At the opening plenary of Vancouver’s EV 2010 VE electric vehicle conference, William Clinton J. Foundation senior director Steven Crolius struck a parallel between the electric car business today and Southwest airlines five years ago.
Crolius’ organization works as a catalyst to help launch greenhouse-gas-reduction projects. It’s a partner in C40—formerly the Large Cities Climate Leadership Group—16 members of which recently formed the C40 Electric Vehicle Network and committed to making their streets more accessible to electric vehicles.
Crolius cited a recent Goldman Sachs report that throws cold water on the dream of an electric mobility revolution. Of a global auto market of 85 million vehicles in 2020, the firm expects only about 1.7 million of them—a scant 2 percent—will boast batteries instead of tanks.
“We wonder why the mainstream has such a pessimistic view of the prospects,” Crolius said, pointing to the graph, which showed EV adoption bumping along the bottom of the chart like a dead eel.
He then showed the penetration of hybrids in the United States, which has flattened out at 2.5 percent. “This is the foundation of the mainstream view,” he explained. “Hybrid cars are almost a rounding error in the total market for vehicles.”
But, he argued, when a product makes sense to consumers, it can have a very rapid rate of penetration. This happened with DVD players, which quickly ran up to more than 80 percent of share after introduction—the result, he said, of classic identifiable forces that drive the market penetration of products.
But the analogy to DVD players is not the best one. It is a product with superior performance that came in and displaced an incumbent. You need to come in with a lower price for consumers to relax expectations. Another product attained greater than 40 percent of the market share in its first 10 years, he said: air travel.
“When budget-carrier Southwest comes into a new airport, it cuts prices and does very well, but the trade-off is you don’t get an assigned seat,” said Crolius.
Crolius put up some price and range comparison figures that I couldn’t get down fast enough, but the upshot was that after five years of ownership, the price of an pure electric vehicle ends up lower than an internal combustion vehicle. But the range between “fill ups” of one is presently dramatically different than the other.
Back to Southwest. The carrier discovered that business travellers were going to competitors because they didn’t want to deal with the minor chaos of unassigned seating at check-in time. That was the trade-off of the offering. They went to work on that trade-off, and came up with a rational and organized cueing system, and a way to check-in online the night before to get into the preferred boarding group.
“Our city partners are working on this exact construction. They recognize that not all value propositions come with the vehicle; a number are created locally. They know that what the local stakeholders do to make it easier can make the difference.”
In Houston, new EV owners can wind up in possession of a personal charging solution, he said. Chicago is putting in a charge network to eliminate range anxiety. In Hong Kong, they are relaxing registration charges for EVs. Los Angeles is working with the State of California to allow EVs into HOV lanes.
Meanwhile, the car manufacturers are putting vehicles out there with economic and performance packages that are in the ballpark of conventional vehicles.
“The die is not cast,” said Crolius. “There is nothing preordained. Even the supply of EVs is not fixed, either. Manufacturers will send the vehicles where they think they will succeed.”
“If we wring our hands and sit on the sidelines, we will be disappointed,” he told the electric vehicle industry members in the audience. “I think we are on the verge of something great. If we think we can make a difference, then we can make a difference.”