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USA: Who will own Electric Avenue?

Visitors to the 2010 Detroit Motor Show, which opens today (US time), will this year be able to walk through a dedicated ‘Electric Avenue’ where electric vehicles, both production models and ‘concept’ cars, will be on display.

But as they run their eyes over the models’ sleek curves (perhaps even over the cars), opinion will be sharply divided as to whether even the mainstream production model EVs will even reach a mass market.

For ‘EVangelists’, such the global head of ‘electric mobility solutions’ company BetterPlace, Shai Agassi, EVs are a turning point in history, promising to revolutionise transport by cutting motoring costs and emissions of CO2 and other pollutants at the same time. The Nissan Leaf, for instance, boasts the efficiency equivalent of 367 miles per gallon.

For the naysayers, such as SeekingAlpha blogger John Petersen, they are a “unconscionable waste and pollution masquerading as conservation”. The high cost of vehicles and batteries, plus the “range anxiety” caused by the limited distance an EV can travel without stopping to recharge, will prevent the technology making, ahem, inroads.

And yet, electric vehicles are coming, like it or not.

Australian CFO for BetterPlace, Antony Cohen, says his firm has 115,000 cars (the Fluence) on order from its car-maker partners Renault/Nissan which it will roll out across Israel and Denmark, then in Australia.

Mitsubishi will begin selling its i-MiEV product into government and corporate fleets in Australia before the end of this year.

Forward thinking developers have even built conduits under Adelaide’s Mawson Lakes transport hub carpark to allow EV charging stations to be cheaply installed in future.

Are they worth it?

The economics of the EV are still being debated. Petersen argues that putting many more ‘cheaper’ hybrid vehicles on the road would cut petrol use by a far greater amount, while former Tesla developer Dr Andrew Simpson recently explained why even conservative costings make EVs cheaper, over the life of a vehicle, than petrol-powered cars.

But ‘economic sense’ does not always prevail. One marketing director told Business Spectator that EVs weren’t too expensive: “They might be too cheap,” he said. “Buying cars has never been about price – they’ll sell them as being faster, or better looking, and then mention that they’re also cheaper to run.”

Indeed, Tesla’s Washington-area sales rep last month told the Wall Street Journal that she’d sold 27 Roadsters, that cost upwards of $US100,000. “Some of the buyers are environmentally conscious,” she said, “but most are car enthusiasts who want the New Thing.”

Even the Chevrolet Volt (to be released in Australia in 2012 as the Holden Volt) is “a rocket ship”, according to one analyst, but will cost only $US35,000-40,000 – its speed being due to the fact that electric motors deliver full torque almost instantly, unlike the internal combustion engine.

A charged market

Beyond the cars themselves, the advent of EVs requires what Shai Agassi calls a transport “ecosystem” to be developed, comprising:

– Energy sources, whether conventional electricity generators or renewables (as Alan Kohler discussed in August)

– Power transmission, much of which is already in place – though there are fears that too many cars charging during peak times could overload existing sub-stations, transformer and power cables

– ‘Smart’ infrastructure, via internet and wireless networks to allow charging, billing and even route-planning information to be shared between solution providers, cars and drivers.

Betterplace has released a useful, if somewhat cheesy, video showing how some of these elements would work together.

But the really interesting development in Australia looks to be a ‘real estate grab’ for the infrastructure required to recharge the huge Lithium ion batteries that power EVs.

BetterPlace will install charging units in homes, office carparks, outside train stations, in shopping centre car parks and curb-side on city streets, but plans to retain ownership of the units.

Its Australian infrastructure competitor, ChargePoint Australia, by contrast, plans to sell units to customers who will then onsell the electricity to EV drivers at whatever price they deem appropriate.

The limiting factor for both firms is real estate.

While it is conceivable that shopping centre carparks will have BetterPlace charging units – which look a little like futuristic parking meters – at one end and ChargePoint units at the other, in many of the places that cars park, only one company can win.

ChargePoint, for instance, plans to install units capable of charging a car in 4-6 hours, in home garages or on driveways, for around $1,000.

The units are manufactured by US company Coulomb Technologies (ChargePoint Australia has exclusive distribution rights in Australia and New Zealand) and connected via the internet to ChargePoint’s IT infrastructure, to provide “multiple web-based portals for drivers, charging station owners, installers, fleet operators, and utility companies” to track how much energy’s being used and when.

Similar units drawing 3-phase power, and hence able to recharge a car in 2-4 hours, will be installed by ChargePoint’s customers in a range of locations across major cities – rolled out first in Sydney, Melbourne and Perth. The ‘host’ customer pays for the unit and sets the price at which it will on-sell power to motorists.

The company will also offer high-current rapid charge stations capable of recharging a car in about 15 minutes – the company’s “solution to range anxiety” according to CEO Luke Grano.

BetterPlace, by contrast, will retain ownership of similar charging units, but will also build ‘battery swap’ station where the range-anxious driver can pull in and get a fully-charged battery installed in less time than it takes to refill a petrol tank. The company will own the batteries, which currently cost around $A15,000 to $17,000 each, and effectively lease a class of battery to each driver.

Cohen says that by owning the batteries and charging infrastructure, BetterPlace can sell an infinite variety of ‘plans’ to motorists, similar to the broad range of plans available to mobile phone users – a capped ‘all you can drive’ price, or cheaper pay-per-kilometre plans.

Australian standards are yet to be set for the charging equipment, but both firms say they are committed to ‘open architecture’ solutions, to allow any motorist to recharge at either company’s recharging stations – though the battery swap option will be limited to specific models produced by BetterPlace’s partner car-makers.

ChargePoint will start running pilot charging stations in Sydney “very soon”, but Luke Grana says the major challenge will be to have enough in place by 2012, when Holden, Ford, Nissan, BMW and Renault are all expected to release models in Australia. Before that, he says, individual corporate or government buyers will install their own equipment.

After a disastrous 2009, EVs are certain to get a mixed reception in Detroit. What kind of reception they get in Australia will depend first on the ability of ChargePoint and BetterPlace to install the infrastructure needed to run them.


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