E-vehicles and utilities: It’s time to accelerate business models
There’s no doubt that e-vehicles are the transport of the future. While adoption rates may currently be disappointing, their future is looking bright. What’s more, they will bring a wealth of opportunities to a wide variety of stakeholders – from vehicle manufactures on the one hand to smart home manufacturers on the other, from start-up prosumers through gas companies to electricity providers, and many more companies in between.
But companies in some sectors are struggling to find the right business models. Read on to discover some of the challenges that are putting brakes on adoption. I will also reveal some potential new business models for utility companies, and the great promise they offer.
Manufacturers speeding forward
Car manufacturers’ progress with e-vehicles has been immense. Today’s e-vehicles offer so much more than vehicles that run on fossil-based fuels – pollution-free, better economy, better performance and faster acceleration in particular. For many OEMs, around 50 percent of their e-vehicle portfolios are now made up of pure electric vehicles, which is an enormous leap from portfolios dominated by hybrid vehicles just a few years ago.
For drivers, car manufacturers bridge the gap to the charging point operator. They provide the front-end capabilities that allow drivers to charge their vehicles with ease and, in doing so, act as an intermediary between the driver and the charging point operator.
So, with manufacturers making great progress with their cars and software, what’s holding up adoption?
Barriers to adoption: Infrastructure and batteries
Firstly, a lack of charging infrastructures. If drivers think they will find it difficult to charge their cars, they’ll steer away from the electric option. Equipping homes with charging points needs to be a priority. While it may be relatively straightforward in places where there is space between dwellings; in cities where many people live in apartments, providing charging facilities is a more complex challenge.
Deploying charging points away from home is a second priority. It needs a push from local authorities. No matter who it is deploying the charging points – it could be cities or it could be a public-private initiative – they will need political determination and investment with returns based on better infrastructure for citizens and the achievement of environmental targets.
Battery technology is my second challenge. While it has come on in leaps and bounds in recent years, battery technology still has some way to go. The most difficult challenge currently? Apart from the cost and autonomy, controlling battery degradation when discharging to the grid.
This flow is particularly important for utility companies since they will have a symbiotic relationship with e-vehicles: the vehicles will need to extract power from the grid to run and, to be able to balance the increasing load, the grid will also need to resort to electricity stored in e-vehicle batteries, among other places.
Partnerships the key to new business models
Let’s move from the barriers to the opportunities – specifically the opportunities for utility companies, many of whom are finding it difficult to find the right e-vehicle business model.
I mentioned before that there is a wide variety of stakeholders in the e-vehicle ecosystem. It won’t surprise you, therefore, that many of the opportunities open to utility companies will involve partnerships with stakeholders in different industries.
One of the primary business model opportunities for utility companies involves a partnership with charging point operators. You see, utility companies have access to a very large retail market – a market that charging point operators are interested in because they want to build loyalty and attract clients to their public charging service. For utility companies, charging point operators bring with them a new – and soon to be essential – service for them to offer not only their retail customers but also to companies and authorities wanting to offer to charge to their customers in public places. Add in a company able to provide the relevant IT services and you have a complete ‘household charging service’ offer.
With the e-vehicle impact on utilities’ retail business currently relatively small, we expect to see multinationals adopting this business model first. After all, making it work will require size: the more customers you have, the more synergies available.
Visibility essential for TSOs
I alluded to the second business model earlier: the symbiotic relationship between e-vehicles and the grid. We are already seeing transmission system operators (TSO) putting the technology in place for this, information technology that will give them visibility of demands so they can forecast and prepare for imminent loads.
With technology evolving rapidly and adopting set to accelerate, E&U companies need to start driving their e-vehicle business models forward.
Emerging e-vehicle business models are great opportunities for utilities, and will be critical for their success in what will be a very exciting and competitive space. Read our Journey 2022 ‘Resolving Digital Dilemmas’ publication, researched and written by the Atos Scientific Community, for our thoughts on some of the other opportunities utilities can expect to see in the coming years – along with the ‘digital dilemmas’ these may bring.