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Electric Cars Global Trends Results of Finpro Foresight Ines Seidel, June 2009

Electric Cars - Global Trends

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Everbody talks about electric cars as the future of transport. Here are some of the challenges on the road. (June 2009)

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Page 1: Electric Cars  - Global Trends

Electric Cars – Global Trends

Results of Finpro ForesightInes Seidel, June 2009

Page 2: Electric Cars  - Global Trends

© Finpro ry / 2

Electric Car Trends - Overview

1. Background & Methodology

2. Global Electric Car Climate

3. Related Trends

Page 3: Electric Cars  - Global Trends

© Finpro ry / 3

Background

• The Ministry of Employment and Economy has established an official task force "Electric Vehicles in Finland“. The aim of the working group is to define the required measures for technology and innovation policy in order to strengthen the foundations of know-how and business aspects in Finland.

• Finpro Foresight has been asked to use Finpro global network to get a view on current trends related to the use of Electric Cars. Can we find signals that relate to the development outlook, impact, business possibilities, as well as future needs of the branch in terms of research and development activities?

• Finpro used the internal platform for sharing and discussing signals related to Electric Cars. The following presentations are an analysis of these signals, where appropriate, also developments that are only indirectly linked to electric cars have been included. – Deeper analysis into specific areas or regions could be a next step.

Page 4: Electric Cars  - Global Trends

© Finpro ry / 4

Methodology: From Signals to Trends

Signal

collection

Pattern/Trend

Recognition

Analysis: What is

happening + samples

Spillover Effects

Deeper Analysis of

Options and

Opportunites can be a

next step

Do it Yourself

Page 5: Electric Cars  - Global Trends

© Finpro ry / 5

Electric Car Trends - Overview

1. Background & Methodology

2. Global Electric Car Climate

3. Related Trends

Page 6: Electric Cars  - Global Trends

Signals refer to various parts of the

electric car eco-system

© Finpro ry / 6

Society Context

Energy Crisis

Economic Crisis

Government Influence

Consumer Acceptance (Costs,

Mistrust, Convenience)

Manufacturing/R&D

Car Industry crisis

Battery R&D Progress

Competing Alternative Transport

Research Breakthroughs?

Enabling Infrastructure

Utilities

Retail/Ownership Models

Charging Infrastructure

Insurance

Page 7: Electric Cars  - Global Trends

Questions that move the market

• How long before electric vehicles

become mass market?

While some car manufacturers are sure that

„the time for the mass-market zero-emission

car has come‖ (Carlos Ghosn, Renault-

Nissan), other experts believe that it may

take at least a decade before electric cars

enter the mainstream.

High purchasing costs and lack of

convenience are currently seen as the

main obstacles towards mass adoption.

Hybrid cars are seen as an interim solution.

There is a hope for research

breakthroughs towards better batteries or

other alternative energy that could change

the game completely. Financial incentives

like subsidies speed up mass adoption

already today. © Finpro ry / 7

Research firm Fuji Keizai Co predicts battery-

powered electric vehicles to go mainstream in

Japan only until late 2020s or 2030s

Page 8: Electric Cars  - Global Trends

Questions that move the market

• Who will be Winners and

Losers?

Establishing leadership in electric

car technology is like the new race

to the moon – every one wants to

be first. There is a certain

desperation in that competition as

electric cars are seen as a way out

of the crisis for the car industry

and the economic crisis as a whole.

This competition will inevitably lead

to casualties – and potentially also

to conflict over resources. In

many cases, competition for

survival also leads to new

partnerships and also new value

chains/value networks are on the

horizon.© Finpro ry / 8

―The flurry of ruthlessly competitive diplomatic and

corporate overtures to Bolivia … is driven by the

same dream: ultimate control of the future global

market for electric vehicles. An ample supply of

lithium, at least using current technology, is the

critical weapon in that quest and Bolivia is to lithium

what Saudi Arabia is to oil, say geologists. ― Times

online, June 2009

―When the electric revolution final

comes, China's e-bike makers could

have the last laugh‖ – Time, June 2009

Page 9: Electric Cars  - Global Trends

Questions that move the market

• Will electric cars make

transportation environmentally

save?

The concern that the electric car/battery

industry is not really solving the energy

and environmental problems of transport is

voiced especially from activists and

consumer groups. Being „a little less

bad“ is not seen as sufficient. Also

urban planning increasingly encourages

alternatives to cars.

As health and safety are generally

growing more important to consumers,

also electric vehicles need to address

these topics.

© Finpro ry / 9

―How is using electric cars considered

green technology? If you still are tied to

a nuclear power plant that produces

waste that can‘t be disposed of, how is

that green?‖ – Letter to the Editor, Northwest Herald

Feb 2009

The suburban district Vauban was

designed for living without a car. 70% of

households do not own a car.

Some worry that electromagnetic fields

generated by electric vehicles could

cause cancer.

―The delusion lies in the idea we can

continue to live the way we do (eat,

consume and travel) but do so in a

"sustainable" fashion‖. Sydney Morning

Herald, June 2009

Page 10: Electric Cars  - Global Trends

© Finpro ry / 10

Electric Car Trends - Overview

1. Background & Methodology

2. Global Electric Car Climate

3. Related Trends

Page 11: Electric Cars  - Global Trends

Government Influence

Countries like the U.S. or China have put

it on their national agenda to develop a

leading role in electric car technology.

Governments try to speed market

migration towards electric cars through

financial incentives such as subsidies,

taxes, investments. What will be the

impact of electric vehicles on tax

revenue?

© Finpro ry / 11

Only if the cost of ownership is

heavily subsidized will the cost

of electric cars be brought

down to an attractive level for

most consumers. - Comeback of

the Electric Car? BCG, Jan 2009

„Governments could …lose

tax revenues when drivers

spend less money on

gasoline … Will lawmakers

…be willing to sacrifice tax

receipts that pay for the

upkeep of roads in order to

help control climate change.

If not, how will the tax burden

be migrated to the new fuel:

electricity?― - Electrifying cars.

McKinsey Quartlerly 2009, Number 3

Page 12: Electric Cars  - Global Trends

Spillover Effects

As electric car and battery industry take a

center stage in plans for the future of

transport, this opens opportunities (and

challenges) to adjacent industries.

Lightweight construction of car parts

and overall sustainable design are

obvious examples. Other spillover effects

on new value chains are not so clear:

Who will own and operate charging

stations? Could electrified cars lead to

new revenue streams for utilities? Will

insurers see electric vehicles as more

risky initially?

© Finpro ry / 12

―Because they are not in

the mainstream yet we may

look at potentially a higher

rating for these cars. Part

of the group rating … is the

cost to repair the car. The

cost of repairing an electric

or hybrid car could be

higher because of the

specialist technology they

feature,‖ Norwich Union, Britain‘s

biggest motor insurer.

In the joined project, Vattenfall

provides charging infrastructure

Page 13: Electric Cars  - Global Trends

Not just Cars!

When talking of electric vehicles,

typically passenger cars are being

discussed. But electric propulsion can

also make sense for other vehicles,

especially in an urban context.

© Finpro ry / 13

Cheap, green electric bikes are

more popular than cars in

China's

crowded cities, helping to offset

the country's pollution problems.

Last year, Chinese bought 21

million e-bikes, compared with

9.4 million autos.

Page 14: Electric Cars  - Global Trends

R&D Wildcard

The search for the best future transportation

is going on. Hydrogen powered vehicles

seem to have lost the competition: Ford and

Nissan cancelled their hydrogen car plans

and the U.S. Department of Energy has put

the brakes on hydrogen fuel cell research.

Could other alternatives (such as

advanced internal-combustion engines

(ICE)) make battery powered vehicles

obsolete? Regarding batteries, R&D efforts

are for instance concerned with storage and

speed of charging. As lithium is difficult to

recycle, also advances in recycling or

alternative materials are needed.© Finpro ry / 14

Multi-fuel Cars: Technology that

will allow cars to run on petro,

ethanol, bio diesel, hydrogen,

natural gas or biomass based fuel

is developed at the German

Aerospace Center in Germany.

The various types of fuel are

turned into electricity and the

motor is in effect an electric motor.

BCG developed 3 scenarios

and found that ―internal

compustion engines will

remain the dominant

technology in 2020 ―- Comeback

of the Electric Car? BCG, Jan 2009

Page 15: Electric Cars  - Global Trends

Alternatives to Ownership

As many consumers are less interested

in owning products but more in using

them, alternative ownership models

are gaining in popularity, especially in

the field of transport: car sharing, bike

sharing and even boat sharing programs

can be seen, with very different business

models (e.g. community ownership; or

company remains owner but sells usage

time). Similar service models are also

used for instance in solar technology.

Likewise, innovative business models

could make electric vehicles affordable

per use.© Finpro ry / 15

Vancity—Canada's largest

credit union (!)—kicked off

their free Bike Share program

in summer 2007 and has since

got a lot of positive feedback.

Sunlabob Rural Energy (Laos)

is renting solar panels to

communities and solar

powered lanterns to

individuals.

Page 16: Electric Cars  - Global Trends

Do-it-Yourself

With collaboration and empowerment

becoming a way of life it is little wonder that

we see crowdsourcing /open source car

projects also in the terrain of electric cars.

Enthusiastic users hope to be able to

develop more innovative and less expensive

cars – ideally with support from carmakers.

Similar developments can be seen in relation

to energy: As energy prices become more

noticable in people‗s budgets, consumer

generated energy becomes an interesting

alternative.

The influence on electric vehicle market

remains yet to be seen. © Finpro ry / 16

Sustainable mobility is at the

heart of the motivation

behind c,mm,n (pronounced

"common"), an initiative from

the Dutch Society for Nature

and Environment along with

3 universities. Aiming to

provide an open source

model for cars in the year

2020, the first collaboratively

designed prototype car was

debuted recently at

Amsterdam's AutoRAI 2009

car show.

Page 17: Electric Cars  - Global Trends

More radical, please!

Despite the enthusiasm of governments

and many consumers, whether electric

cars can fulfill the promise of being an

environmentally friendly transportation is

not certain. If involved industries cannot

address these issues convincingly and

with a holistic concept of sustainable

design, investments may turn into losses.

© Finpro ry / 17

„If you want a cheap

way to be fuel

efficient, buy a car

that‗s half the size.

Hybrids cannot

compete with that.― –BCG consultant Xavier Mosquet

in interview, Mar 2009

„(B)atteries at the end of

their lives may be

liabilities, not assets,

because of their recycling

costs.―– - Electrifying cars.

McKinsey Quartlerly 2009/3

Electric cars emit gases indirectly if

they use widely available power from

fossil fuel electric plants which burn

coal, natural gas and petroleum .-

International Business Times, Feb

2009

―If we accept the ―cradle to cradle‖

philosophy, there‘s no reason there should be

any garbage at all. No waste. Living systems,

ecosystems, don‘t waste.‖ – Justin Podur,

Canadian activist, Apr 2008

Page 18: Electric Cars  - Global Trends

© Finpro ry / 18

Contact

Markku Vantunen – Foresight Process

[email protected]

00358 40 3433407

Ines Seidel – Foresight Projects

[email protected]

0049 8954264731