I have not done any news articles on this site but I really enjoyed this article by “The Economist”
September 3rd, 2009.
IN 1995 Joseph Bower and Clayton Christensen, two researchers at the Harvard Business School, invented a new term: “disruptive technology”. This is an innovation that fulfills the requirements of some, but not most, consumers better than the incumbent does. That gives it a toehold, which allows room for improvement and, eventually, dominance. The risk for incumbent firms is that of the proverbial boiling frog. They may not know when to switch from old to new until it is too late.
The example Dr Bower and Dr Christensen used was a nerdy one: computer hard-drives. But unbeknown to them a more familiar one was in the making. The first digital cameras were coming on sale. These were more expensive than film cameras and had lower resolution. But they brought two advantages. A user could look at a picture immediately after he had taken it. And he could download it onto his computer and send it to his friends.
Fourteen years on, you would struggle to buy a new camera that uses film. Some of the leading camera-makers, such as Panasonic, are firms that had little interest in photography when Dr Bower and Dr Christensen published. And an entire industry, the manufacturing and processing of film, is rapidly disappearing.
Substitute “car” for “camera” and you have a story that should concern thoughtful bosses in the motor and oil industries. Internal-combustion engines have dominated mechanized road transport for a century, but the past year or so has seen the arrival of a dribble of vehicles driven by electric motors. That these are the products of small, new firms, or of established non-car making companies, supports the Bower-Christensen thesis. But next year the big boys, encouraged by legislative pressure to produce low-emission vehicles, will leap out of the boiling water and join in. Their progress towards greenery will be an important theme of the Frankfurt motor show this month.
Bold claims are being made. Carlos Ghosn, who leads the Renault-Nissan alliance, thinks 10% of new cars bought in 2020 will be pure-battery vehicles. A report by IDTechEx, a research consultancy based in Cambridge, England, reckons a third of the cars made in 2025 will be electrically powered in one way or another. If that trend continues, liquid fuels might become as obsolete as photographic film.
The Li-ion roars
The technological breakthrough that led to digital cameras was the charge-coupled device, or CCD. The equivalent for electric cars is the lithium-ion battery, or Li-ion. Just as CCDs were used first in specialist applications, such as television cameras, so Li-ion batteries have been used in laptop computers and mobile phones. By 2003, however, their price had dropped to a level where Elon Musk, an entrepreneur who had helped launch PayPal, an online payments service, thought that they might be cheap enough to form the basis of an all-electric sports car.
The “killer app” of this car would be its acceleration. Unlike internal-combustion engines, electric motors have full torque, as pulling-power is called, from zero revs. They are thus predisposed to go like a bat out of hell without the aid of a gearbox. Mr Musk’s brainchild is known as the Tesla Roadster (pictured above). The sports version goes from zero to 100kph (62mph) in 3.7 seconds—not much slower than a top-line Ferrari.
The desire for acceleration at any price ($121,000, since you ask) is a niche market, but niche markets are the classic way in for a disruptive technology. Tesla’s next vehicle, the Model S, is a more mainstream family car. At about $50,000 it will still not be cheap, but it should be cheap enough to appeal to those who like to think of themselves as early adopters, but who also have spouses and children to worry about.
Another reason for the high price of Tesla’s cars is their range. According to its maker, the Roadster can travel almost 400km between charges. The Model S should be able to do even better. But cheaper electric cars have to make a trade-off between range, price and convenience. Since batteries can be recharged only slowly (the process takes hours, not minutes), a car’s effective range is limited by the size of its battery. And batteries are expensive.
A lot of researchers are working on making them cheaper and faster to charge, of course. In the meantime, though, there are three approaches to the trade-off, each of which has its champions. One is to accept the range limit and design small, thrifty vehicles specialized for city use. This has the virtue of simplicity and the vice of inflexibility. The second is to add a petrol-driven generator known as a “range extender”. This complicates the mechanics, but provides the driver with a security blanket, for he knows he will never be stranded if he can find a petrol station. The third answer is to keep the car all-battery, but to introduce a network of battery-exchange stations similar to the existing network of petrol stations, so that someone who is running out of juice can pull in, swap over and pull out.
Celling the future
A leading contender in the first category is Mitsubishi’s i-MiEV, which should go on sale next year. Its initial price will be ¥4.6m ($49,000), although that is expected to be cut in half once the car goes on sale outside Japan. That halving (and potential quartering) of price compared with a Tesla Roadster is achievable because the i-MiEV’s battery has only 88 Li-ion cells, rather than the Tesla’s 1,800. It uses its limited resources well, however. Its quoted range is 160km. Other electric city cars are expected from firms such as Fiat and Toyota. And in November Daimler (which also owns 6% of Tesla) plans to start producing a Li-ion-powered version of its Smart Fortwo. In Germany, a full charge will cost about €2 ($2.80) and keep the vehicle going for around 115km—although there is room in the car, as the name suggests, for only two people.
City cars are all very well as runabouts, but for electric vehicles to become widely adopted and displace fossil fuels they will have to crack the saloon-car market, too. To do that with an all-battery car will be a tall order, as the price of the Model S suggests. Most car makers are taking a more conservative approach than Tesla’s, and it is here that the second answer, a battery plus a generator, heaves into view.
In an existing hybrid, such as the Toyota Prius and the Honda Insight, the wheels can be turned directly by both the petrol engine and the electric motor (and all the energy is supplied originally as petrol). Such vehicles are known as “parallel” hybrids as a result. In the new battery-plus-generator designs, also known as “series” hybrids, the wheels are driven only by the electric motor. The petrol engine is there to create more electricity, if it is needed, but the batteries are usually recharged from the mains.
The most talked-about of the battery-plus-generator models is General Motors’ Chevrolet Volt (to be sold in Europe as the Ampera). This car, which should be in the showrooms next year at a price of around $40,000, has an all-battery range of 65km, after which the range-extender will kick in. GM reckons 65km is enough to cover 80% of daily usage in America, and similar figures pertain to other countries. Mitsubishi says 90% of drivers in Japan cover less than 40km on weekdays and 80% cover less than 60km at weekends. Robert Bosch, a German car-parts firm, reckons that in Germany the 90% figure is less than 80km.
Most of the big carmakers have series hybrids under development. In some cases the range-extenders could be offered as an extra on a battery-powered model, leaving it up to the customer to decide what sort of range he wants. Daimler is taking this approach with its BlueZero cars. These five-seater vehicles will be available in three versions. A battery-only model will have a range of 200km. Another will offer 100km of battery-powered range, but will also have a petrol generator to extend it. A third will use a hydrogen-powered fuel cell to generate electricity.
The third answer, though, is perhaps the most radical. Instead of a petrol engine, with its widespread infrastructure of filling stations providing the security blanket, why not build new infrastructure to refuel cars with new, fully charged batteries?
The leading proponent of this idea is Better Place. This firm, which is based in California, has been scouring the world for car markets that are, in its terminology, “islands” and offering to fit them with networks of car-charging and battery-swapping stations that will use robots to exchange exhausted batteries for fully charged ones in seconds.
Better Place defines an island as a place with an edge that motorists rarely cross, and the first to be picked by Shai Agassi, the firm’s founder, was Israel. Though more of the country’s edge is land than sea, few cars leave by either route. Israel is now being fitted out with the Better Place infrastructure. Meanwhile, Nissan is tooling up to start building cars with batteries of the appropriate dimensions, for sale starting next year, and Tesla plans to offer swappable batteries on the Model S.
Other “islands” that Better Place has signed deals with include Denmark, Hawaii and Australia. The firm also has a partnership with Tokyo’s largest taxi operator, Nihon Kotsu, to provide swappable batteries for a new fleet of electric taxis which will take to the streets of the Japanese capital. With some 60,000 taxis in Tokyo, this could turn into a huge market.
Besides providing drivers with secure refueling, the Better Place approach has a second advantage. Separating ownership of the battery from ownership of the car changes the economics of electric vehicles. If you rent the battery rather than buying it, that becomes a running cost (like petrol) and the sticker price of the car drops accordingly. This might not matter to a sophisticated economist, who would amortize the battery cost over the life of the vehicle. Many people, though, are swayed by the number they write on the check that they give to the dealer.
Better Place, indeed, plans to go further. It will charge for its services (battery and electricity) by the kilometer traveled. The cost per kilometer will be lower than for petrol vehicles, and if you sign up for enough kilometers a month, it will throw in the car for nothing.
That is possible in part because electric cars are efficient. According to Bosch’s calculations, a conventional internal-combustion-engined car can travel 1.5-2.5km on a kilowatt-hour (kWh) of energy. A hybrid with a combined electric and diesel engine would go up to 3.2km. But a battery-powered car can travel 6.5km.
On top of that, the energy put into them is cheaper. Owners with garages or driveways can top up at night using the domestic supply. The long recharge time will thus not be an issue, and the electricity will be cheap, off-peak power. Even if more expensive daytime power is needed (some office and supermarket car parks are already being fitted with recharging points, in anticipation of mounting demand), the cost of such juice is still favorable compared with petrol.
Only for garageless owners does recharging become complicated. They will need street-based electrical infrastructure, and a lack of this will limit the spread of electric vehicles to start with. That said, the batteries are expected to get better quite fast. No one is talking of Moore’s Law—a doubling of capacity every 18 months or so. But an improvement of about 8% a year into the foreseeable future is on the cards. A doubling in a decade, in other words.
Bosch, for example, calculates that a car fitted with a 40kW motor capable of speeds of up to 120kph would need a Li-ion battery with a capacity of 35kWh. Today such a battery might cost around €17,000. With the technology and economies of scale Bosch expects to be available in 2015, that could drop to €8,000-12,000. As Ford recently pointed out, if the industry were to move towards a common standard for battery packs, this would help boost production volumes and so bring prices down even more. Bosch reckons that for electric cars to become universally popular, a threefold increase in energy density and a fall of two-thirds in the price of batteries will be needed. To that end, it has set up a joint venture with Samsung of South Korea to develop and produce Li-ion batteries for automotive use.
Indeed, battery firms, both old and new, are coming up with innovations that add up to the 8% annual gains. These involve changes to the lithium chemistry of batteries, their mechanical properties and the electronics that control them. Among the newcomers are two American firms, A123 Systems and Boston Power, both of which are based in Massachusetts.
A123 was founded in 2001 and is backed by General Electric. It uses nanoscale materials to boost the performance of its batteries (making an electrode out of nanoparticles increases its surface area, which in turn decreases the battery’s internal resistance and improves its ability to store and deliver energy). Its batteries are already used in power tools, and the company has formed alliances to supply Chrysler and SAIC Motor Corporation of Shanghai with car-sized versions. Its batteries were also being considered for the Volt, but GM eventually picked ones made by LG Chem, a South Korean firm.
Boston Power, founded in 2005, makes fast-charging Li-ion cells for consumer products, including some Hewlett-Packard laptops. The company, which has a factory in Taiwan and plans for one in Massachusetts, is developing a Li-ion battery called Swing for automotive use.
Some carmakers are forming partnerships with battery-makers to ensure supplies and gain access to technology. Others are building their own battery factories. And some are doing both: Nissan has formed a joint venture with NEC to produce advanced Li-ion batteries that use a laminated structure to improve cooling.
The firm is planning to put the batteries in a new five-seater family car called the Leaf that it intends to launch late next year in Japan and America as part of its alliance with Renault. The group plans to build 200,000 a year, the most ambitious production target so far for a pure-battery car. The Leaf will be powered by an 80kW electric motor and will have a range of at least 160km on a full charge. It can be charged to 80% capacity in 30 minutes with high-powered quick chargers which Nissan hopes will be installed in petrol stations and other public places.
At least one battery-maker, though, has loftier ambitions than merely supplying carmakers with its wherewithal. BYD, a Chinese firm, seems to have Panasonic’s success in the world of cameras in mind. Earlier this year it launched the first of what it promises will be a range of electric cars that will undercut those made by American and European producers, in part by using a novel material in the batteries’ electrodes. It claims this will make those batteries both cheaper than conventional types, and faster charging. BYD started with fleet sales in China and plans to begin private sales there later this month and launch its first vehicle in America next year. The company is being watched closely, not least by Warren Buffett, a celebrated American investor who has taken a 10% stake in it.
This will be an interesting experiment. There is a lot more to an electric car than its battery, of course. But established car firms that think their know-how in other parts of carmaking will save them may find themselves in the same position as those 19th-century carriage-makers who thought a “horseless carriage” would, literally, be that. For, once the engine block and the gearbox are gone, the game of car design changes. And batterification could bring about other changes, too.
Which frogs will live?
A number of carmakers and component companies are, for example, looking at getting rid of drive trains, and fitting electric motors directly into cars’ wheels. Such systems would be operated electronically, so they would also provide traction control.
Michelin, in particular, is developing what it calls the Active Wheel. This gives the firm the ability to provide a complete power, braking and suspension package for electric cars. One of the set-ups on which Michelin is working has two motors mounted within each wheel. One turns the wheel. The other works an active-suspension system that dampens the usual pitching and rolling of a car as it drives along. Besides traction control, the driver (or the vehicle’s computer) would be able to select different suspension settings to suit motoring conditions.
One of the first cars to use Michelin’s four-wheel-drive ActiveWheel set-up is likely to be the Venturi Volage. A Li-ion battery gives this a range of around 320km and a top speed of 150kph. It is designed to accelerate to 100kph in under five seconds, according to Venturi, a specialist carmaker based in Monaco. Like the Tesla Roadster, it is not expected to be cheap.
With wheel-mounted motors that mix motive power, braking and active suspension, more of the things conventionally fitted to a car become unnecessary. Because a gearbox, clutch, transmission and differential unit are no longer needed, and springs and other suspension items will probably go, too, vehicles could assume all sorts of shapes and sizes.
Without the cost and complexity of many of the parts hitherto required to make a car, the shape of the automotive industry could be transformed as much as cars are. As for the oil companies, if the visionaries are correct, they risk finding themselves in the wrong business. Some researchers already have battery materials they reckon could be recharged in the time it takes to freshen up and have a snack at a service station. If they are right, the need for even a range-extender vanishes.
That is still a biggish “if”, of course. The efficiency of internal-combustion engines is improving, too—and as the advert below shows, electric cars have come and gone in the past. But propelling modern transport by means of serial explosions in an array of tin-cans does seem an incredibly primitive way of doing things. The time is ripe for a change.