Innovative business models in the electric vehicles industry

Image from picasaweb.google.com

The electric transportation industry, including batteries, vehicles and infrastructure, is just at the beginning.

Future innovations in plug-in and hybrid vehicles were presented at the Plug-In 2010 International Conference and Exposition in San Jose, CA this week. This third annual event drew automotive manufacturers, component suppliers, electric utilities, government agencies, research organizations, and academic experts who came together to discuss current and future developments of plug-in hybrid and electric vehicles technologies.

Three different and emerging business models were presented by:
1. Mission Motors, San Francisco
2. Best Buy, retailers
3. Better Place, Palo Alto

Mission Motors described how their business model has evolved from building an electric sport-bike with zero emissions to developing a battery technology with more powerful and efficient motors and smarter technology.

Initially, the company has undertaken the task of building a motorbike from the ground up with performance that would shift the paradigm of electric vehicles. This process has lead them to define a new era of performance in electric transportation, not just to focus on motor power, functionality and speed ratings, but also to encompass all aspect of performance: speed, acceleration, range, handling, reliability, and impact on the environment.

The battery technology developed by Mission Motors meets voltage and current requirements of a variety of electric vehicles (EVs). Their business model sets out to push the limits of EV technology, to build a capital efficient vehicle and powertrain technology, to offer higher performing and more flexible electric powertrains to all applications, and to collaborate with OEMs to reduce their risk and time to-go-to-market of new EVs.

Best Buy began demonstrating and selling electric bicycles and scooters to consumers a couple of years ago. Currently, Best Buy is the leading retailer of electric bikes (ebikes). With a vast network of retail stores, and therefore accessibility to consumers, Best Buy has a significant reach. As transportation is experiencing a paradigm shift on a global scale and the industry moves toward a more sustainable power model and behavioral change, Best Buy has made EVs one of their emerging business models. EVs fit well with the company’s perspective to encourage adoption of affordable and clean transportation solutions.

Best Buy has enhanced the EV experience by enabling potential customers to test ebikes before they make a purchasing decision. Taking it further, Best Buys wants to help educate the consumers of the benefits of sustainable transportation options.

Other areas of interest to Best Buy in the evolving transportation field include electric recharging infrastructure solutions.

Better Place presented a new model in the transportation space: providing EVs networks and services. To reach a mass adoption of EVs, there is a need to offer alternatives to the existing transportation models, across the entire automotive industry and infrastructure, not just cars. Better Place believes their eco-friendly solution competes with the current transportation models and offers added value.

In Better Place’s model, customers own the vehicle (a personal vehicle or a fleet), but they don’t own the battery, which is the main component of cost in electric transportation. Better Place owns the batteries and provides several service options, where customers swap drained batteries in re-changing stations, and drive away with a fully charged one. The concept may be similar to mobile phones: we own our units, but we sign up with service providers who offer us a variety of programs and applications.

Since owning an EV is so expensive, the Better Place solution addresses customers needs of cost, range (of travel) and convenience. Their personal and public charge spots enable a recharge anytime, anywhere. A grid of networked charge stations will be accessible in key locations (similarly to gas stations today) and enable an unlimited driving range for EVs. Consumers’ affordability is key, as the customer doesn’t own the expensive battery that also has a limited lifespan and limited manufacturer’s warranty. In this model, Better Place owns the batteries and is responsible for aggregating battery usage, including phasing out poorly performing packs or modules.

In addition to the networked infrastructure, the grid is managed and recharging is optimal to reduce cost, load, and carbon emissions. Better Place optimization of their operations includes utilization of renewable energy sources.

We are facing a new era in the transportation industry, where the integration of emerging business models and new value chains will advance and improve EVs and plug-in hybrid electric vehicles (PHEVs) and lead them to become major players in the future of sustainable transport.

Tags: emerging technologies, future of transportation, electric cars, plug in hybrid cars, innovative business models, San Francisco and Silicon Valley innovators, emerging battery technologies