Driving Forward: Show drivers the real green
Can car-charging initiatives work without better EV sales?
It was both exhilarating and disconcerting to hear Christopher Misch utter the following words during a recent phone interview:
?We are laying it out there. We are taking a risk. Some of us have cut our paycheques in half to join the (green infrastructure) movement,? said the vice-president of sales and business development for Sun Country Highway, a Saskatchewan-based electric vehicle (EV) infrastructure firm that aims to fast forward EV adoption in Canada through a charging-network installation blitz across the TransCanada highway and in local communities.
The company has set up more than 100 units across Canada in the last six months and hopes to get to 200 by 2013. But, unlike similar businesses south of the border, Sun Country Highway has limited support from governments. There?s some money from B.C. and P.E.I in its infrastructure efforts but the self-funded company is essentially going out on a limb here ? finding business partners where it can and developing revenue models on the fly.
While the efforts of Sun Country and similar Canadian companies (as pointed out by Wheels columnist Peter Gorrie in a recent piece) are commendable, Misch?s observations also laid bare the central dilemma facing businesses involved in the EV ecosystem ? how do you create a sustainable, and profitable, revenue stream from a trend that just doesn?t seem to catch on?
Yes, electric vehicle sales have shown signs of improvement. General Motors has moved 1,075 Chevrolet Volt units in Canada year to date, compared to last year?s total of 275. Mitsubishi iMiEV and Nissan Leaf sales have also spiked slightly but together they only add up to fewer than 400 units. Estimates show that there are about 1,500 EVs on Canadian roads. Even with strong growth in sales, it will be a while before that number hits 10,000.
So with these figures in mind, let?s do some Bill Clinton-style ?arithmetic.? Typically, Canadian EV infrastructure firms are being paid by a business or government partner for 240-volt charging stations, which usually range anywhere between $2,000 and $5,000. So if you took an average of $3,000 per unit and an optimistic installation rate of about 100-150 a year per company, total revenue amounts to about $300,000-$450,000 ? which, to be honest, is not a very impressive sum. Some money can be made through charging fees but given the current EV population and future projections, that doesn?t add up to much either.
The impact on businesses ? primarily retailers, restaurants, condos and hotels ? that are supporting the installations is minimal. In most cases, these companies are not looking for monetary gain, but opting for charging stations in their premises to add customer value, raise brand perception and meet sustainability targets, explains Cara Clairman, CEO of Plug?nDrive Ontario, a not-for-profit coalition of various EV value chain partners trying to raise awareness and foster adoption.
?Governments are probably investing to hit emissions reduction targets,? Clairman adds.
So, the risk lies squarely with the network providers. If EV sales do not skyrocket, the recent flurry of installations will eventually slow down, impacting their key source of revenue. Of course, these companies are betting on higher sales fuelled by better infrastructure. While charging stations may reduce some ?range anxiety? issues among potential buyers, I am doubtful about their overall impact at the dealer?s lot.
Most current EV owners rely on home charging. With low volumes, domestic overnight charging makes most sense. It?s cheaper and consumers don?t need to worry about charge times. Even utilities gain from home charging, particularly in Ontario.
?Ontario has a big surplus of electricity at night. The province loses a lot of money at this time because we don?t have storage in this province. On a typical night, we will either give it away or sell it at a loss. So if people charge their cars at night, it?s a big economic winner for Ontario,? points out Clairman.
A better approach toward convincing the average vehicle owner would be to sell the total cost of ownership ? the key value proposition of EVs at this point. The green message around EVs sure hits the heart but the sticker shock of current EV models hits the wallet harder. Conversely, several studies have shown the long-term savings of EV ownership compared to traditional fuel vehicles and I am not sure why all market participants, including automakers, don?t drive this message harder.
Charging stations may be necessary for pitching EVs to the public but so is a little dose of cynicism: show them the real green and they?ll eventually plug in.