By all accounts, the electric vehicle industry appears to be a market on the brink of mainstream adoption, yet sales and growth rates continue to fall short of projections. So what is missing to take EVs to the mass market?
As with any emerging technology, there are a number of questions that are preventing potential buyers from signing on the dotted line. Price is naturally a concern for a customer base still climbing its way out of the Great Recession. According to Pike Research's annual Electric Vehicle Consumer Survey, the optimal price for EVs to attract buyers is around $23,000, but currently there is not a model available today priced under $30,000.
"It's not that potential car buyers reject the idea of being green. Most love the idea -- until it involves the hassle and substantial expense of installing a home charger on top of paying a substantial price premium over an equivalent non-electric car. And then there is planning for range limits," said a recent article in the Detroit Free Press that also touches on an important point.
Perhaps just as inhibiting as cost and range limitations are the questions surrounding how customers will actually use their EV once they drive it off the lot.
Yet, the resolution of these deterrents is only half of what must be done for successful mass market adoption. The other half involves the infrastructure supporting the use of these vehicles, namely the charging vendors and utility companies that will establish the charging points, supply the energy to power EVs, and calculate and send bills for payment.
Without thinking through the end-to-end, car-to-cash process in terms of how owners will charge and pay for the energy consumption of their EVs, consumers will continue to be hesitant to buy, regardless of the purchase price.
Right now there is relatively little infrastructure in place for consumers to confidently use an electric vehicle in the same way they would a traditional car. While there is certainly a segment of the population that will adopt of EVs for their environmental benefits, the majority of car buyers will stick with their gas-powered vehicles until EVs can offer the same freedom and convenience they enjoy now.
At the end of 2011, there were nearly 5,000 charging stations in the United States; by 2017, Pike Research estimates that number will grow to be 1.5 million. As a result, the EV charging industry is a bit like the Wild West.
Today there are more than 50 different vendors producing charging station technology, each looking to stake their claim and make their name in the industry. At the same time, there is a variety of different charging locations and billing scenarios they must support. Most people are familiar with the idea of charging their EV at home, which would be added to their utility bill, but what if they were to charge at someone else's house? That could be billed similarly to a mobile roaming charge.
Other scenarios might include an employer offering subsidized payments as a benefit to employees, or fuel stations selling electric charging through a point of sale or subscription model. And somehow all of these different charges have to end up on a single bill.
The challenge is removing the barrier of uncertainty and making these scenarios simple and easy for the consumer. How do they interact with these different vendors and charging models and remain confident that they will be billed correctly? Akin to that, how does the utility company enable these different methodologies?
The key is to aggregate the charging data, regardless of where it originates from, into a centralized data point that exists between the charging station and the utility's back office billing system. Most importantly, this centralized data point should be paired with a real-time rating engine -- because most charging points feature real-time capabilities -- able to support the various charging models.
With a solution like this in place, the charging points become relatively agnostic as the energy usage and billing models are collected and organized in a way that's easy for the utility to control and bill for despite the heterogeneity. By eliminating the questions of where, when and how, when it comes to charging, consumers are free to focus on buying the vehicle for the benefits they seek -- ecology, conscience and economics.
The automobile industry is clearly interested in the future of this personal transportation alternative. Major automobile manufacturers such as Ford, Toyota, Honda, BMW, and Volvo are all set to launch electric vehicles in 2012 -- in addition to those already available from Nissan and Chevrolet, not to mention a number of independent manufacturers.
Electric vehicles have the support of the government, as well. Shortly after President Obama announced in last year's State of the Union Address his goal to have one million electric vehicles on American roads by 2015, the Department of Energy committed nearly $3 billion in investment to furthering the development of EVs. Analyst firm IDC predicts 120,500 plug-in electric vehicles will be sold in North American in 2012.
2012 may not be the year EVs turn the corner from pilot stage to mainstream adoption, but we will see important strides made in that direction in the next few years. EV prices will begin to drop as lithium ion battery production evolves and more and more charging stations are being installed every day. And once EVs become more competitive in terms of price and usability, the customer experience will emerge as the primary factor in the purchasing decision.
By viewing the end-to-end car-to-cash process through the customer experience lens today, we can see a future where consumers don't have to think about the transaction every time they need to plug in their car. And it's by simplifying the experience and the payment process that we pave the road to mass market adoption.