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2015 | Book

Electric Vehicle Business Models

Global Perspectives


About this book

This contributed volume collects insights from industry professionals, policy makers and researchers on new and profitable business models in the field of electric vehicles (EV) for the mass market. This book includes approaches that address the optimization of total cost of ownership. Moreover, it presents alternative models of ownership, financing and leasing. The editors present state-of-the-art insights from international experts, including real-world case studies. The volume has been edited in the framework of the International Energy Agency’s Implementing Agreement for Cooperation on Hybrid and Electric Vehicles (IA-HEV). The target audience primarily comprises practitioners and decision makers but the book may also be beneficial for research experts and graduate students.

Table of Contents


Industry Perspectives

EV Business Models in a Wider Context: Balancing Change and Continuity in the Automotive Industry
This paper seeks to balance the tendency to analyze EV business models in isolation by setting them in a wider context in which the automotive industry is seeking to reconcile continuity and change in an increasingly volatile and uncertain competitive environment. This paper argues that one reason for the relative lack of penetration of EVs and the relative failure of the organizational innovations that have accompanied them is that there are powerful forces for continuity. It is argued that there are many other aspects of change in the industry that have been neglected by EV protagonists and policy-makers but which, for the industry itself, may be more urgent. Consequently, policy-makers may need to reflect upon the utility of traditional market incentives, research support and regulatory pressure.
Peter Wells, Paul Nieuwenhuis
Four Business Models for a Fast Commercialization of Plug-in Cars
Plug-in vehicles are one important means to lower CO2 emissions from the transport sector. Despite this, uptake is slow. This can be well explained by theory on social dilemma problems and on diffusion of innovations. The traditional “sell-and-disengage” business model is not suitable for plug-in cars. Using an entrepreneurial business model generation process we have developed four alternative business models that address important factors for the speed of which customers adopt an innovation. The results show that alternative business models are necessary, but they cannot alone ensure a fast, and lasting, commercialization of plug-in cars. As a complement, governments will have to take measures to control external factors that influence the viability of business models for plug-in cars.
Mats Williander, Camilla Stålstad
Electrification of the Powertrain in Automotive Applications: “Technology Push” or “Market Pull”?
Full battery electric vehicles are yet to achieve significant worldwide success on the market. This analysis shows that the required technologies have already been developed, but not for a use in the mass market, where low cost is mandatory to be successful. Central roles for this success will be played by governments, industries, and research and standardization institutions. A great effort in both national and international synchronization and coordination activities, together with a clear regulatory push, will be mandatory. Enabling technologies for the plug-in hybrid and full electric vehicles will also come from the “3Cs”: Costs, Comfort, and Climatic dependency. There is definitely not a single impulse that will be sufficient to enable the market for electric vehicles.
Vincent R. H. Lorentz, Martin M. Wenger, Reiner John, Martin März


Identification of Market Models and Associated Billing Strategies for the Provision of EV Charging Services
The creation of an attractive market for the provision of charging services is crucial for the mass introduction of electric vehicles. Therefore there must be an adequate availability of charging infrastructure for owners of electric vehicles at their preferred locations where affordable and user-friendly charging services are offered. In this paper a part of the work performed within the ENEVATE project is described. Market models are presented that describe the structure of the market for charging services in terms of roles which can be taken up by different actors. Subsequently, this paper analyses the state of the art on billing structures for charging services. Finally, the correlation between the payment method and different factors are looked at (e.g. location of charging, parking and mobility policies and the type of end user).
Annelies Delnooz, Daan Six
Business Case for EV Charging on the Motorway Network in Denmark
This paper presents a business case for the development and operation of EV (Electric Vehicle) fast charging stations on the Danish motorway network. The business case is based upon an analysis of the EV models available on the Danish market, existing high power recharging solutions and a projection of market uptake of EVs in Denmark. The business case investigates two scenarios: A low scenario where 5 % of an EV’s charging demand is covered by fast charging stations and a high scenario where fast charging stations cover 10 % of an EV’s charging requirements. The two scenarios are examined for both a 5-year and a 10-year period. The business case shows that fast charging stations throughout a period of 10 years may result in a significant return of investments whereas investments for a period of only 5 years is too risky.
Victor Hug
Pricing Plug-in Electric Vehicle Recharging in Multi-unit Dwellings: Financial Viability and Fueling Costs
This research explores whether pricing structures and levels likely to provide electric vehicle drivers with financial motivation to recharge at multi-unit dwellings might provide sufficient opportunity for station cost recovery. Compared to a popular 50 mpg gasoline hybrid baseline, residential charging prices might have to be kept below $0.26/kWh, $1.00/h of charging, or $85/month—levels that only support roughly $1,000–2,000 in facility investment per vehicle served. Increasing facility utilization while minimizing per-vehicle costs is key to improving financial viability and, across pricing structures, could more than double the cost recovery potential. Further, site hosts’ choice of pricing structure will differentially affect their ability to remain financially viable in the face of input-parameter uncertainty.
Brett Williams, J. R. DeShazo
Solutions and Business Models for Wireless Charging of Electric Vehicles
This article describes possible scenarios for wireless charged electric vehicles, as they are discussed within the UNPLUGGED project. It gives a brief introduction into wireless technology and explains the three possible implementation steps for charging electric vehicles: stationary, static en-route and dynamic en-route. Based on these scenarios the impact of wireless charging on future mobility, especially in urban environments is discussed.
Axel Barkow, Gianni Campatelli, Riccardo Barbieri, Stefano Persi

Energy Systems

Electric Vehicles as Grid Support
The vision of Electric Vehicles (EVs) providing energy back into the grid is one that has captivated people since the re-emergence of EVs and the rise of the Smart Grid. In this vision, EV owners, electricity network operators and society more generally share the benefits of smoothing the peaks and troughs of electricity demand and improving EV battery utilization. Whilst technical obstacles remain, the greatest limitations are those presented by electricity market rules. Within existing frameworks, charging can be managed according to network needs for widespread benefit. And more immediately, vehicles can supply emergency back-up power or act as local storage for renewable energy through interactions that take place behind the electricity meter. Successful deployment of these scenarios will serve as a stepping stone towards the future vision of EVs as grid storage.
Kristian Handberg, Gill Owen
Energy Efficiency in Electric and Plug-in Hybrid Electric Vehicles and Its Impact on Total Cost of Ownership
There is an increasing awareness, policies and an incentive landscape, which are encouraging and starting to shape future transport as part of a wider ecosystem of infrastructure, use, behaviour and sustainability. However, one of the main barriers for the wider uptake by both fleet and individual users of electric vehicles is the concern of the uncertainties of Total Cost of Ownership (TCO). This contribution is based on a mix of original modelling, simulation and laboratory experimentation studies as well as a review of the academic and policy literature. It focuses on vehicle design and the battery and energy management in electric and plug-in hybrid electric vehicles (EV/PHEV). EV users express concerns about the longevity of the electric battery and hence the life cycle (especially with frequent fast charging), which amounts to a major part of the costs and value of the vehicle. Using the battery to provide ancillary services will add more value to the EV and reduce the effective TCO.
Matteo Conti, Richard Kotter, Ghanim Putrus


Evolution of E-Mobility in Carsharing Business Models
Carsharing continues to grow worldwide as a powerful strategy to provide an alternative to solo driving. The viability of electric vehicles, or EVs, has been examined in various carsharing business models. Moreover, new technologies have given rise to electromobility, or e-mobility, systems. This paper discusses the evolution of e-mobility in carsharing business models and the challenges and opportunities that EVs present to carsharing operators around the world. Operators are now anticipating increased EV proliferation into vehicle fleets over the next 5–10 years as technology, infrastructure, and public policy shift toward support of e-mobility systems. Thus, research is still needed to quantify impacts of EVs in changing travel behavior toward more sustainable transport.
Susan A. Shaheen, Nelson D. Chan
Personalized Total Cost of Ownership and Range-Capability Assessment as an EV Sales Accelerator
Several activities are currently underway that will further reduce the Total Cost of Ownership (TCO) and improve the user experience for electric vehicles. While this will potentially increase the favorability of EVs, this will only translate to increased EV adoption if potential EV owners are informed of these benefits in a method that is understandable and personally relevant. Multiple studies have concluded that current methods are insufficient in providing this awareness and that the lack of suitable alternatives will delay EV adoption. This paper will present the findings of a new method of EV purchase assistance, highlighting key findings from over 20 fleets that have implemented the system.
Sunny Trochaniak, Megan Allen, Eric Mallia, Jennifer Bauman, Matthew Stevens

Case Studies

Business Models for Electric Vehicles: Lessons from the Japanese EV Ecosystem
In this paper, we explore the reasons for Japan’s early success in the EV industry and the challenges it faces in sustaining its growth in the future. In-depth semi-structured interviews with major players in the Japanese EV ecosystem provide substantial data to draw lessons for EV business model innovation. Current barriers to the EV market are also discussed. We address the impact of the catastrophic tsunami and earthquake that hit Fukushima Prefecture in March 2011 on the emerging EV market. Three main business models are analysed in this paper. First, we present the strategies for the development of the EV charging network in Japan from industry and government perspectives. Second, we discuss innovative business models as drivers of the market with two cases of e-mobility services in Japan. Finally, energy service business models such as vehicle-to-home and storage that allow to capture more value from electric vehicles, are discussed as drivers of entry in the EV market.
Claire Weiller, Andy Neely
Orchestrating Ecosystem Co-opetition: Case Studies on the Business Models of the EV Demonstration Programme in China
This paper explores the development of the Chinese EV demonstration programmes through the conceptual lens of the business ecosystem framework. At present, government is acting as an ecosystem orchestrator promoting different types of business models such that the Battery Swapping Model in Hangzhou and Battery Charging Model in Shenzhen are co-existing while competing fiercely; such actions of orchestrating ecosystem co-opetition triggers practical implications for policymakers and industrial players who are tackling the challenges of stimulating a supportive business environment to promote the advancement of the EV industry in their respective countries. Theoretically, this paper clarifies the definition of business ecosystems, both statically and dynamically, while examining the relationship between business ecosystems and business models.
Tianjiao Shang, Ying Chen, Yongjiang Shi
EVs to Reduce Dependence on Imported Oil: Challenges and Lessons from Maui
Hawaii’s geographic isolation and historical dependence on imported fossil fuels are the primary cause of its residents having to pay the highest energy prices in the USA. To reduce oil dependence in transportation, the State of Hawaii introduced EV-friendly policies (in 2009) and financial incentives (in 2010) for an early adoption of plug-in electric vehicles (EV) and deployment of associated charging infrastructure. In 2011, University of Hawaii Maui College led a consortium of grant and cost-share partners to plan for mass EV deployment for Maui County in a 2-year project called “Maui Electric Vehicle Alliance.” The “planning” involved regular meetings and discussions among stakeholders, continuous outreach and education, and learning through implementation. An organized group of stakeholders acting as a central repository of information and coordinator of EV-related events while providing opportunities to educate and engage the community is essential to building confidence in this new EV technology and cultivating a change of driver attitude and behavior.
Anne Ku
Charging up Chile: Enabling Shared, Electric Mobility in an Emerging Market
Santiago de Chile has one of the most extensive and functional metro and bus networks in South America, yet the city is laden with extreme urban congestion and pollution. In this emerging market, where the private vehicle ownership rate is increasing at nearly 7 % annually, electric mobility and vehicle sharing have the potential to significantly mitigate the severe pollution and congestion. However, the high cost of electric vehicle (EV) ownership is far out of reach for the typical Chilean family, whose average net-adjusted disposable income is less than half of the OECD average. This paper proposes an EV sharing ecosystem that creates the opportunity to distribute the high capital cost of EVs across multiple users. In a nation with limited policy incentives for electric mobility, vehicle sharing and strategic partnerships in the private sector involving mining companies, energy providers, automotive OEMs, and research institutions can enable the broader adoption of hybrid and battery electric vehicles. Strategies and recommendations for enabling electric mobility in this emerging but economically divided context are proposed.
Praveen Subramani
Electric Vehicle Business Models
David Beeton
Gereon Meyer
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