Telematics and electric mobility, part I

Prices of electric vehicles are discouragingly high, business models involving their operation iffy. Yet that is not stopping a growing number of entrepreneurs and politicians in Europe from embarking on ambitious electric mobility projects that they hope will not only help save the environment but also make money.

There are forward-thinking operators of major car fleets looking at electric vehicles for their ability to save on fuel and diminish greenhouse gases. There is a nonconformist eco-warrior trying to drive wider adoption of electric vehicles by providing free electricity at charging points in remote corners of the United Kingdom. There is the serial entrepreneur who believes he has found a way of making electric cars financially viable even at today’s prices. There is an ambitious mayor who aims to remake London as the electric vehicle capital of Europe. And there are innovative car-sharing schemes that for the first time make it possible for anyone with a few spare euros to try out an electric car.

Their individual motivations vary, but together they are building toward the critical mass necessary for electric mobility in Europe to achieve wide adoption.

Economies of scale

Electric car ownership is negligible now. There are only about 2,000 electric cars registered in the United Kingdom. Germany may have as many as 5,000. But the numbers are swelling as advances in batteries are made and economies of scale kick in. And while electric vehicles are unlikely to displace combustion engines any time soon, the European Automobile Manufacturers’ Association (ACEA) expects them to grab a significant market share – between 3% and 10% (450,000 to 1.5 million new vehicles sold annually) by no later than 2025.

That may not seem like much, but consider the obstacles facing the fledgling sector. There is the prohibitively high up-front cost of electric vehicles and no way of telling how fast costs will decline. For example, Leaf, the all-electric compact from Nissan, starts at £25,990 in the United Kingdom, and that is after a £5,000 government subsidy. Little matter that a full-range trip of 170 kilometers then costs as little as £1.30.

There is uncertainty over the resale value of used vehicles, a critical variable for operators of car fleets. Concerns persist over long-term reliability of lithium-ion batteries and their effectiveness under adverse operating conditions; they have been known to explode in cell phones when exposed to excessive heat. Charging infrastructure is spotty at best. And the underpinning value chain is only beginning to coalesce.

“For electric mobility to take off and fulfill its potential,” the ACEA writes on its website, “the cooperation of multiple players is necessary, including the automotive industry, the energy producers and providers, the research and development community as well as governments on various levels – from EU institutions to towns and city councils. Together, these players must enable a workable and affordable mix of technologies, energies, accessible charging infrastructures, common standards as well as consumer information and targeted market incentives, and more.”

Fleet operators will lead the adoption of electric vehicles, says Peter Fuss, Ernst & Young’s senior partner for automotive in Germany, Austria and Switzerland. “They have the power and the willingness to really use EVs, and they can afford it,” he says. “If you look at the purchasing price without incentives for most EVs, a normal private person cannot afford to buy these cars because they are up to twice as expensive as cars of similar size with a combustion engine.” (For more on fleets and EVs, see M2M telematics: Turning the OEM development model on its head and Green telematics: The eco-driving opportunity.)

EVs and fleets

Many are already testing the waters. The mail division of Deutsche Post DHL uses 60 electric vehicles and last September reaffirmed its commitment to clean energy by announcing a partnership with Germany’s StreetScooter for the development of a brand-new all-electric delivery van. A working prototype capable of handling up to 200 stops a day and operating 300 days a year is expected this fall.

“Protecting the environment is one of the stated goals of Deutsche Post DHL,” said Jürgen Gerdes, a management board member responsible for the mail division, in a press release. “As operators of one of the largest vehicle fleets in Germany, we have a special interest in deploying vehicles that emit no emissions, are economically efficient and can handle the daily stresses of strains of delivery work.”

Last year the car rental company Hertz introduced i-MiEV electric vehicles in London, thus heeding the call of Mayor Boris Johnson to make the city the electric vehicle capital of Europe. Made by Mitsubishi Motors, the i-MiEV has a range of 140 kilometers and takes roughly 30 minutes to recharge. The City of London absolves all electric vehicles of the £10-a-day congestion charge and is on target to provide 1,300 publicly accessible charging points across the capital by 2013.

In Paris, people can now subscribe to an electric car-sharing scheme owned and operated by the French investment holding Bolloré Group and co-financed by the city of Paris and the outlying districts of Île-de-France. Called Autolib, the project works much like already popular bicycle sharing. For a flat subscription fee (€10 for a day, €144 for a year), one gets access to a fleet of electric cars and is then charged an hourly rate for usage (between €9 and €13 for the first hour depending on the subscription plan).

Bluecar, the electric car Autolib uses, is manufactured by Pininfarina and features Bolloré’s proprietary lithium-metal-polymer batteries. The scheme launched on Dec. 5 with 250 vehicles and 250 stations and aims to have as many as 3,000 vehicles by the end of the year. In late November, car2go, a subsidiary of Daimler AG, launched a similar scheme in Amsterdam with a fleet of 300 smart fortwo electric vehicles.

Downside risk

There is, of course, the risk of getting in too early as TNT found out. Four years ago, the UK branch of the mail and logistics company acquired a fleet of 51 7.5-ton all-electric delivery trucks from Smith Electric Vehicles, a Kansas City, Missouri-based manufacturer of zero-emission commercial vehicles. At the time, Tom Bell, then regional managing director for UK and Ireland, hailed the acquisition a “huge step forward for our fleet. Not only is this one of the most environmentally friendly vehicles on the market, there are also potential significant cost savings in the long-term,” he said. “This vehicle is exempt from the London congestion charge – approximately £1,750 a year. It costs just £25 a week to recharge the battery as opposed to £110 spent on fuel for a diesel vehicle.”

The expectation was that the vehicles would pay for themselves in five years and that their residual value would match that of similar diesel trucks. But they have been a disappointment, says Steve Davis, national engineering manager for TNT UK. He says that half of the vehicles have suffered failures of their sodium-nickel-chloride batteries, some of them repeatedly, leading to service disruptions and costly replacements that were, fortunately for TNT, covered by warranty. (Ten trucks have since been converted to lithium-ion batteries and the problems seem to have gone away.)

And while TNT persists with the vehicles, putting them to work along short delivery routes in 17 different cities across the United Kingdom, it is in no rush to buy 150 more as it had previously planned.

Jan Stojaspal is a regular contributor to TU.

For more all the latest telematics trends, check out Telematics Detroit 2012 on June 6-7, Insurance Telematics USA 2012 in September in Chicago, and Telematics Munich 2012 on October 29-30.

For exclusive telematics business analysis and insight, check out TU’s reports on In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.