Perhaps it’s the tedium of traffic gridlock or our unreliable trains but transport seems to inspire utopian visions like few other of life’s chores.
Take the much-hyped “Segway personal transporter” and the miracle fuel cell that’s been promising to revolutionise transportation for a generation.
Now it’s the turn of the electric car - or rather, the return.
A century ago, more than a third of the motorcars on US roads were electric-powered. Then along came Henry Ford and his Model T, and the combustion engine has dominated ever since.
Electric motors, though, had advantages that remain today: zippy acceleration, mechanical simplicity, no exhaust and quiet operation.
Rapid technological advances, meanwhile, are overcoming some of the past limitations of battery technology – cost, range and recharge time. Add soaring petrol and diesel prices, and the era of mass electric car may finally be nigh.
“If you spend more than $80 a week on petrol, your next car will be an electric car,’’ predicts ex-internet entrepreneur Evan Thornley. “We think that of new car sales in 2020, about 25 per cent will be electric.’’
Thornley parked one fortune when he became the first Australian to list a company on the Nasdaq stock exchange – LookSmart - in 1999. In 2008, he quit Victorian state politics to chase another when he became chief of the Australian operations of Better Place.
The company is building plug-in points and other key infrastructure to serve an expected surge in electric vehicle (EV) demand.
Rivals in Australia include ChargePoint, which debuted last May with Australia’s first public plug-in point and has some 30 installed now.
“You’ll find the uptake much higher than many expect,” says ChargePoint chief executive officer James Brown, adding that industry momentum is picking up towards an “inflection point”.
Carbon debate in overdrive
Better Place’s local debut will come in Canberra later this year – just as the carbon tax debate enters overdrive.
Thornley welcomes the Gillard government’s plan to tax carbon emissions but doesn’t expect a big impact on his business.
‘’The economics of batteries and renewable energy are just overwhelming versus petrol,’’ he says. “But obviously, as governments move to put a price on carbon, that will lead to a further increase in the cost of dirtier energy sources and therefore a greater competitiveness for clean energy.’’
Better Place estimates energy costs for electric cars is 2-3 cents per kilometre, compared with 10-15 cents/km for petrol-powered cars, depending on the model.
Any carbon price would widen the gap - provided the electricity comes from renewable sources.
Better Place will start serving Canberra customers early next year once it’s installed sufficient plug-in points in car parks so drivers can recharge away from home. The company will open switching stations that allow drivers to swap depleted batteries with fully-charged ones by June 2012.
Sydney and Melbourne will see similar roll-outs in 2013, with a network covering 80 per cent of Australia by that year’s end.
ChargePoint is also starting small, with about 300 registered customers so far - not all of them active. Firms face a “chicken and egg” issue, since they need to invest in recharging points ahead of EVs’ arrival, says CEO Brown.
Abroad, Denmark, Israel and China are among countries planning subsidies to help accelerate EV take-up. The Obama administration, meanwhile, wants one million so-called advanced technology vehicles – many of them EVs – on US roads by 2015.
Some see slow progress
IBISWorld, however, doesn’t share the ardour of EV advocates. The industry analysts estimate the EV market will be worth $1.7 billion worldwide this year and account for just 0.05 per cent of new car sales.
By 2020, the share will rise to 1 per cent, and only 0.8 per cent in Australia, it predicts.
“The Australian car market will remain predominantly petrol, gas and diesel-based, with higher hybrid vehicle penetration and more fuel-efficient petrol-run cars,” says senior IBISWorld analyst Sarah-Jane Derby.
The barriers to mass EV adoption include high prices – batteries can account for about a third of a car’s cost - and the lack of infrastructure.
“Even if charging stations are set up, there will not be enough of them, especially given the short range of EVs,” she says. Cheaper models may need recharging every 100 kilometres.
In Denmark, for instance, the new Renault five-seat Fluence ZE sedan costs about $38,000 and an additional $1800 for a private charging station from Better Place. Monthly subscriptions will cost about $275 to $580, according to a recent AP report.
(Renault won’t reveal when it will bring the Fluence to Australia, or its price.)
Recent US sales figures don’t signal a green rush there. GM’s Chevrolet Volt sold just 281 of its hybrid petrol-electric cars in February and Nissan just 67 of its new Leaf – both down on January levels. Australia’s all-electric car sales barely topped 100 last year.
In China, another great hope for the industry, the car maker backed by US billionaire investor Warren Buffett, BYD (supposedly for “Build Your Dreams”), is also struggling to get its hybrid electric cars to market.
A Chinese rival, though, is planning to export a cheap model to Australia soon, according to a report this week.
Fleet of foot
Better Place’s Thornley believes the EV’s hurdles will be cleared.
Huge investments in research around the world will cut the cost and improve the range of the lithium-ion batteries. (Indeed, The Economist recently reported on a potential breakthrough). Energy hunger in China, India and elsewhere, meanwhile, may send oil-based fuel prices ever higher.
Better Place expects fleet operators to be among the first buyers of EVs - a view shared by IBISWorld - and is in a $26 million consortium planning to produce an all-electric version of the Holden Commodore by next year.
“We were, to be honest, a little surprised by … the extent to which the fleet market is focused on emissions reductions,’’ Thornley says. “We talked to 73 of the top 100 fleets in Australia in the last few months, and 95 per cent of them said that as soon as the major manufacturers are bringing zero-emissions vehicles to the market, they will be wanting to trial those vehicles.”
At current fuel prices, a typical fleet car has petrol costs of about $5000 a year for its average 30,000 km usage, and would be more expensive to run than an electric vehicle, Better Place says.
ChargePoint’s Brown also expects fleet operators to become important customers. For early adopters, though, the main motivation is ”not necessarily all about the cost,” he said.
Renewable fillip
Better Place packs a war chest after raising about $700 million in venture capital in the past two years, including $25 million from local investors Lend Lease, AGL and RACV.
The company also intends to source all its electricity from green power, promising a boost to fledgling wind, solar and other renewable energy generators.
“We’ll be the biggest buyer of renewable energy by a factor of two magnitudes,” says Thornley, noting a typical wind turbine would supply power for 2500 cars.
(Better Place’s offering will include all-renewable electricity wherever charged – answering IBISWorld’s concerns consumers charging at home won’t be as environmentally-friendly. ChargePoint says its customers also want green-sourced power.)
The company will “smart charge” batteries remotely from sites such as a high-tech control room in Melbourne’s inner suburb of Richmond. The aim is to manage the company’s drain on the grid – potentially an issue on peak-use summer days.
“If you convert all 14.7 million (vehicles in Australia), you’d see relative to current load a ‘small double-digit’ increase in total load,” Thornley predicts. “Total emissions across the energy system will actually decline and wholesale electricity prices will actually decline.”
All up, some big calls. How utopian? We’ll discover in the near future.
