Navigant Research Blog

EV Charging Companies Going Global

— April 5, 2017

Commercial EV charging companies are starting to go truly global, supported by major investments coming from the energy sector and automakers. These investments will see companies enter new markets with the potential to ramp up in volume. Since plug-in vehicle (PEV) sales started in 2010, the commercial charging market has been geographically compartmentalized, with few companies based in North America and Europe expanding outside their home region. This was especially true once the large multinationals like Siemens and Schneider Electric pulled back from the market, leaving it to the smaller startup companies that needed to tend carefully to their cash flow. However, large companies are returning to the charging market in anticipation of it being on the verge of a high growth period, and they are announcing their intention to become global players.

Gearing Up

Last year, RWE spun off and rebranded its renewables business, including EV charging, to innogy. It announced innogy would target the United States for its charging market, one of the biggest PEV markets with significant growth potential for infrastructure.

Then in March, ENGIE acquired EV-Box, which has one of the world’s largest charging networks. EV-Box ranked as a leader in the Navigant Research Leaderboard Report: EV Charging Network Companies last year on the strength of its market share, its multiple capabilities as a manufacturer and a software developer, and its relationships throughout key European markets.

The Navigant Research Leaderboard Grid

(Source: Navigant Research)

EV-Box has recently entered the competitive North American charging market with its charger offerings. Entering the North America market seemed ambitious, as the company was a startup with plenty of market to play in throughout Europe without crossing the ocean to tackle North America. However, having a global energy giant like ENGIE behind it could provide EV-Box with the support it needs to pursue its expansion efforts.

Developing New Products and Relationships

It still won’t be easy. Getting a foothold in a new market requires not only developing new products, but more importantly, also establishing the web of relationships needed to secure customers and installation sites. This is a time consuming and therefore expensive process, which is one reason the large multinationals—or companies backed by large multinationals—will have an advantage in this market over the smaller players in the long run. Multinationals looking to come back to the market as growth finally ramps up may find that the startups that have established significant market share and have very large public charging networks will be an easy route to establishing a beachhead. Even companies that have smaller installation bases but dominant market share in a particular country or subregion in Europe or North America could be attractive targets.

ENGIE and innogy may be the thin edge of the wedge in terms of energy companies wading into the charging market, but they are not the only companies with big pockets that are seeking charging company partners. ChargePoint, the leader in the North American charging market, secured $82 million in a funding round led by Daimler in March. The funding will support a stronger push into the European market for ChargePoint.

Maintaining a Long-Term Perspective

While all this activity is encouraging as a sign of confidence in the charging market, success in this market will still require a long-term perspective. There is significant growth, but it will still be years before charging is a well-established and high volume market. It is also a market that is still overly dependent on financial support for deployments, whether from interested stakeholders like the car companies or from governments, and growth will not be even across all the market segments of public, workplace, and private chargers. These dynamics do still favor the companies with sufficient funding to stay the course.

 

Success in Automated Vehicles Depends on Tech, Services, and Manufacturing

— April 3, 2017

An old axiom in motorsports goes: “to finish first, first you must finish.” This means you can have the fastest car on the track and qualify on the pole position, but if you don’t have the preparation or team to back you up, the quality of the car is meaningless. In the race to make automated driving a successful commercial reality, hype may get companies all the media attention, but a fully realized strategy combined with the ability to execute are the keys to success. This is why Ford, General Motors (GM), the Renault-Nissan Alliance, and Daimler are the leaders in the latest Navigant Research Leaderboard Report: Automated Driving Systems.

Outside observers would not be faulted for believing that companies in Silicon Valley were about to roll over the entire automotive industry and take over personal mobility in the coming months based on news coverage. However, as many veterans of the technology industry have become painfully aware of, the reality is that building vehicles to safely transport the world’s population is far more difficult than just writing an app and publishing it to an online store.

Horse Before the Cart

Assembling a suite of sensors and writing the basic software to control a vehicle are actually the easy parts. Before that package can become a real product, you need a vehicle. Google developed its automated driving system in 2009 by hiring many of the top brains from Stanford, Carnegie Mellon, and several automakers that had previously created winning vehicles in the DARPA Grand Challenge program between 2004 and 2007. Then Google went to local Toyota and Lexus dealers and bought vehicles one or two at a time. Companies like Cruise Automation and Uber followed similar paths. In order to commercialize a system, they will need to invest billions more to develop and manufacture vehicles or find an automaker partner willing to supply cars.

Uber is reported to have lost more than $3 billion in 2016 without capital investment in vehicles or manufacturing. The world’s major automakers already have the engineering and manufacturing infrastructure in place, and many of them have been working on autonomous technology for far longer than Silicon Valley. Major automakers understand the intricacies of developing, validating, and certifying vehicles for profitable production.

At Navigant Research, we believe the leading automakers are learning what it takes to develop automated vehicles faster than new entrants can learn how to build cars. Companies like Ford, GM, Nissan, and Daimler also understand the regulatory and product liability hurdles faced by bringing automation to the world’s roads. These companies have heavily invested in controlling and understanding the key technologies required to make vehicles and automated driving system work seamlessly.

Just Around the Corner

The leading companies in this field are also rapidly developing their own in-house mobility services so that they can provide consumer access to automated driving systems while retaining control of vehicle manufacturing. This will help to ensure that the vehicles are properly maintained and updated—something that is key to safe and proper use within the early years of deployment.

Technology companies like Waymo and nuTonomy, as well as suppliers like Delphi and ZF, will have an important role to play in the new mobility ecosystem. But for now, automakers lead in the automated driving system race.

 

Questions Aplenty About Interacting with Automated Vehicles

— March 31, 2017

Over the past 130 years, the interface between human and machine has become relatively standardized. We have steering wheels, pedals, seats, mirrors, and other major controls in roughly the same location no matter what brand or type of vehicle we use. We’ve made adaptations for additional hand controls for those that have physical disabilities, but overall, the experience is consistent. But when those controls are eliminated in automated vehicles (AVs), as Ford will do in the AV it intends to produce in 2021, designers have opportunities to rethink vehicle cabins. And those opportunities raise a few questions about interacting with AVs.

User Experience

The more you know, the more you realize how much you don’t know. As we accelerate toward an era where humans are no longer in direct control of the vehicles we move around in, it’s clear that making a car drive itself is only the beginning of the task at hand. A panel at the recent Automotive Megatrends Autonomous Car conference in Detroit examined some of the questions around the user experience (UX) with automation.

A crucial aspect of the human-machine interface are the seats and what we see as we move through the world. Over the last several years, automakers and suppliers revealed a number of fascinating concepts for cars of the future such as the Mercedes-Benz F015, Nissan IDS, and the BMW HoloActive Touch.

One of the seemingly more appealing ideas about not having to drive is that vehicle occupants could be repositioned so they can interface with each other instead of the vehicle. However, a driving force behind the design of modern vehicles is the need to protect occupants in the event of a crash. They must be properly positioned in order for airbags to provide protection. While AVs are likely to cause far fewer crashes, they will still have to coexist with the more than 1.2 billion vehicles on the road today and for decades to come. That means that unless we ban human-driven vehicles, AVs still have to conform to the same safety standards and seat rotation will be limited to small angles.

Then there is the whole issue of motion sickness. Many people experience physical symptoms when there is a disconnect between what their eyes see and their body feels during motion. If we go from driving to watching or reading during our commutes, this could become a design issue.

Voice Recognition Systems

Another question regarding interacting with AVs: Will we let self-driving vehicles know where we want to go? For all the attention that devices like Amazon’s Echo have received in the past couple of years, voice recognition systems remain frustrating to use. Companies like Google and Nuance have made huge strides in improving the reliability of these systems when they are connected to the cloud, but even the most advanced machine learning systems continue to struggle with natural language semantics and accents. There is an enormous difference between recognizing individual spoken words and the meaning that is imparted by stringing a series of words together.

Humans are remarkably adaptable, and we will likely adjust our own speech patterns to the limitations of the machines before the machines themselves can reliably understand us. Or we may decide that if technology can’t make our lives less frustrating, we may reject it.

 

Purchase Incentives More Cost-Effective for E-Bikes Than EVs

— March 24, 2017

Electric bicycles (e-bikes) continue to be the highest selling EV on the planet, with nearly 35 million unit sales forecast for 2017. Increasing urbanization and a desire from consumers and city officials to move away from cars for motorized transportation are opening opportunities for alternative mobility devices. E-bikes are uniquely positioned to be a primary benefactor of this trend since they are low in cost relative to cars, do not require licensing, have no emissions, and can take advantage of existing bicycling infrastructure. The European Cyclists’ Federation (ECF) published a report that shows e-bikes are a particularly cost-effective way to decarbonize the transport system through incentives. However, e-bikes have received little in the way of purchase incentives within most countries’ electric mobility strategies.

Germany has spent an enormous sum of money on electric cars, with unimpressive results. The country spent €1.4 billion ($1.5 billion) through 2014 on R&D and added an additional nearly €1 billion ($1.07 billion) subsidy scheme in 2016. Yet, there are just 25,500 pure EVs on the road in Germany. Meanwhile, e-bike sales exploded in the country during the same period with virtually no subsidies, aside from a few small pilot projects. Over 2.5 million e-bikes are in use in Germany, and Navigant Research expects nearly 650,000 unit sales for 2017. One wonders how much higher this figure could be if e-bikes had the same public financial support as EVs in Germany.

Differences in E-Bike and EV Policy, Germany: 2016

(Source: European Cyclists’ Federation)

New E-Bike Purchase Incentives in Europe

Several new e-bike purchase incentives have popped up across Europe, providing a boost to the industry and demonstrating new confidence in e-bikes as a cost-effective way to reduce traffic congestion and greenhouse gas (GHG) emissions. France announced a $200 subsidy for e-bike purchases in February 2017, and earlier in the year, Oslo, Norway began a $1,200 incentive program for electric cargo (e-cargo) bikes. Austria has offered an e-bike incentive program for numerous years. The ECF estimates roughly 25% of early e-bike purchases in the country’s crucial market uptake phase, around 2010-2011, were supported by financial incentives. Austria has one of the highest sales rates of e-bikes per capita in Europe, third behind the Netherlands and Belgium.

The increasing number of e-bike incentives in Europe demonstrates the growing recognition by European policymakers that e-bikes can be a more cost-effective technology to incentivize over EVs within an electric mobility strategy. On average, e-bikes cost less than 8% of the price of an electric car, according to the ECF. This, coupled with the lack of licensing requirements, make adoption much easier for consumers.

Studies Show

As noted in a previous blog, a consumer survey conducted by the Oregon Transportation Research and Education Consortium (OTREC) showed that the primary reason respondents bought e-bikes was to replace car trips—not bicycle trips. E-bikes offer enormous potential to replace cars. One study by the German Federal Environmental Agency shows that e-bikes are faster than cars for distances of up to 10 km (6.2 miles) in an urban environment. The trends in Europe in conjunction with conclusions from these studies suggest that more countries should incentivize and promote e-bikes if the goal is to reduce GHG emissions and traffic congestion in a cost-effective way.

 

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