1103 Exec Digest.IR2

Accenture

The large-scale rollout of plug-in electric vehicles (PEVs) will be hindered unless investors stimulate demand, lower the cost of public charging infrastructure and manage the impact on the grid, according to a report published by Accenture. 

The report, “Changing the game: Plug-in electric vehicle pilots,” analyzed a range of electric vehicle trials around the world, focusing on pure electric vehicles (EVs) that depend entirely on charging from the electric grid. The report identified three key challenges:

  • Cost. The business case for investing in public charging infrastructure is weak because of high costs and initial consumer preferences for home charging. Pilots reveal a risk that consumers might not use public charging spots at rates required to recover costs, which range from about $5,000 to $50,000 per charging station for units capable of fast charging a car in about 30 minutes.
  • Control. Infrequent charging by consumers will limit the ability to control the impact of charging on power flows. Pilots show that PEVs meet the driving requirements of typical city users who therefore might not plug in their cars daily. This increases the unpredictability of charging and reduces control. Plugging in vehicles whenever they are parked will help grid management and ease the strain on the grid.
  • Scale. While most electrification technologies work in isolation, there are too few electric vehicles in pilot areas to test the technologies and their integration with each other robustly. Grid impact must continue to be monitored closely as the market develops.

“Plug-in EVs have extensive implications for business models because they require changes in consumer behavior and can increase strain on the grid,” Accenture’s Melissa Stark said. “It will be critical to improve understanding of consumer preferences and to change consumer behavior through creative incentives if utilities and service providers are to manage the impact on the grid.”

Implications of PEV business models
The report reviews business models that have varying impacts on adoption and implications for service providers.
  • Charging business models. Today’s public charging infrastructure model is needed to drive initial large-scale rollouts but carries high risks because of upfront costs, unpredictable charging patterns and possibly limited demand. More profitable commercial models are needed for a sustainable PEV market. These include: private charging infrastructure that will include mechanisms such as premium charging to manage demand and battery-swapping services that reduce the strain on the grid. The end-to-end model, where a single service provider will offer long-term service contracts that remove the battery cost from the vehicle purchase price and include battery swapping as an option.
  • Automotive business models. Direct vehicle sales to consumers are being tried by some manufacturers, but the high cost of the batteries makes this option unaffordable for most consumers unless large government subsidies are offered. Leasing cars is more attractive because it spreads the high purchase price over a long time. Automotive manufacturers must invest in capabilities to manage a new service-based relationship with consumers if they are to adopt this model.
  • Battery-leasing models. Some service providers own and maintain the batteries, leasing them through a subscription service where consumers pay for miles driven instead of electricity.
     
“The consumer is the most important factor in determining which business models will succeed,” Stark said. “The capabilities needed to deliver these models will be the same across the world, but the players that choose to develop them will vary. This means that standardization of technologies is urgently needed to support the varied involvement of service providers. And greater efforts will be required to improve understanding of consumer preferences.”
 
About the report
“Changing the game: Plug-in electric vehicle pilots” features the following case studies of EV pilots: Showa Shell’s fast-charging pilot in Tokyo; Alliander’s E-Laad pilot in The Netherlands; One North East’s Plugged in Places pilot in Newcastle Upon Tyne, U.K.; and Better Place’s Tokyo taxi battery-switching demonstration. The study also examines the competitive battle between the Chevrolet Volt and Nissan Leaf.
 
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1103 Exec Digest.IR2

Accenture

The large-scale rollout of plug-in electric vehicles (PEVs) will be hindered unless investors stimulate demand, lower the cost of public charging infrastructure and manage the impact on the grid, according to a report published by Accenture. 

The report, “Changing the game: Plug-in electric vehicle pilots,” analyzed a range of electric vehicle trials around the world, focusing on pure electric vehicles (EVs) that depend entirely on charging from the electric grid. The report identified three key challenges:

  • Cost. The business case for investing in public charging infrastructure is weak because of high costs and initial consumer preferences for home charging. Pilots reveal a risk that consumers might not use public charging spots at rates required to recover costs, which range from about $5,000 to $50,000 per charging station for units capable of fast charging a car in about 30 minutes.
  • Control. Infrequent charging by consumers will limit the ability to control the impact of charging on power flows. Pilots show that PEVs meet the driving requirements of typical city users who therefore might not plug in their cars daily. This increases the unpredictability of charging and reduces control. Plugging in vehicles whenever they are parked will help grid management and ease the strain on the grid.
  • Scale. While most electrification technologies work in isolation, there are too few electric vehicles in pilot areas to test the technologies and their integration with each other robustly. Grid impact must continue to be monitored closely as the market develops.

“Plug-in EVs have extensive implications for business models because they require changes in consumer behavior and can increase strain on the grid,” Accenture’s Melissa Stark said. “It will be critical to improve understanding of consumer preferences and to change consumer behavior through creative incentives if utilities and service providers are to manage the impact on the grid.”

Implications of PEV business models
The report reviews business models that have varying impacts on adoption and implications for service providers.
  • Charging business models. Today’s public charging infrastructure model is needed to drive initial large-scale rollouts but carries high risks because of upfront costs, unpredictable charging patterns and possibly limited demand. More profitable commercial models are needed for a sustainable PEV market. These include: private charging infrastructure that will include mechanisms such as premium charging to manage demand and battery-swapping services that reduce the strain on the grid. The end-to-end model, where a single service provider will offer long-term service contracts that remove the battery cost from the vehicle purchase price and include battery swapping as an option.
  • Automotive business models. Direct vehicle sales to consumers are being tried by some manufacturers, but the high cost of the batteries makes this option unaffordable for most consumers unless large government subsidies are offered. Leasing cars is more attractive because it spreads the high purchase price over a long time. Automotive manufacturers must invest in capabilities to manage a new service-based relationship with consumers if they are to adopt this model.
  • Battery-leasing models. Some service providers own and maintain the batteries, leasing them through a subscription service where consumers pay for miles driven instead of electricity.
     
“The consumer is the most important factor in determining which business models will succeed,” Stark said. “The capabilities needed to deliver these models will be the same across the world, but the players that choose to develop them will vary. This means that standardization of technologies is urgently needed to support the varied involvement of service providers. And greater efforts will be required to improve understanding of consumer preferences.”
 
About the report
“Changing the game: Plug-in electric vehicle pilots” features the following case studies of EV pilots: Showa Shell’s fast-charging pilot in Tokyo; Alliander’s E-Laad pilot in The Netherlands; One North East’s Plugged in Places pilot in Newcastle Upon Tyne, U.K.; and Better Place’s Tokyo taxi battery-switching demonstration. The study also examines the competitive battle between the Chevrolet Volt and Nissan Leaf.