieve congestion is the implementation of intelligent traffic systems, as described in Navigant Research’s 2013 Smart Cities report.  According to the report, by 2020 spending on smart traffic technologies will grow to $5.5 billion globally.

The government of China is considering a more immediate and radical response to rising congestion.  China Car Times has reported that eight Chinese cities are considering implementing car buying limits to slow down the addition of vehicles onto city streets.


High-End German Models Will Power the EV Market

— July 23, 2013

BMW this week announced that the upcoming i3 battery electric vehicle (BEV) will be priced at $41,350 in the United States.  This can be viewed from two perspectives – either as yet another EV priced well above an average sedan or as a competitively priced BMW that happens to not use any gas.

Like other premium brand customers, BMW drivers are accustomed to spending $40,000 or more for a performance-oriented sedan, and the i3 is likely to convert some car shoppers for whom a 100-mile range is not an issue to electric driving, largely because of the nameplate.  (BMW’s 3 series starts at a similar price.)

The i3 is likely to gain traction in China, where BMW is a coveted and thriving brand.  At this price point, the i3 must live up to the fit-and-finish standards of conventional BMW models (Autoweek provides a preview here).  BMW has chosen to reduce the weight of the i3, using a carbon fiber body, which maximizes the driving range while also decreasing the 0-to-60 acceleration time.

As I wrote in our white paper, “Electric Vehicles: 10 Predictions for 2013,” the i3, which is slated for availability in early 2014, is one of the high-end German brands (others include Audi and Mercedes) that will expand demand for EVs.  While the vehicles are fundamentally different, the price tag is similar, which will often be an easier sell than convincing fiscally conservative customers to pay more upfront to bypass the gas pump.

Catching Up Fast

Also due soon from Germany are the Audi A3 e-tron and Mercedes SLS E-Cell and B-Class, which will eventually be available to global customers.  The German manufacturers are also likely to boost demand for fast charging, as they have agreed with the American car companies to support the SAE’s combo charger standard.  The German EV market has been slow to develop due to the paucity of domestic vehicles, but that is quickly changing.

As forecast in Navigant Research’s 2013 Electric Vehicle Market Forecasts report, sales of BEVs in Germany will grow by nearly 32% annually through 2020, when they will surpass 108,000 in sales.  Worldwide sales of BEVs will surpass 1 million annually starting in 2018.

Annual Light Duty BEV Sales by Region, World Markets: 2013-2020


(Source: Navigant Research)

Premium car makers will be eating their own lunch to a degree with their EVs, as some customers will forego similarly priced gas or diesel vehicles of the same make.  The expectations for premium EV sales will be lower, since they don’t sell in Toyota Camry or Ford F-150 volumes; selling 2,000 per month would be a much larger share of the companies’ overall totals.

Daimler and Audi’s parent Volkswagen are also competing in the more challenging entry-level EV category, with the Smart fortwo ED and soon-to-be-released Volkswagen e-Up.

While Mitsubishi, Nissan, Renault, and Chevrolet, which are dropping the sale and lease prices of EVs to broaden the audience, have blazed the trail with their EVs, BMW and other prestigious German automakers will help push the market into second gear during the next year, while adding variety and volume to the fledging EV industry.


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