Monthly Archives: January 2017

Five Ways Automakers Make Some Electric Cars Profitable

Big, gas-guzzling cars are often more profitable for automakers than are cars that drive on electricity, due in large part to the persistently high costs of batteries. So it’s not all that surprising that some automakers have spent years delaying more aggressive pushes into electrification.

But the world is changing, and consumers are increasingly interested in driving electric cars, while automakers continue to be required to meet environmental mandates. Battery costs are also steadily coming down, but it will still take many years for most competitive electric cars to have the lower manufacturing costs associated with traditional internal combustion vehicles.

The analysts at McKinsey recently published a report to help automakers that are struggling with the potentially expensive prospect of adding more electric-car models to their lineup. The researchers give a handful of suggestions for how automakers can adjust and adapt to offering electric cars, while also trying to turn a profit.

The tips seem mostly directed at big automakers that are still offering just a few electric car models. New figures out from EV-Volumes suggest that Tesla’s Model S and Nissan’s Leaf were the bestselling electric cars of 2016, followed by BYD’s Tang and GM’s Chevy Volt.

All of those automakers have been pretty aggressive about jumping into electric cars, but other manufacturers have produced a limited number of models that are largely being used as “compliance cars,” to meet stricter state regulations.

Currently, the overall electric car market is still pretty small — at 773,563 models sold worldwide last year — so automakers can still define, or redefine, their electric car strategies. However, they should act fast, before companies like Tesla, Nissan and GM corner the market.

Here are five suggestions from McKinsey for how to make the transition to electric cars more profitable for automakers.

1) Start by offering lower-range, cheaper urban electric cars: Even though Tesla started out selling expensive luxury electric cars, McKinsey analysts argue that automakers are currently missing out by not offering more low-cost, low-range electric cars. There are a variety of types of electric-car buyers, says the report, starting with early adopters that are willing to spend on the Model S or even the Roadster, Tesla’s first expensive electric sports car.

But the next wave of electric car buyers, referred to as “near-term electric car buyers,” are likely to more interested in electric cars that cost far less and are designed primarily for use in urban areas. Members of this demographic tend to live in cities and only travel 25 to 35 miles on average per day. These cars would be cheaper because they would have smaller battery packs and driving ranges.

Automakers focused on Europe and Japan already offer some of these electric models, which on the low end used to be called “neighborhood electric vehicles.” French giant Renault has been selling the small Zoe, which has a 22-kilowatt-hour battery pack, for some time now, while Nissan’s early Leaf models were low-cost and had relatively low range.

But these automakers are clearly caught in a bind when their cars have minimal range and are being compared to longer-range electric vehicles from the likes of Tesla and GM. Nissan and Renault subsequently launched their own versions of those cars with bigger batteries and higher costs.

2) Package competitive electric cars with new business models: If automakers plan to make electric car models that have big batteries, long ranges and high costs, they should start offering those types of higher-end cars today to new types of customers through alternative uses like ride-hailing and car-sharing, according to the report. Electric cars can have higher upfront costs than internal combustion cars, but their total cost of ownership, considering the cost of electricity versus gasoline and maintenance, can be lower.

The report contends that companies like Uber, which manages ride-sharing services, or Zipcar, which maintains car-sharing fleets, would be well served by buying up electric cars and using them in fleets. They could save money that way.

At the same time, automakers should be more creative in terms of both partnerships and new business models, embracing these new forms of “mobility,” a buzzword heavily favored these days by car companies. Automakers should be able to shift their electric-car launch strategies from selling a car, to selling services, to selling a package in between, depending on demand from customers, notes the report.

3) Education and communication: While between 30 percent and 45 percent of consumers in the U.S. and Germany say they’ve considered buying an electric car, less than 5 percent of consumers are actually buying electric vehicles, the report found, according to surveys.

That’s a large gap. It highlights how only about half of consumers say they understand how electric cars work. Through more education and marketing, that gap between interest and purchase could be made much smaller, and automakers should make efforts to create communication campaigns to figure out this problem.

Tesla seems to be well aware of this issue, because the notion is at the core of why the company insists on selling its cars out of its own Tesla stores. At Tesla stores, potential customers can learn about electric cars and battery technology, and have a hands-on experience with electric-car technology. Tesla doesn’t want its cars sold at traditional dealerships where electric cars are sold alongside traditional cars and often go ignored by dealers.

The report also found that consumers who are interested in electric cars are more fearful about range issues compared to consumers who have actually purchased an electric car. That implies that once someone owns an electric car, range anxiety is diminished. Communication campaigns explaining how charging works and where it’s available could be helpful in overcoming this barrier.

4) Know your demographics: In the same way that there’s a lack of lower-cost, lower-range electric cars out there, the report contends that automakers need to target electric-car models to other types of buyers. There are a whopping nine types of buyers, say McKinsey analysts, including: status luxury enthusiasts, risk-averse greens, mainstream mobility seekers, mass premium seekers, low-cost performance, urban families, trendy families, high-tech status seekers, and feature-focused buyers.

If automakers can customize and sell to these different verticals, they could uncover major opportunities that their competitors are missing out on.

5) Don’t hide in the sand and ignore electrification: The auto industry is undergoing a huge shift, not just in terms of battery technology and electric vehicles, but also with autonomous car tech, car-sharing tech, and connected cars. All of these investments together mean that car companies could become very capital-constrained.

However, the report says that automakers can’t rely on just internal combustion cars for long. Electric car tech could be disruptive to internal combustion cars as autonomy, connectivity and sharing are all reinforcing electrification. For example, a connected or autonomous car could make it easier to charge a car efficiently.

At the same time, battery costs are coming down significantly, and by 2025 to 2030, electric cars will “reach true price parity” with traditional internal combustion engines, notes the report. That’s just under a decade in the future.

Key to Autonomous Electric Vehicles

There’s a lot of excitement around autonomous vehicles, and electric autonomous vehicles in particular. Many people envision a day when driverless EVs will chauffeur us around safely and emissions-free — while allowing passengers to work, read or take a nap instead of watching the road.

The less visible, but essential player in this autonomous electric transportation future is wireless charging.

For vehicles to be truly driverless, they need to be able to refuel on their own too. Wireless charging — though still in its early days of consumer adoption — is one reason why EVs are considered the preferred platform for autonomous cars. Wireless charging liberates vehicles from gas pumps and plugs, and allows for virtually limitless electric range if chargers are strategically placed.

This week, wireless charging took another meaningful step toward broad adoption.

Wireless power transfer company WiTricity announced a new partnership today with Nissan, building on existing partnerships with General Motors and Toyota. The news is significant, because it signals that EV stakeholders have successfully avoided the type of standards battle that burdened the EV fast-charging sector — creating additional hurdles for the nascent EV market to overcome.

In the case of fast chargers, European and American automakers insisted on using one charging standard, while Nissan and other Asian manufacturers insisted on using another. As a result, two different types of fast chargers are being built and paid for across the U.S.

WiTricity’s latest announcement shows that automakers have recognized how critical interoperability is for simplifying the EV charging experience and prompting broader adoption of EVs.

“WiTricity is partnering with Nissan to catalyze wireless charging in the EV market and move the industry forward to an interoperable future,” said WiTricity CEO Alex Gruzen. “In order for us to realize a future of transportation that is electrified, shared and autonomous, we need a wireless charging solution that works for all vehicles.”

Why working with automakers matters

WiTricity saw a big win last month, when SAE International selected a circular coil design — the type of design WiTricity uses — as the standard all automakers must use for wirelessly powered EVs. These systems will now be tested to inform a global set of wireless charging guidelines, with buy-in from all automakers.

Because of the standards hurdle, the first vehicle-integrated wireless charging systemisn’t expected to come to market until 2018, with the Mercedes-Benz S550e plug-in hybrid (PHEV) luxury sedan. However, Gruzen believes there could be a product announcement this year.

EV owners don’t have to wait for in-vehicle technology. Aftermarket solutions for wireless charging already exist. Tesla owners, for instance, can buy an aftermarket system from Plugless Power for $4,120. But because automakers haven’t signed off on these products, they may not support them.

WiTricity doesn’t offer aftermarket products. Rather, the company licenses its technology to Tier 1 suppliers like Delphi, IHI and TDK who build products for carmakers. At the same time, WiTricity works directly with OEMs like Nissan, Toyota and GM to develop its technology further. It comes as no surprise, then, that Gruzen isn’t a big fan of aftermarket solutions.

“I think that this is a critical system. So you need to make sure that it’s integrated well from the mechanicals, to thermals, and proper shielding so that none of the car systems can be impacted,” he said, as well as “that the software and the physical connector interfaces are blessed and approved.”

There aren’t going to be autonomous Ubers without wireless charging

WiTricity was founded in 2007 to commercialize technology patented two years earlier by a team of physicists from the Massachusetts Institute of Technology, led by Professor Marin Soljačić. The company’s claim to fame is its magnetic resonance technology that provides highly efficient power transfer from the grid to a vehicle, regardless of vehicle type and with flexibility on how accurately the vehicle is positioned.

Gruzen said WiTricity’s technology is 91 percent to 94 percent efficient, and can be even more efficient than plugging in because it doesn’t need certain pieces of technology, like a DC-to-DC converter.

WiTricity’s DRIVE series of wireless EV charging pads come in 3.7 kilowatts, 7.7 kilowatts and 11 kilowatts — typical sizes for consumer vehicles. The company also plans to scale to 22 kilowatts and higher to power bigger vehicles like electric buses. By installing charging pads at bus stops and depots, buses may never have to plug in or fill up again.

Some of the first applications of wireless chargers will likely be for luxury vehicles, like the S550e, until technology the technology scales and costs come down. Ditching the plug may seem like a luxury, but the convenience factor is actually considered an important draw to electrification in general.

Nissan is partnering with WiTricity because of “the potential of wireless charging to help advance widespread acceptance of EV motoring,” said Kazuo Yajima, global director of the EV engineering division at Nissan.

Enabling the use of EVs is an important goal, said Gruzen. Wireless chargers significantly improve the user experience and are theoretically capable of bidirectional charging and other applications that benefit the electrical grid. But the evolution of autonomous vehicles is what caused interest in wireless charging to really spike.

“It’s like there’s a holy trinity of electrification, autonomy and shared services…and in the middle of that is all the investment that’s taking place in lidar and in optical sensors like from Mobileye and Velodyne,” said Gruzen. “You’ve also got massive investments in artificial intelligence and machine learning, as well as optical processing and all of that decision-making. And, then, wireless charging.”

“Not as many people are talking about [wireless charging], but there just aren’t going to be fleets of autonomous Ubers…without wireless charging,” he added.

Different Reactions to Uber and Tesla by Trump

While Uber got shellacked for its link to President Donald Trump, the electric carmaker and sometimes-rival Tesla Inc. has comfortably weathered its association with a president who has lower approval ratings than any predecessor in his first days in office.

Uber Technologies Inc. lost customers and drivers and became the subject of a campaign on Twitter that encouraged people to delete their Uber apps. The opposition compelled Uber Chief Executive Officer Travis Kalanick to quit Trump’s Strategic and Policy Forum. Meanwhile, Tesla faced relatively minimal backlash, and there’s been no comparable effort to boycott the carmaker’s products. Tesla CEO Elon Musk has said he has no plans to quit the committee.

The contrast is viewed as a double standard within Uber’s headquarters in San Francisco.

Former President Jimmy Carter said Wednesday millions of jobs could be created in the United States if President Donald Trump embraced renewable energy sources such as geothermal, solar and wind power.

Carter, a Democrat who was the first U.S. president to install solar panels at the White House, said he hoped the Republican Trump would give it “deep consideration.”

“Sometimes there’s a philosophical objection to this by some — I’ll say right-wing Republicans — but he has a high priority of job creation,” Carter said in an interview with The Associated Press. “If they just remember the tremendous potential of creating millions of jobs in America just from renewable energy sources, that would be a very good counter-argument to those who oppose the concept of global warming being caused by human activity.”

Guardian: Electricity Market Operator Denies Being ‘Asleep at the Wheel’ During Blackout

The Australian Energy Market Operator says it was not asleep at the wheel after another electricity shortage in South Australia on Wednesday caused blackouts for 40,000 people.

Senior managers from the electricity market operator faced combative questioning about their management of the South Australian weather event during a Senate committee hearing in Canberra on Friday.

As other states battled extreme temperatures, and faced the risk of blackouts, and as political debate continued to rage about energy policy, David Swift, executive general manager of corporate development at Aemo, defended the performance of his agency despite admitting there had been an error in their forecasting on the day of the blackout this week.

“We certainly weren’t asleep at the wheel,” Swift told the committee.

Engadget: Researchers Make a Graphene Superconductor

Graphene is the miracle cream of the physics world, with scientists all across the globe looking to unlock its powers. Researchers at the University of Cambridge believe they’ve found a way to transform the substance into a superconductor. Superconductors are nothing new, of course, but they normally have to be cooled to very low temperatures to be effective. In this experiment, however, the materials were left at the current temperature. Now, like so many graphene projects, it’s still early days, but if it works, it could upend the way we build electronics forever.

All materials have a level of resistance, which is a measure of the fight it puts up to stop electricity passing through it. A copper wire, for instance, has quite a low level, which is why it’s used a lot to build electronics and computers. Wood’s at the other end of the spectrum, at least when it’s dry, which is why your smartphone isn’t hewn from trees.

The European Commission has proposed extending import duties on solar panels from China by 18 months, a shorter period than initially planned, and with a gradual phase-out, Commission Vice President Frans Timmermans said on Wednesday.

Anti-dumping and anti-subsidy duties have been in place on Chinese solar panels and cells since 2013 and are currently under review as to whether they should be maintained. A majority of EU countries last month opposed a proposed two-year extension.

Timmermans told a news conference that it was a sensitive issue. The commission’s proposal, revealed by Reuters on Tuesday, will be put to the EU’s 28 member states later this month.

The Energy Jobs

As GTM’s Stephen Lacey has reported, New York’s top utility regulator, Audrey Zibelman, is moving on from her position. Australia’s energy market operator announced that Zibelman will be taking over as chief executive. The organization, called AEMO, operates wholesale power markets, wholesale natural-gas markets, trading hubs and gas transmission systems throughout Australia. Zibelman leaves New York’s Public Service Commission at a delicate time. The state is two and a half years into Reforming the Energy Vision, the utility reformation plan announced by Governor Andrew Cuomo in 2014.

Last Thursday, FERC Chair Norman Bay announced his early resignation. He broke the news after President Trump chose Cheryl LaFleur to serve as the new chair next year. Carolyn Elefant tells NPR: “I think [Bay] was perhaps disappointed that Commissioner LaFleur was elevated above him. The resignation could mean costly delays for some major pipeline projects.”

Energy storage provider Sunverge named former Nexant CTO and GM Martin Milani as its first COO. The company also named two new members to its board of directors:John Di Stasio, former CEO of Sacramento Municipal Utility District and current president of the Large Public Power Council; and Elisabeth Brinton, executive GM of Australian energy retailer AGL Energy.

Sheldon Kimber and Todd Johansen, both previously with Recurrent Energy, have founded Intersect Power, “an infrastructure development company bringing clean power to wholesale markets.”

Aclara Technologies, a supplier of infrastructure solutions to electric, gas and water utilities, named Aaron Merkin as its first CTO. Before joining Aclara, Merkin was CTO of ABB Enterprise Software (formerly Ventyx) and chief software architect of its grid automation practice. Aclara is owned by an affiliate of Sun Capital Partners.

Boris Schubert, previously with previously with ET Capital, is now GM of solar operations at Shell.

Solar tracker vendor Array Technologies named Jeff Krantz, previously VP of sales at SMA, as senior VP for North America.

Energy storage provider Alevo named Peter Heintzelman, previously with T5 Oil & Gas, as group CFO. Alevo, a battery manufacturing aspirant with mysterious sources of big funding, has moved a little closer to commercial deployment of its sulfur-based inorganic lithium-ion electrolyte chemistry. The first commercial deployment for the big battery is in the city of Lewes, Delaware, where it will enable the “repurposing of a retired oil-fired generator building once operated by the Lewes Board of Public Works.” Alevo is hoping to sell ancillary services into the PJM regulation market.

ExxonMobil announced that Dr. Susan K. Avery was elected to its board of directors. Avery, an atmospheric scientist, is the former president and director of the Woods Hole Oceanographic Institution. Her appointment is in response to a longstanding request from shareholders to appoint a climate expert to its board.

John Berdner has joined HiQ Solar, a builder of commercial 3-phase inverter technology, as VP of regulatory compliance. Berdner most recently was with Enphase, and before that SMA and SolarEdge. Berdner is active with IEEE 1547, UL 1741, National Electrical Code, and the Calif. Smart Inverter Working Group.

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Enertech Search Partners, an executive search firm with a dedicated cleantech practice, is the sponsor of the GTM jobs column.

Among its many active searches, Enertech is looking for a Distributed Response Operations Manager.

The client is one of the world’s leading integrated energy companies aiming to expand the team for an internal startup. The parent company is expecting to invest about $1 billion into this early-stage business focused on distributed energy for large energy users. By combining traditional and renewable power, energy efficiency, demand response, generation, advisory services and big data and other digital assets, they help their customers capitalize on the new and more flexible energy landscape and move from consumers to prosumers and even grid service providers.

This client is currently seeking a Demand Response Operations Manager who will reside on the Customer Success Team. They are looking for an individual who will lead the North American team responsible for demand response retail operations in utilities and all ISOs, including PJM, NYISO, ISO-NE, MISO and ERCOT. This will include oversight of all post-sale customer interactions and operational steps and is responsible for the ongoing customer experience.

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Elise Hunter joined flow battery developer Primus Power as director of business development. Previously Hunter was an expert analyst of energy storage at PG&E. Primus has raised more than $60 million from Anglo American Platinum, Chrysalix Energy, DBL Investors, I2BF Global Ventures, KPCB, DOE, ARPA-E and the CEC. Primus uses a single-loop flow battery design, plating zinc on titanium-based electrodes to perform the key energy exchange function, rather than running electrolyte through membranes.

As reported by GTM, “According to the Department of Energy’s latest report on jobs in the energy sector, employment in the electric power sector rose 13 percent in 2016 as utilities and developers built new power plants, replaced aging equipment, and invested in new technologies to manage an increasingly complicated distribution grid. There are now 860,869 people employed in the electric power sector, an increase of more than 101,000 jobs from 2015. Workers in the construction industry building solar, natural gas and wind power plants accounted for most of the increase, reported DOE.”

The new members of the Advanced Energy Economy board of directors are Roger Flanagan, managing director, Lockheed Martin Energy; Mike Garland, CEO, Pattern Energy; Arjun Gupta, executive chairman, Nexant; Paul Kaleta, EVP and general counsel, First Solar; Dan Shugar, CEO, NEXTracker, a Flex company; and Aziz Virani, CEO, CLEAResult.

The confirmation hearing of Oklahoma Attorney General Scott Pruitt, President-elect Donald Trump’s choice to be the administrator of the U.S. Environmental Protection Agency (EPA), started in mid-January.

Pruitt’s LinkedIn page describes him as “a national leader in the cause to restore the proper balance of power between the states and federal government. […] Scott filed the first lawsuit challenging the implementation of the Affordable Care Act, is a leading advocate against the EPA’s activist agenda, and is leading a multistate lawsuit challenging the constitutionality of the Dodd-Frank financial law.” Pruitt joins Ben Carson at HUD, Rick Perry at the Department of Energy, and Betsy DeVos at the Department of Education in having rather unorthodox views regarding the direction of the government agencies they could potentially lead.

“Republicans only need 50 votes to confirm [Pruitt], and there have been no signs of GOP defections,” according to political news website The Hill.