Battery of changes: the car industry's electric future

At the the World Future Energy Summit, industry experts were saying that the current model of the car industry is set to change radically.

This year, more models and variants of electric cars, such as the Chevrolet Volt, the Fisker Karma and the Nissan Leaf, will join other plug-in and electric hybrid cars that are in showrooms and on the road already. As the number of choices increases for consumers, and as the electric car gets more and more prevalent in the coming years, industry experts are saying that the current model of the car industry - from how people buy a car to who sells it - is set to radically change. And those insiders aren't all just from the car industry.

"People don't just want electricity, they want mobility," says Tobias Wittmann, part of the business development of E-car infrastructure at Siemens, the German engineering company. Wittmann was speaking at the Siemens booth on the floor of the World Future Energy Summit in Abu Dhabi last week. Wittmann and Siemens are working on an infrastructure model of support for the power delivery for electric cars. They see a world where the buyer of an electric car would lease its battery and buy the electric power directly from the point of purchase, and a place where the car communicates with the power grid itself.

"It's almost like buying fuel," says Wittmann. "What car companies will do is go bargaining around in the electricity market from the different utilities and say, 'Hey, I need so much and that's the (power usage) curve in the day that I need. Who wants to serve me?'. And you'll hear, 'I can give you between this and that hour and give it to you for four cents', and then 'I can give it to you for three cents'. And because car companies have such a big purchasing power they can do a lot.

"A lot of car manufacturers are thinking about it. They will be energy dealers in the end." With battery packs currently costing more than Dh100,000 for every car, leasing batteries is becoming a popular idea when it comes to the future of selling electric cars. Not only does it make the vehicles more affordable, but it also puts consumers' minds at ease when it comes to worries about the reliability and life span of the batteries.

"We have to change the major investment - the battery - into an operating cost," says Jan-Olaf Willums, chairman of the Zero Emission Mobility Alliance and chairman of Zem Energy. Willums was speaking at an electric car forum at the summit. "Maybe people say 'I'll wait for two or three years and see if the batteries are cheaper'. We have to take that risk from the individual. "Normally, if you buy a car, a nice BMW, you don't buy 10 years of fuel the same day. That's why I think the financing of the battery to make it a service - is very important."

Not only would the cars be power users, but they could also be power storage units for the grid. But this involves direct communication between the cars and the power utility grid. Wittmann says, in peak electric production times, electric cars could drain excess power from the grid, while the cars would be charged at low points in the power useage curves, such as at night, thereby helping to balance the fluctuating supply of energy on a city's power supply.

Siemens is involved in developing two infrastructure projects in Europe. One is Project Edison in Denmark, where the engineering company has contributed parts for Porsche Cayenne-based electric vehicles, as well as other infrastructure on the charging side. It's a test to see how various companies can work together in supplying power, and it is scheduled to begin in 2011. The Herz Electric Mobility project involves the use of renewable energy for electric transportation in Germany.

Jörg Kruhl, head of New Technologies for E.ON, an energy service company, was also speaking at the electric car forum. He adds that consumers can benefit greatly from balancing the power grid with electric cars. "In Germany today, there are times when you are actually paid to consume excess electricity off the grid. We have negative wholesale prices already, and that needs to be part of the customer story. We need to make a win-win situation for the electricity system and the customer.

"It's a value with the vehicle being part of the energy system, and you will end up earning with the car when you are part of the grid and the balancing services. You can even trade electricity on the wholesale market." Power supply may not be the only area affected by these new green technologies. The business model of car showrooms could also become obsolete as other industries latch on to new sales possibilities with the electric car.

Sean Long, automotive and LCV senior specialist for One North East, the green regional development agency for the north-east of England, cites a "major US electronics retailer" that hopes to expand to sell electric cars in the UK as well as the usual mobile phones, computers, stereos and the like. Long, who was also in Abu Dhabi for the summit, describes a process whereby electric cars are on display at the front of large electronics retailers and, once inside, potential customers are offered more than just a mode of transport.

In a mock sales pitch, Long says: "OK, we'll lease you the battery and sell you the car at a knockdown price, and then we'll have a technician come and install a charging station at your house so you can charge your car overnight - and if you live in a flat, we can find ways around that too, but if you're worried about your power bill going through the roof, there's no need to." He draws a breath and continues: "As part of the whole package, we'll also offer you cheaper power for your house, so you'll change your power supplier and you won't notice any increase in your power bills. And then we'll arrange for membership of an RACV or AA-type organisation for roadside assistance and cheaper insurance."

The increased presence of multimedia in cars, such as internet access and connectivity for iPods, would also give the electronics retailer the chance to inform consumers of offers that are relevant to their customer profile, Long says. Infrastructure is important if electric car ownership, as well as ownership of other alternative fuel vehicles, is to become widespread. But when it comes to taking responsibility for providing infrastructure and manufacturing facilities, there are differing viewpoints on whether it is up to governments, private companies or the market - or a combination of all three - to dictate what infrastructure will be put in place and when.

Siemens' projects receive 50 per cent of their funding by the governments in each country. "Of course, you need a political will, where governments have to put in some money," says Wittmann. "That's necessary in the beginning, but later on, this all has to stand on its own feet." One North East works closely with and is accountable to the UK government. The organisation receives funding from the government and reports twice a year to the Department of Business, Innovation and Skills to ensure it is meeting targets. Long says that in north-east England, the political situation means stakeholders involved in the alternative fuel car industry, are "trying to see what they can get out of the current government but also looking to see what they can get out of the other side if [the Conservative Party] gets in."

One of these stakeholders is Nissan, whose troubled Sunderland plant has received a new lease of life with plans for the production of the Nissan Leaf likely to go ahead. Plans are already in place for lithium-ion battery production for the car to take place in Sunderland. But Dr. Alan Lloyd, the president of the International Council on Clean Transportation, warns governments must be careful as to how heavy handed its legislation is. "If you push too hard, when the technology is not ready, and force manufacturers to produce tens of thousands of sub-par vehicles at a very expensive cost and the customer doesn't like them, then you set back the industry a long way.

"We need to continue this push, but with a realistic timeframe. I think three years is a little soon, it will be more like five to 10 years. But it has to be consistent, and it has to be a global push." But not everyone thinks that governments should be involved in the development of infrastructure. Nazeer Bhore, senior technology adviser for Exxon Mobil, firmly believes that the market should lead the push for alternative fuel infrastructure rather than governments foisting infrastructure upon regions where the consumers are not yet ready for alternative vehicles or the vehicles simply are not available.

"The marketplace should decide what comes into place with infrastructure rather than premature infrastructure going in before the market is ready," he says. Bhore says that Exxon Mobil is taking a multi-faceted approach to alternative energy by researching alternative fuels and technologies, as well as improving their current products to help ensure that the remaining oil lasts longer. Developing fuels that combine the best aspects of diesel and gasoline, hydrogen fuel cell technology, and working on improving lithium-ion batteries for hybrids and electric cars are three high priority research projects for Exxon Mobil. There is also a project underway to research the potential to create renewable biofuels from algae.

"The future of lithium-ion batteries is in high performance cars and the target is to make batteries that will last for the life of the car, with safety and reliability, " says Bhore.