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BMW is leasing for 12 months an all-electric version of the Mini Cooper
BMW is leasing for 12 months an all-electric version of the Mini Cooper as part of its on-going research into the future of electric vehicles.

The Coming Electric Car Upgrade Market

Why carmakers will find the shift to electric vehicles enticing and, yes... profitable..

By Craig Shields

I just returned from the New York Auto Show, where I dutifully made the rounds, interviewing as many OEMs as I could find that have announced plans for EVs -- present or future. In my travels, I came across an important idea related to the EV adoption curve that I wanted to share with our readers.

We often read articles that call us to question the sincerity of traditional OEMs with their EV production plans. Sure, they want to appear “green,” and provide angry taxpayers with some confidence that they are doing their best to remain relevant in today's global automobile market.

But when you look at the business model, what's really in it for them? Doesn't the diminution of volume in internal combustion engine-based cars and trucks represent a huge interruption in the profit stream generated by each customer? Since EVs have far fewer moving parts than their ICE counterparts, and thus a ridiculously low-cost maintenance schedule, won't far fewer cars be sold on average per customer per year? Won't the profit from replacement parts plummet instantly to near zero?

And, regardless of what we're told, doesn't all this create an enormous DISincentive for the traditional OEMs to introduce EVs as a replacement to ICE-based cars and trucks?

Not necessarily.

I had fascinating conversations with key representatives of several major companies at the show, and a few people pointed to a concept that doesn't receive as much discussion as perhaps it should:

It is TRUE that consumer interest in buying a new car every two or three years will likely not be based on the same thinking that was prevalent in the 1970s. Consumers probably WON'T care so much that their car no longer looks brand new. Maybe customers WON'T care that their father bought a new car every couple of years, and somehow feel that they should too. And, without doubt, the EVs they're buying WON'T be falling apart after 100,000 miles or so.

But what about the pace with which technology is changing? The EVs that will be available for mass consumption in, say, 2012 will be vastly inferior to those available in 2015, and there is nothing that anyone can do about this. And they'll be inferior in some extremely important, obvious ways: range, performance, features -- not to mention cost.

I sat in the driver's seat of a Mini-E, speaking with Jim McDowell, one of the company's vice presidents, and a truly articulate spokesperson for the entire EV industry. He asked me if I was familiar with the heating and air conditioning system of the car. Of course, it had never entered my mind to ask about such details; I wondered why he could have possibly asked such a question.

“Well I'll be honest,” he explained. “It's fairly limited. On a really hot day or cold day, I can promise you this: you won't be 100% comfortable. And it's not because we don't care; it's because every Watt-second I use to heat or cool the passenger compartment comes right off the range that I can give you. But a few years down the line, we'll have better battery energy densities, and probably dozens of other improvements that customers will absolutely demand. I'm not at all worried that the car buyer in 2015 will want a 2012 model.”

I have to believe he's right. The lifecycle of an EV may more closely resemble that of a laptop computer than that of a 1975 Buick Regal. Advancements in technology create a world in which a three year-old laptop is a doorstop. Isn't it reasonable to predict that a similar case could be made for EVs?

In this cynical world, we normally jump to the idea that everyone in corporate America is lying to us. But here was an idea that I could believe in.

I welcome your comments.

Craig Shields is EV World's Vice President of Marketing and Sales.

Times Article Viewed: 7047
Published: 12-Apr-2009

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