Electric Vehicles 2011: Technology, Economics, and Market

Speaker Moderator

Dominic Hofstetter
Consultant

Travis Bradford
Founder, President, and Director,

The Prometheus Institute for Sustainable Development
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The EV Revolution has begun!

Electric Vehicles 2011: Technology, Economics, and Market

Recent News

Relevant Research Questions
What technologies and companies are vying for market share? How fast will the market grow and what will drive growth? What other infrastructure elements will be required and what are the prospects for those? Are there alternative business models which might help address obstacles? How competitive are EVs relative to ICEs today, and how is this competitiveness expected to change over time? Which technologies will win, and what investment strategies are available to capitalize on that insight?

Many LDV Options Exist

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Required Components

• Energy Storage • Charger – On-board/Off-board • Cords and Connectors • Electric Vehicle Supply Equipment • Advanced Meters • Home Area Networks • Parking Lots and Neighborhoods

• Buildings/Multi-unit Dwellings • Smart Grid • Aggregation Algorithms • Distributed Generation/Storage • Renewable Generation • Communications Architecture • Information Technology
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Challenges to Smart Charging
Physical Integration Communciations Pricing Mechanisms

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Observation #1 - Forecasts are (almost) useless

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Forecasts Vary Wildly
Range from 2 million vehicles to over 20 million in 2020 Very few differing underlying assumptions to achieve those results
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Supply Forecasts

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Myth: Excess Demand Hypothesis

First blush suggests that demand outpaces supply by a wide margin
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Observation #2 - EVs are already relatively cheap, but may have trouble getting relatively cheaper
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Calculating Total Cost of Ownership (TCO)

Capital, Operating Costs, Fuel, Electricity, Performance, Use, and Financing all impact TCO and will change over time
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Example: Cycle Costs

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International markets enjoy even better economics

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Observation #3 – BEVs will find niche markets easier, but mass markets harder than PHEVs
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Understanding Market Constraints
Total Market Size Substitutability Access to Infrastructure Income Issues Behavioral Issues

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Adoption constraints impact BEVs and PHEVs differently

Price, Access to Charging, and Driving Range are less of a concern among early adopters They are of great concern to the mass market
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Declining Marginal Value of More Batteries

A very expensive way to avoid Range Anxiety
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Observation #4 – EVs will be delivered by Big Auto

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Markets rarely develop this way

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Big Auto owns the channel
1. 2. 3. 4. 5.

Big Auto has the necessary sales and service infrastructure Big Auto can gain customer trust that is the major obstacle to adoption today Big Auto can withstand slower than expected deployment without going under Big Auto picks winners and loser in the component suppliers with platform awards Big Auto can afford to absorb winning technologies, often before they make them winners with platform awards

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Observation #5 – What it is not about…

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It is not about charging infrastructure

Charging cars and providing grid services will require a fundamentally local architecture, which is not yet already universal.

It is not about the batteries

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It is not about V2G
Grid Storage
Day/ Night Arbitrage Ancillary Services
Frequency Regulation Spinning Reserves

Grid Peak Shaving Buffer Storage for PV Dispatchability

Observation #6 – EVs provide an optionality that will change transportation forever
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Risks to traditional Fuels
Undulating Top in Oil Rising Volatility Energy Insecurity Trade Imbalances Slow Swap of Infrastructure Limited Biofuels Impact

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Forecast of Light Duty Vehicles

Conclusion: What it is about…
Electric Vehicles may be slow out of the gate versus current demand and production forecasts EVs are already cost effective, and non-economic market barriers will come down over time increasing penetration And, they provide both an alternative for many and a new shadow price for ICEs that will force a massive shift in ICE performance This optionality, enhanced by further biofuels deployment and easy incorporation of fuel cell generators, allows EVs to permanently break the link between LDVs and oil – relieving the risks and costs of dependence…even at low penetrations
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Thank You !

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