Revving Up Electric Cars in 2012 and Beyond
Electric vehicle manufacturers had a rough December. Aptera closed its doors, Fisker recalled hundreds of plug-in hybrids, and Chevy sought to address battery-related safety concerns.
But don’t expect a few potholes to halt progress toward vehicle electrification.
According to new reports from Next10 and Pike Research, the electric vehicle industry is alive, particularly in California, and growing. In 2012, carmakers will introduce a variety of models – from Toyota’s Prius Plug-in Hybrid to Tesla’s Model S and Ford’s Focus EV – that will make electric vehicles more accessible and affordable, increasing sales.
“With the evolution of any new industry, there are going to be fits and starts and winners and losers. It is not going to be a straight hockey stick up to success,” said Noel Perry, founder of the advocacy organization Next10. “Our report… points to continued research and investment into electric vehicles.”
In “Powering Innovation,” Next10 reports that California leads the United States in vehicle electrification. California ranks first in venture capital investment in electric vehicle-related technologies, first in electric vehicle-related patents and first in electric vehicle charging stations per capita. In the first half of 2011, California attracted nearly 70% of global venture investment in electric vehicle-related companies.
California owes its leadership position in part to supportive public policies.
“From a policy perspective, California is doing an incredible job,” said Jit Bhattacharya, CEO of Mission Motors, a California-based developer of advanced electric powertrains that in August raised $9 million from Warburg Pincus and Infield Capital. “California is creating a certain policy landscape around which electric vehicle companies can grow and thrive and around which consumers can be early adopters for electric vehicles.”
According to Next10, California also benefits from entrepreneurial talent and strong research and development capabilities, which serve as a magnet for investment.
“An electric vehicle is a lot more like an iPad than it is like a fossil-fuel driven car. It is a lot about electronics, hardware and software, [where] Silicon Valley has been a leader,” said Next10’s Perry, a venture investor turned public policy advocate.
“The ecosystem for a startup is awesome [in Silicon Valley] because of the concentration of tech companies,” said Pat Romano, CEO of Coulomb Technologies, a California-based charging network company that sells electric vehicle charging stations and subscription-based charging service plans. “Your entire supply chain and talent pool is optimized in Silicon Valley.”
In “EVs: Ten Predictions for 2012,” Pike Research forecasts that new models and increased sales will put an end to the “are EVs for real” speculation. Pike Research predicts that more than a quarter-million plug-in electric vehicles will be sold in 2012 – but at “prices that will continue to disappoint (and exclude) many consumers.”
According to Coulomb’s Romano, consumer interest in electric vehicles is spreading, from California to Washington State, Maryland, Texas and beyond. As a result, electric vehicle sales will pick up nationwide.
Pike Research expects that many urban residents will first drive an electric vehicle through car sharing services such as ZipCar, RelayRides or City Car Share. But consumers who do purchase electric vehicles will increasingly take advantage of workplace charging, as employers begin purchasing charging stations in large numbers to attract young professionals.
“In the distribution of where charging stations are going, workplaces are really hot. Workplaces are adopting charging to support their employees’ purchase of EVs,” said Coulomb’s Romano, citing Google as a Coulomb customer that has installed charging stations for employees. “We are also seeing large retailers lay plans to enable their parking lots with charging infrastructure.”
“The electric vehicle market is at an inflection point. Many new electric vehicles and plug-in hybrid electric vehicles have been released in the past year or will be released next year,” said Rob Bailer of Leaf Clean Energy, a renewable energy and sustainable technology investment firm. ”As a result, there is going to be increasing demand from consumers for items like charging stations and software around controlling charging both on the grid and inside the car.”
However, not all industry-watchers are as optimistic. Thilo Koslowski of Gartner believes 2012 will be “a bit of a ‘cooling off’ year” for electric vehicle buzz.
Indeed, a federal judge last week made California’s regulatory environment significantly less certain. The court blocked California from enforcing a low-carbon fuel standard, a regulatory framework that encouraged the adoption of electric cars.
Moreover, significant technical obstacles remain before electric vehicles will achieve mainstream consumer adoption. Electric carmakers must reduce battery and car costs, extend battery life and vehicle driving range, and address consumers’ safety concerns.
“Batteries are the limiting factor right now in electric vehicles,” said Bhattacharya of Mission Motors. “[But] there is a lot of innovation taking place in batteries in Silicon Valley, not just in companies but also in Lawrence Berkeley National Laboratory, UC Berkeley, Caltech, [and] Stanford.”
Much of this research will go nowhere and many of the companies that spin out of these institutions will fail. But Bhattacharya argues these failures will be no more significant than that of Aptera on the road to vehicle electrification.
“In Silicon Valley, we know that in order to innovate… you have to be willing to accept that there are going to be failures,” said Bhattacharya. “We believe in failing fast, so you can move on to the next idea and keep innovating.”
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