The Electric Car is hardly a new invention. In fact, they were very popular in the 1920s when Internal Combustion (IC) Engines suffered from drawbacks like excessive noise, vibration and the high cost of fuel. However, they left the limelight after the rise in popularity of IC engines due to the discovery of oil blocks in the USA and improvements in IC engine design.
However, the resurgence in popularity of EVs, fuelled majorly by oil shocks and environmental movements warrants some attention. Even though the Electric Vehicles need a lot of factors working in their favor for them to gain an important position in the automobile market today, we feel there is one aspect which lies at the heart of the issue – the power system.
The power system – the bottleneck in EV performance:
The performance of batteries and charging infrastructure are responsible for a majority of the bottlenecks facing the rapid acceptance of EVs.
Recharging time: Larger and more powerful electric vehicles require more time to charge – and though the batteries with greater capacities are available, they cost a lot more and take very long to charge.
Battery Lifetime: The cost of batteries increases exponentially with capacity and hence raises the cost of owning an electric vehicle as compared to a fossil-fuel powered vehicle
Range Anxiety: Electric Car owners are plagued with the fear that their battery will run out of power and they will be left stranded. Lack of sufficient charging infrastructure is the core reason for such anxiety
The Battery – A tradeoff between cost and capacity
Batteries are probably the most expensive component of EVs which increase the upfront cost of ownership. Thus, managing battery economics is the first major piece of the puzzle.
Here we will look at a metric called the payback period for the battery since it is the most relevant and commonly used measure of economic competitiveness. The Payback period in our context simply calculates the time taken for an Electric Car’s operating efficiencies to recover the upfront payment for the battery.
This payback period should obviously be less than the normal lifetime of the vehicle for it to make economic sense for the consumer. The figures below do not indicate such a possibility – the current payback period is 12 years, which means we are not there yet; but considering the steady decline in this metric from 35 years in 2007, it is not a distant dream. Moreover, Government subsidies make the deal even sweeter by reducing the upfront cost and hence the payback period.
Charging Infrastructure – the antidote to Range Anxiety
Another way in which this equation can be improved for the customer, is by reducing the capacity of a battery, while also keeping the ‘Range Anxiety’ at bay – this can only be accomplished by widespread charging infrastructure.
There is a clear tradeoff between the fixed cost of charging equipment and time taken to fully charge a battery; and even with fewer cost constraints, technology to quickly charge the EV has not penetrated the market yet.
Charging Stations Vs. Gas Stations:
There are two major reasons why charging stations are unattractive as compared to gas stations –
Firstly, the time taken for charging a battery can be 30 minutes for even the best charging stations. Compare this to the 10 odd minutes taken by even the least efficient gas station and we see we have a problem.
In addition, there is no standardized offering with respect to charging infrastructure – a Tesla station cannot charge a Nissan Leaf EV for example. This lack of standards in the industry is multiplying the cost of charging infrastructure for the society.
Regular chargers can take 4-5 hours on an average to charge the EV, which means overnight charging is the best option. Even with such a high duration, the cost of the charging point is as high as USD 3000 which can be prohibitive for certain customers.
Distance between public charge-sites:
Another way to solve the range anxiety problem is to have charging stations at regular intervals, so that I am not far away from a charge-site when the battery is running out of charge.
An easy way to make preliminary calculations is to assume that car should be able to recharge when it exhausts, say, 80% of the charge it gained in 15 minutes of charging (the usual time one would want not mind waiting at a charge station).
Using LA county as a test example, we observe that a charge point is needed every 10 miles. But with only 75 sites as opposed to the requisite 350 odd sites, the current infrastructure is hopelessly inadequate. Without major investments in more powerful chargers or in increasing the frequency of charging infrastructure, the problem of range anxiety is difficult to alleviate.
Alternatives to charge stations:
Two interesting charging mechanisms have evolved to counter the conventional charging stations:
Battery Swapping: This revolutionary method simply replaces a discharged battery with a charged one – taking far less time than even a conventional gas station. However, this technology has to deal with obvious issues like lack of standardization, high capital costs, getting small refills and questions of ownership of the batteries. Better Place – a company which tried to use this as part of their business model files for liquidation recently – clearly indicating that battery swapping still has a way to go before it can become mainstream.
Wireless charging: Using EMF coils set below the road or dividers, EVs can be charged wirelessly, while on-the-go. This solves a lot of issues, including the standardization issue of battery swapping, but high capital costs (estimated at a million dollars for a 5 Km stretch of road) can make this unviable in the short term. In addition, there is no business model to recover the cost from the consumers yet and till such a time, charging stations may be the only way.
EVs despite their many advantages, thus, will be restricted by battery costs and charging infrastructure, before it can truly compete with existing gas-powered vehicles.
Sahil Patwa is a PGP 2 student at IIM Ahmedabad and a member of the Consult Club. He spent his summer at the Boston Consulting Group developing a growth strategy for an Industrial Goods major. Before coming to IIM Ahmedabad, he worked as an Associate Consultant at Ernst & Young and did a brief stint at a boutique consulting firm. Sahil holds a B.Tech in Mechanical Engineering from IIT Bombay