The Electric Car’s Even Bigger Challenge

I was reading an interesting blog on the Blue Car from Bolloré, yet another entrant into the race to bring a workable electric car to market. (http://innovtoday.wordpress.com/2010/01/29/can-bluecar-create-an-upset-in-the-auto-industry/).  The Blue Car will use a more advanced battery than most (LMP-Lithium Metal Polymer) and that is interesting in itself.  However, following from my blog on the Apple iPad, I started to think about the marketing challenge of getting people to buy electric cars.  Of course this marketing challenge also goes to the design and technological choices of electric car suppliers.  If electric cars don’t deliver the right benefits people won’t adopt them. 

The first problem for electric cars is that no innovation succeeds unless it is (1) as good as the existing technology in all-important areas and (2) brings an advantage over the existing technology.  So far most electric cars fail on the first issue.  They do not have the range, performance or carrying capacity of hydrocarbon-fuelled cars.  Now I will agree that statistics show most people don’t drive far on a typical day, nor in congested cities do they drive fast.   Also the typical car on the road has one person in it. So on paper electric car performance is fine.  But it is not fine in my mind—I might want to drive from Fontainebleau to Nice next week and I don’t want to have to charge or change my battery every 200kms, or worse get stranded in the countryside.  Or I might want to go to Germany and drive at 180kph on the autobahn.  Or I might want to take my family of four on a vacation. Thus most electric cars do not reach parity in people’s minds, which in turn means they never consider the advantage of zero pollution or cheaper operation.  There are electric cars that do better on some of these points.  Tesla has a sports car whose performance is stellar (electric motors are inherently better for car performance than petrol or diesel engines because they produce maximum torque at zero revolutions).  However, it still has a range problem.  You can burn rubber but not for long.  Bolloré are silent about the range of their Blue Car on their website (http://www.bluecar.fr/en/pages-accueil/default.aspx). But since their LMP battery can store several times more energy than the laptop battery technology other manufacturers use it will likely have a better range than the Tesla Roadster while having similar acceleration.  The Blue Car also seats four but is not a car for the German market as it cannot go more than 130kph. 

The second problem for electric cars is the psychological status quo or ownership bias. What I own (in my case a turbo-diesel car) is psychologically worth more than an objectively equivalent car I don’t own.  To overcome this bias, and assuming the electric car achieves parity in other areas, the advantage of the innovation must be compelling.  And so far they are not.  Zero pollution is a tangential, esoteric and “in-the-future” benefit compared with “how do I get to work today.”  Yes, we know in a conceptual sense that zero pollution is an important societal goal but it will be hard for many people to give this goal much weight when faced with a car-buying decision.   Zero-pollution is not a compelling advantage. In contrast cheaper operation could be a compelling advantage.  Running a car is not cheap (it is typically ranked two or three in household spending after housing costs).  So a car that came with the message that it only cost half as much to operate would attract serious interest.  The hurdle here is the economics of electric cars are not yet fully worked out—no-one has yet given a detailed picture of what operating costs will be when there are many electric cars on the road.  At the moment the cost of the battery itself dominates the discussion, with various business model innovations trying to get around this hurdle.  These include Shai Agassi’s battery swapping stations and Blue Car’s plan to only rent their cars.  And the electric car industry also faces the chicken-and-egg problem of building an adequate infrastructure to enable access to everyone who might want an electric car.

So my conclusion is that electric cars will only be successful if they produce a better car.  A car that has the range, performance and carrying capacity of my current diesel car, but also costs less to operate. And a car that is supported by a service infrastructure that lets me “refuel” in five minutes pretty much anywhere, just like today.  Anything less than this is not an innovation in my opinion—whatever technologists or environmentalists might say—it is actually an inferior car.  Will electric cars reach the level of development they need to provide a compelling reason to change?  Hard to predict I’d say. I’m not ruling it out but it is an immense challenge, with many hurdles that could cause it to fail.  Indeed, the problems may be less on the technology side than the service infrastructure side.  One can see the technology itself has promise. But it is much harder to see how the infrastructure can be built to a level where it competes with hydro-carbon technology.  Unless, that is, a government or a brave large company decides to push it; or the price of oil rises sharply over the next ten years.  And of course the electric car faces competition from bio-fuels—which can use the current infrastructure—and other alternatives such as hydrogen (which is the worst of the three in my opinion).  So an immense challenge that I hope will succeed (I like the dream of the perfect electric car) but I’m not yet sure it will.

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