Just Building Electric Cars Isn't Enough

IBM Institute for Business Value's Kal Gyimesi urges development of both infrastructure and business models to support rollout of electric cars.

Published: 25-Jan-2011

The introduction of the Nissan Leaf -- the first all-electric car from a major automaker -- is a big, tangible sign that electric vehicles are no longer just the stuff of environmentalist dreams or science fiction.

Electric vehicles are here to stay, and during the next few years most major automakers will roll out an array of new electric-powered cars, and even trucks.

But if EVs are to be successful, the auto industry is going to have to do more than just build the cars -- they'll need to find innovative ways to make recharging them easy and convenient.

Unlike traditional vehicles that can be filled up with gas or diesel in a matter of minutes, EV batteries require hours to fully charge. And the range of EVs are still limited to about 50 to 100 miles before drivers need to plug in.

So how do you make sure there are enough places to recharge and do the other things needed to help EVs become successful? Here are three places to focus on:

At home: The good news is that the average American drives about 37 miles a day, with surprisingly little variation among urban, suburban and even rural drivers, according to new research from IBM's Institute for Business Value. That distance is well within the capacity of current EVs.

Plus, our research shows that 83 percent of U.S. drivers park their primary vehicle in the driveway or garage of their private residence, versus in a parking lot, on the street, in a shared garage or in some other location. That means that most owners would easily be able to charge their cars at home.

The problem is that retrofitting to a 240-volt outlet accessible to vehicles averages $1,000 to $2,000, and only 13 percent of drivers said they would consider spending more than $1,000 to retrofit their residence to support recharging of an electric vehicle.

So the auto industry would be wise to move aggressively in addressing this potentially significant obstacle to EV adoption. One strategy would be for them to partner with national home improvement chains in offering highly discounted or rebate-driven installations.

At work or at the mall: U.S. drivers also park for long stretches at work and at the mall (this is, after all, America). Here, too, partnerships could play an important role.

Automakers could team with companies that manufacture charging stations to install the stations at large employer sites, government locations and retail hubs. The parking lots wouldn't have to be blanketed all at once. The roll-out could proceed gradually as the number of electric cars on the road increases.

Perhaps automakers could even offer consumers a discount on the vehicle's purchase price based on the number of charging stations that their employers install. The more charging stations, the higher the discount employees would receive.

As this kind of home/work/retail charging infrastructure starts to take shape, the electric vehicle will become increasingly attractive to consumers, as it will meet most of their driving needs.

On the road: Ah, but what about that New York to Miami road trip? Will drivers have to abandon all hope of long-distance driving in order to embrace the electric car dream? Not necessarily.

Looking to gain an edge in the marketplace, automakers are starting to think about offering their customers access to a portfolio of vehicles. It would work like this: you buy a car, and in addition to ownership of that vehicle, you get access to a variety of "occasional use" vehicles, such as a pickup truck when you need to do some heavy-duty yard work.

It's easy to envision an automaker providing an EV owner with a traditional, gas-powered vehicle for long-distance trips. That would be a really smart way to allay consumers' reluctance to buy an EV.

Automakers aren't dabbling in EVs; they are making a substantial, long-term commitment. They're already making great strides.

Now it's time to start building both the infrastructure and business models essential to support these promising new vehicles.

Kal Gyimesi is the automotive lead for the IBM Institute for Business Value and the author of "Advancing Mobility, The New Frontier of Smarter Transportation."

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