The Evolving Landscape of EVs

Editor's Note: From today's Wall Street Journal

Hybrid or All-Electric? Car Makers Take Sides
Debates in Tokyo
Highlight Tensions Within Industry
By JOSEPH B. WHITE in Tokyo and NORIHIKO SHIROUZU in Utsunomiya, Japan
October 24, 2007; Page A13
"Big auto makers revving up efforts to electrify automobiles are taking shots at each others' strategies, in a style more familiar to Silicon Valley entrepreneurs than the auto industry's usually circumspect leaders.
The argument surfacing among auto-industry leaders gathering for the Tokyo Motor Show this week is over whether it is time to skip past partial electrification of cars -- represented by gasoline-electric hybrids such as the Toyota Prius -- and push instead to revive the idea of an all-electric car.
On one side are Toyota Motor Corp. and General Motors Corp. Both have played down all-electric cars in favor of developing gasoline-electric hybrids, though they disagree on the best technology and how quickly it can be implemented.
On the other side are two allied car makers, France's Renault SA and Japan's Nissan Motor Co., as well as Honda Motor Co. The three have expressed skepticism about the economic wisdom of hybrids and are talking up all-electric cars."

Darryl has an opinion to share :-)

The pace with which the story of electric cars and hybrid cars continues to develop is astounding. Across the industry we have pretty much everyone talking about hybrids of some sort or another and more and more companies are presenting concept cars that are pure electric or plug-in with a significant electric range.

Joe White’s article in today’s WSJ outlines a significant development. In recent months, it seemed that everyone was moving toward the camp that plug-in hybrids were going to be where it’s at. Chevy has put its marketing muscle behind the Volt concept (those commercials are a bit much in my opinion) and Toyota has gone from dropping hints about a plug-in Prius to speaking openly about the challenges and hurdles they want to overcome before marketing it (I think Toyota is just biding their time and milking their current generation Prius cash cow before launching the next gen Prius. In the meantime they can make GM’s life difficult by suggesting they are concerned with Li-ion safety issues). Even Volvo is showing odd plug-in concept cars. In the WSJ article today, companies like Honda and Renault/Nissan are speaking out in favor of pure-electric.

This is certainly getting fun. The amount of time I spend in the morning reading through my RSS feeds has gone through the roof. If you are interested in what I am reading – I have some feeds for my shared items here and here (why won’t Google integrate their shared items function from Google Reader and “Your Shared Stuff”?).

The field is certainly shaping up to be a crowded one – and it begs the question of what the landscape will actually be in 2010 (I’ll just pick that year since most of the competitive offering are slated to come out, including WhiteStar). Your crystal ball is as good as mine so I thought I’d offer my perspectives and ask for yours. A full treatment of this topic would be massively long so I will offer the abbreviated version and save some for later.

First of all, we need to get away from the notion that there is going to be a massive and sudden shift from one dominant technology (gasoline) to another. Most informed people get this but it surprises me how many are still asking questions as if the answer is binary. Gasoline and cousin diesel will still be a dominant technology for many years to come.

That being said, the explosion of consumer interest in alternative fuel options should not be ignored. On a recent panel discussion at an investment conference with Don Runkle and Charlie Hughes among others, someone pointed out that hybrid electric cars will still only have a couple of points of market share in the near future. I responded by saying that while this might be true, if you look at where the growth markets are and will be in the automotive sector, it will be alternative fuel vehicles. Having a growth industry that will become several points of market share in a several hundred billion dollar industry sounds pretty good to me.

In my opinion, we will see significant growth in this alternative category, and we will see a proliferation of choices for consumers who are seeking these alternatives. This is where the binary logic trap sets in again. I am often asked which technology will win – plug-in or pure electric (the essence of the WSJ article.) I firmly believe that we will have healthy markets for both plug-ins and for pure electrics in the 2010 timeframe. There is no question that pure-electric appeals for its absolute efficiency advantage and its cleanliness, but the current limitations of battery technology as it relates to range provides an opportunity for a large market for plug-in hybrids for consumers who want a car that has the ability to drive with zero emissions for some distance yet travel long distances for road trips. Both markets will be growth markets with great opportunities for those who get to market with great cars.

Within the category of “plug-in” hybrids, I believe that we will see a distinction in the marketplace between what we often refer to as the parallel hybrid system (like Toyota’s Hybrid Synergy Drive) and the series hybrid approach (which GM is developing for the Volt). Many people have criticized GM for spinning the issue and calling the Volt an EV with a range extender, and not a hybrid. Those people are usually surprised when I tell them I agree with GM 100% on this. Although the technical terminology of series hybrid has been in existence for over 100 years, the marketplace has redefined “Hybrid” in such a way that I think it misrepresents the key differences between the platforms. You might argue that the average Joe won’t understand the difference between series and parallel hybrid systems if you were to tell them about it but I can assure you that they will understand the difference when they get behind the wheel.

The key difference is that with the “Range Extended EV” approach, you have a 100% electrically driven powertrain. The characteristics of this powertrain, with the smooth power and the high torque, will feel substantially different than a parallel hybrid system, which is fundamentally a gas motor with an electric assist. The electric motor in a parallel hybrid system will not have the power to provide the kind of thrills that a pure electric drivetrain can offer. There are other reasons to consider these two approaches substantially different that relate to CO2 emission under typical driving patterns but the bottom line is that I think these will evolve as two distinct market segments in the timeframe we are talking about, with customers choosing between them based on the merits of each approach and the criteria that is most important to them.

So I would summarize my points the following way:

• The shift away from gas to hybrid and electric will be gradual

• Alternative fuel cars will be a muti-billion dollar market opportunity very soon

• The marketplace has room for multiple technological approaches, including pure EVs, range extended EVs and parallel hybrid systems.

• Pure EVs are the most efficient and clean technology, although plug-in hybrids makes sense for a lot of people and are better than pure gas cars.

• “Range Extended EV” is not just PR spin for series hybrid platform, it actually makes sense from a customer perspective.

Let the debate begin! I look forward to your insights.