While the “tipping point” in the market for electric vehicles (EVs) will not be reached for some years, continued investments by both new companies and established automotive players promise that EV models will displace internal combustion engine (ICE) vehicles and gain a major share of the global market in the next 10 years.
E-mobility will produce fundamental changes to the concept of ownership, maintenance and general usage as vehicles shift away from being a purely mechanical form of transportation towards becoming a hub for services and connectivity.
Continued technological advances and the rapid adoption of digital and mobile devices have rapidly altered almost every aspect of daily life – including how people work, communicate, spend their free time – and travel around. Armed with smartphones, today’s consumers want to be connected – anytime, anyplace. Consumers’ desire for connectivity in everything they use aligns directly with the notion of electric vehicles as sophisticated machines.
By 2020, there will be an estimated fifty billion devices connected to the Internet. A 2018 study suggests that early EV adopters tend to be particularly more “connected” consumers. Drivers who said they were likely to purchase an EV in the next two years were also more inclined to be involved in online activities and have adopted smartphones.
With the increasing trends for EV adoption focusing towards connectivity, consumers can look forward to the security that comes from greater information sharing with automakers through this new platform. In turn, automakers can benefit from the exchange by collecting extensive data from consumers about how they use EVs and how the vehicles perform on the road – and then use this data to further cater to drivers’ needs and safety concerns.
EVs are being designed from the ground up for connectivity. And these connected vehicles can offer exciting features – and added efficiency – for consumers. Connected solutions can provide consumers with reassurance in areas ranging from safety to navigation by providing extensive driver assistance. For example: take the case of critical software downloads for the connected vehicle. When not on the road, vehicles spend a considerable amount of time either in a car park or at a charging station, which is almost equal to the time required for critical updates to be installed in cars. By installing in network connectivity services, such as cloud based WiFi services that can provide these critical software download ability. Such an ecosystem will tend to benefit all the concerned stakeholders, with drivers being able to download and install critical software on the go, while at a charging station. On the other hand, this will mean over the top cost cutting for Original Equipment Manufacturers (OEM) since the vehicle does not need to be taken to a service station every time an update is required. Charging Station owners can also benefit from this ecosystem as they can monetize their offerings through the above mentioned scalable WiFi services.
Another aspect is the availability of requisite charging infrastructure for the EVs on the road. Level 1 and 2 being the most common methods of vehicular charging today, fully recharging an electric-only vehicle takes hours – so it’s important for owners to be able to charge their vehicles in places they park for extended periods of time. Because Level 1 charging is very slow, most consumers will likely want a Level 2 set up at home. However, establishing a Level 2 home charging station can cost up to EUR 2,400.
Obviously, the auto industry must partner with utility companies, particularly to ensure they can handle the large increase in electricity demand that wide-spread regional adoption would bring. More creative partnerships will be required to build an adequate charging infrastructure outside of home charging. Automakers can partner with large employers in target regions to create charging infrastructure at the workplace. As workers are there for extended time, Level 1 charging will likely be sufficient at the workplace or places where the vehicle stays when not on road.
The next step is to identify other partners to help create scale and increase accessibility for consumers at other locations. Where are the most likely locations for charging other than work and home? When asked where they park most often when not at home or work, 62 percent of consumers cited malls and other retailers. The challenge with establishing charging stations in office car parks, retail locations etc. is largely related to cost, which can range from US $3,000 to $7,000. This cost will not be won back through selling electricity alone. However, if charging stations are used as media, advertising and incentive platforms, revenue from advertising, coupon offers and other promotional items could help finance them.
Going back towards the idea of using charging stations as a source of internet connectivity using cloud based Wi-Fi services, it is important to understand that these updates are crucial to ensure the safety of the vehicle and to roll critical performance related updates into the vehicle. After the purchase, OEMs can, for example, offer on-demand services and features to consumers, as Tesla does through its AutoPilot. Such features might include performance- and battery-boosting software, advanced driver-assistance systems, and services like BMW ConnectedDrive, which include remote services, concierge service, and on-street parking information. BMW, for example, offers ConnectedDrive in four packages that cost from €69 to €279 a year. Given the attractive profit margins on those services, BMW is able to bolster the overall profitability of its EVs. Either alone or with the support of third-party data aggregators, OEMs also have an opportunity to generate revenue from the data of customers and vehicles. This data could be used to address a number of use cases involving connected vehicles, to offer personalized services, or to provide third-party marketing. Research indicates that revenue from data could generate approximately €50 a year per vehicle.
Wireless updates, currently a valuable differentiator for Tesla, could be beneficial for legacy brands too, saving on repair costs and improving the rate at which recalled vehicles get fixed. Advisory firm ABI Research said in a report last year that software issues cost carmakers $17 billion a year. Just one example: in 2018, GM recalled over a million trucks and SUVs to fix a bug that caused a steering defect. Owners had to bring their cars to dealerships, and GM had to pay the bills — a cost that analysts say might have been avoided with a simple over-the-air update.
This leaves the charging station owners with a major unexplored opportunity to facilitate their stations with cloud based WiFi services to allow OTA updates in a secure, scalable and compliant manner.
Today, there is no doubt that the Electric Vehicle revolution is changing the entire automotive industry. The biggest change will be in Europe, where diesel engines, which held 48% of the market in 2016, will begin a relatively rapid decline in shares toward 36% in 2020. One relevant area is electric-power generation from cleaner energy sources. So long as fossil fuels (with the slight exception of natural gas) remain the predominant source of electricity in major economies such as the US and China, the impact of EVs on climate change will be negligible (after taking into account the energy required for the production and recycling of batteries). Only when alternative energy sources — nuclear, wind, and solar, for example — become major factors in electricity generation will electric powertrains make a material contribution to lowering greenhouse gases and the EV Revolution will be achieved in actuality.