Category Archives: Electric vehicles

Dyson’s ambitious British EV project relies on Asia – and the US for now

dsc_3983

Sir James Dyson’s announcement of his electric vehicle ambitions has been news across the world.

There’s been a surprising amount of antipathy among the public, mostly in his UK homeland. Perhaps that’s because his name is associated with vacuum cleaners.

Elsewhere, especially in the USA – which likes a start-up, preferably from a California garage – it’s being seen as a credible venture. Especially as it’s being supported by a £2bn war chest. That’s 80% of the £2.5bn investment plan already announced – a huge commitment. Forbes, the Wall Street Journal and Bloomberg have all covered the story in a positive light. So has the FT.

Nevertheless, bringing a car to market by 2020 or even 2021 is extremely ambitious – that’s why Dyson has been keen to stress that the company has been at work on the project for years, and that it’s been in his mind for two decades. But this is a time for ambition, and once he has a product he can unleash a big advantage: growth in demand for Dyson’s consumer products, especially in Asia, which will drive the global EV market, has quadrupled group turnover in the past decade. If that brand traction can be coupled with product containing unique and relevant features – Sir James is betting on solid-state batteries for a start – Dyson has the capability of market success even if turning a profit will take many years.

image001-3Asia is key, so expect to see the vehicles being manufactured there. That may mean partnerships with Chinese businesses, which would reduce the huge financial risk. What that in turn means for the brand – British, daring, challenging, idiosyncratic, innovative – is another question.

But this news adds to the rapidly swelling tide of EV commitment and interest. It’s good for all of us in the EV business. We wish Sir James and his venture the best of British luck.

Advertisements

Tesla, lithium and the battle for power

tesla-logo1

Seeing Tesla yesterday at Cenex LCV, the UK’s leading low-carbon vehicle event, was a reminder of the company’s challenges.

It’s hard to argue with the vision and ambition of Tesla founder Elon Musk – someone who promises not just to make the world a better place but even to help mankind find an escape route to another planet, via his SpaceX business, if plan A doesn’t work. His big pronouncements will always have plenty of emotional appeal.

37cdb07500000578-3769059-image-m-30_1472756569002But they can also fail spectacularly. In April, when he described the forthcoming Tesla Model 3 compact car as “the most compelling product launch on earth” he wasn’t aware that this month’s launch of one of his SpaceX rockets would be dramatically more compelling. The Falcon 9 failed explosively and extremely publicly, made worse by the fact that in its payload was a Facebook satellite for bringing broadband to parts of Africa. It was a PR-loaded fireball and could have been a metaphor for his aim of taking on the established carmakers.

Shortly after the Model 3 announcement it emerged that an owner of a Tesla Model S had been killed in a crash apparently as a result of the company’s Autopilot autonomous driving system failing to ‘see’ a truck. Last week the driver of another Autopilot-equipped Model S was killed in a crash, forcing Tesla to say that he wasn’t using the system at the time of the crash. This week another fatal crash came to light. And yesterday a public spat between Tesla and its former camera supplier Mobileye blew up, with the latter accusing Tesla of “pushing the envelope in terms of safety”.

Even July’s acquisition by Tesla of Solar City – the energy business of which Musk is chairman – undermined the big vision, being seen by most observers as merely a bailout, not a crystallisation of integrated sustainable energy.

tesla_model_3_2It’s been a bad year. Yet Tesla faces new, fundamental challenges and risks, and rather than provide welcome relief the Model 3 breakthrough car is the heart of it. Yes, the Model will alter the dynamics of the electric vehicle market if, as claimed, it comes to market in 2017 at a base price of $35,000, able to carry five people well over 200 miles and on to the high ground.

tesla-gigafactory-solar-roof-01But the real battleground is not the vehicles themselves – it’s how they’re powered. So if anything is going to be the Tesla gamechanger it’s the company’s giant Gigafactory battery plant, not the Model 3. It needs to be: around 375,000 people have placed orders for the 3, equivalent to a likely $16bn in sales. Musk says the 3 will propel Tesla from an annual volume of 50,000 vehicles in 2015 to 500,000 by 2018 to meet demand.

The Gigafactory will double global lithium battery capacity, but there lies the challenge. Where will all the lithium come from? That 500,000 annual production figure will require 25,000 tonnes a year of the precious metal, equivalent to 15% of global production. Lithium isn’t rare but it’s hard to reach, and as other carmakers ramp up their electric vehicle programmes the demand curve will steepen sharply. There could be a lithium gold rush, and a spike in prices: the cost of lithium carbonate imported into China has already tripled since the end of 2015. Tesla’s relatively low volumes will make it hard to bear sharp increases in costs, and unlike all the big carmakers it doesn’t make any cars which don’t run on battery power to provide reliable revenues.

uyuni-bolivia

Tesla may need to buy a mining company to satisfy its appetite – the parallel with Henry Ford buying up rubber plantations to ensure that he had enough tyres to allow the Model T to transform personal mobility would no doubt please Musk. But there are other mouths to feed – not only the major carmakers but others with a longer record than Tesla in lithium battery production, such as BYD, the Chinese EV producer in which Warren Buffett has a stake. BYD has been making its own batteries for 20 years, and in 2015 produced more electric vehicles (EVs) than Tesla or anyone. A further stake in BYD has recently been bought by Samsung, which is pushing hard into automotive, supplies BMW’s i3 and i8, and is a massive producer of lithium batteries for mobile devices like the 6800 laptop batteries wired together to power the Model S.

And what if new battery materials or technologies emerge? Here’s the risk: the Gigafactory puts all Tesla’s eggs into one vast lithium basket. The battery pack for the crucial Model 3 will require new levels of energy density to achieve the claimed performance from a more compact volume, but we know it’ll be lithium and Musk has said he has no contingency plans.

Hedging its bets is part of the reason why the car industry is happy for Tesla to blaze the trail. There’s talk among the carmakers about building battery factories, but largely of JVs, where costs are shared and risks reduced. For the time being, however, it’s not that critical for them, because unlike Tesla their businesses currently depend very little on EVs. They can sit tight, wait to see how markets and technologies develop, then act – with power and accuracy.

There is undoubted allure to the Tesla brand – a disruptor with a bold vision. Tesla has a devoted fanbase, and you want it to succeed in a way you couldn’t want a Ford or GM to succeed. But a brand can’t continue to be a disruptor if its competitors can easily follow (only this week General Motors announced that its Bolt EV will beat the Model’s 3’s range by 10% and it will almost certainly hit the market before the Tesla) – or simply find a better way.

The money-burning carmaker business model alone doesn’t work and, objectively, making cars which happen to be EVs doesn’t even truly fit Tesla’s mission of helping transition the world to sustainable energy. Cars, even zero-emissons ones sold from shopping malls, are still largely privately acquired, carry one person from A to B and back again, and are ultimately disposed of. They fit the old model.

clnnbnwwaaanec5So you hope that, for Musk, cars are a way to create the momentum, goodwill and change of mindset for a wider energy brand and a new kind of grid – translating Tesla’s vertical integration into a world where EVs power not just themselves but our homes, are part of the internet of things and a smarter world. Otherwise his efforts may go the way of that Falcon 9.

Tesla: disruptive world-changer or mainstream wannabe?

tesla-model-s-logo-628Tesla said last week that deliveries of a second model in its all-electric line-up, the Model X, would start late in October. It’s a big moment.

The company has done a remarkable job in leading the established carmakers down the road towards mass acceptance of electric vehicles with its Model S luxury car. There’s a lot to love about it. But the acid test is coming in the form of the follow-up products, starting with the Model X, for which it’s forecast sales of 55,000 before the end of 2015. Even though the X will occupy a lower price point and will be a crossover – the fastest-growing model type globally – that’s a tough call when Model S sales are currently running at an annualised rate of only about 40,000.

But that’s not the biggest issue. Tesla’s key problem is that its model range plans will see it entering the mainstream and taking on the big players – which have the muscle to stamp on the new boy who’s tested the market for them.

2013-tesla-model-s-front-three-quarter-1Tesla’s product strategy has been compromised by conservatism from the start. The Model S is a huge achievement, offering a viable range of well over 200 miles in an EV for the first time. It goes like stink and can move a large family in serenely hushed comfort. But it’s anonymous looking. EVs don’t have to shout their technical or eco credentials but nothing in its design tells you that the car is a ground-breaker, a catalyst for an entire industry. It’s pleasing but anodyne. It could be a large Mazda. Or anything designed around a traditional ICE (combustion engine) drivetrain.

teaser@2xNow, with the Model X, Tesla is taking its offering into more commoditised territory. And the smaller Model 3, which will follow, will further expand the range but do so by lowering the price point again. That opens it up to a far wider customer base but also far tighter margins and massive competition. A crossover the size of the Model 3 will be up against Chevrolet’s forthcoming and very keenly priced Bolt, and the major carmakers like Chevrolet’s GM parent can chevrolet-bolt-ev-conceptoperate at miniscule margins offset by far higher volumes, global footprints, larger product ranges and sales of financial services: most of the carmakers are now effectively banks which also make cars. Tesla is not, in spite of its founder Elon Musk’s billionaire status.

Put it another way: Tesla – despite controversial and vocal Musk – could have been disruptive but has not. Musk touts a disruptor tag and wants to challenge the established brands. His balls are as big as his bank account. But there is no mass following for Teslas or any other EVs at the moment, and when the demand rises the big players will exploit it quickly – there has been no first-mover advantage. Audi has recently announced that it will be revealing a prototype all-electric luxury car with a Model S-beating range at the Frankfurt motor show in September, and Jaguar is planning an all-electric luxury car. Both should be on sale by 2018.

gm-allelectric-chevrolet-bolt-not-a-threat-to-tesla-motors-inc-says-elon-muWhy such a slow response? First because the demand for EVs is still insignificant, and second because the Model S has been in a niche. The real competitive response will start as Tesla enters the more affordable market segments – which it will do with the Model X and Model 3 – and crucially when the demand for EVs can’t be ignored. And when that happens the established carmakers will be ready. Tesla isn’t doing anything the other carmakers cannot, and when it matters Tesla won’t be doing anything they are not actually doing.

Tesla simply can’t challenge the existing major carmakers head-on. Top-down disruption hardly ever occurs. Instead it would be better off continuing to target niches the major players don’t want to enter, or can’t enter quickly and easily, and engaging in innovative business models – like short-term leasing and car sharing. That’s what true disruptors do.

If Tesla’s aim was not to disrupt it should have created highly distinctive products, especially where it cannot avoid direct competition with the establishment. And it should have invested more in its brand. The simplicity of EVs mean that the barriers to entry for new carmakers are far lower than for new entrants in the ICE era. Making a car is the (relatively) easy bit; creating a relevant and differentiated brand is the hard part, and Tesla has not yet done that. To most consumers Tesla means ‘electric’, early mover’ and ‘Musk’ but little else. It may be one of the most tweeted, followed, liked and posted brands but it has effectively outsourced its brand development to the vagaries of cyberspace.

saab_92_black_1947When we see other new entrants into the EV sector they are likely to be less beholden to a traditional product profile, and more focused on brand, than Tesla. The next one may well be Nevs, the business which acquired the assets of SAAB, is rebuilding as an EV company and has just announced alliances with two Chinese state-owned firms. It knows the value of the SAAB brand legacy and my bet is that it will be thinking hard about new business models and the different requirements of Asian and Western markets.

To be successful, Nevs and other EV brands have to offer something different but which can exist alongside the establishment – in the market, in consumers’ minds and probably on their driveways. Challenging them head-on isn’t a sustainable option.

Geneva 2015: Audi R8 saves the (real) world

maxresdefault-2Most reports of the 2015 Geneva Motor Show, which opened its doors last week, have adopted the view that it’s primarily about the exotic supercars. It’s not.

Yes, there were new supercars from Ferrari, Aston Martin, McLaren, Lamborghini and other exotic brands. Even the mainstream crowd was at it, with the revival of the iconic Ford GT.

But the real trend among exotic performance cars was more subtle. Not only that but it tells us something about the future of EVs (electric vehicles). Honda geneva-2015-94showed its own reborn icon, the NSX, but has reinterpreted it supercar as a three-motor hybrid. It’s a contemporary performance engineering approach far more in line with the hybrid hypercar holy trinity of LaFerrari, McLaren P1 and Porsche 918. But where their price tags are $1m-plus, the NSX will be more like $150,000.

Yes, that’s still a lot of money, but it positions the NSX in a new, real-world exotic sports car environment – a place where price, performance and poor taste are images-24restrained and the cars better for it – alongside BMW’s i8 and the Audi R8 e-tron unveiled at Geneva. Audi has gone a step further than Honda and BMW and given the R8 e-tron a pure electric driveline – producing 456bhp and a range of 280 miles for not much more money than the Honda. And not an engine in sight.

This reflects a rapidly growing trend – EVs are going upmarket. As everyday small-to-medium size cars like the Nissan Leaf and Renault Zoe, EV sales remain minimal. Even BMW’s avant-garde, brilliantly engineered, brilliantly marketed and affordable i3 isn’t shifting. So the carmakers are putting EV tech into high-end models and positioning them as the top variants – as in the new Audi Q7 e-tron SUV shown in Geneva, with a hybrid drivetrain. BMW, Range Rover and Volvo have all chosen this strategy already.

photo_20_0Audi has admitted that the pure electric technology in the R8 e-tron will be introduced in at least one more mainstream model in a couple of years or so – most likely a medium-sized SUV with a target of a 300m-plus range. No coincidence that Tesla, which has shaken the establishment with its battery-only performance and range, will have introduced its first SUV by then. This part of the market will be the epicentre of EV growth.

After publicly doubting battery-only EVs Audi has done a U-turn and is now clearly committed to them. It is effectively leading VW Group’s EV efforts, and may well become the leading EV OEM bar none, because it operates in the premium space where the additional cost of electric technologies can be absorbed, yet has mass-volume appeal. Audi could be a catalyst to widespread EV acceptance and adoption.

In this sense Geneva 2015 is all about the real world. Look past the roped-off stands, fake tans, carbon-fibre and colossal combustion engines and there’s an electric future coming into focus.

Toyota – 7m hybrids should make more noise

Toyota_celebrates_100_000_UK_hybrid_sales_Toyota_54952Toyota tells us it has just clocked up 100,000 hybrids in the UK market, almost 14 years after the first Prius went on sale. Not a huge tally if we’re honest. But Toyota was way ahead of the game back then, and globally it’s now nudging seven million hybrid sales.

That is impressive, because by my calculation it equates to savings of around 47 million tonnes of CO2 and 16.5 billion litres of fuel. And as the company is currently selling 1 million hybrids annually and launching around a dozen more hybrid models by next year, the numbers are accelerating.

But Toyota didn’t give us those stats, which is a pity because it’s a great story. And also because it’s in danger of losing the high ground to noisier companies which are newer on the scene and happy to motor down a hybrid highway paved by the Japanese giant.

Electric vehicles are now firmly in the mainstream, even if they’re not selling in truly large numbers yet. Every manufacturer has an EV of some sort. BMW has moved the game on for EVs with its cool and urban i3. Toyota’s rival for the global no 1 car group, VW, has finally launched its first EVs. And both are offering battery-only products.

But hybrids are the way forward for mass adoption of electric vehicles. The hybrid drivetrain, previously regarded as a slightly clumsy compromise, is now seen as the bridge to fully electric motoring the world isn’t yet ready for. And Toyota’s first-mover status should mean that it owns that space.

It still can. Hybrid technology is finding its way into luxury brands; even Formula 1 has gone hybrid. This is transforming favourability among prospective hybrid car buyers which Toyota, with a large existing hybrid customer base – unlike its competitors – can exploit.

The next few years should be Toyota’s. But it will need to invest in its brand and marketing as much as in its R&D if it’s to hold the high ground it’s already taken technologically.

Bentley, Beijing and the hybrid halo

Mercedes recently said that the combustion engine is with us for at least 20 more years. No doubt that’s right, but it has a particular interest. The fact that it still produces a V12 is a badge of honour for the brand. And no doubt a purchase trigger for Asian plutocrats who absolutely must have the highest in perceived luxury.

bentley-mulsanne-hybrid-concept-2014-beijing-auto-show_100463149_lContrast that with last week’s debut of a hybrid Bentley. It’s an important moment, the more so because it was at the Beijing auto show – a place where the brands don’t normally make concessions to the distinctly Western concept of sustainable luxury. The Bentley is officially a concept car, but significantly it’s a version of the Mulsanne, a production model and the brand’s flagship: if hybrid technology it can be accepted at the pinnacle of traditional, conservative luxury, it can fit with any brand.

With the Bentley, and the simultaneous Beijing launch of a production long-wheelbase hybrid Range Rover, the time when luxury and premium car buyers will want to know why they haven’t got hybrid power is surely approaching. Hybrid systems are at the apex of powertrain technology right now, and if seen as such customers will demand them.

Bentley’s VW Group sister brand Porsche already offers a hybrid Cayenne and Panamera, but they don’t sell. Same for Range Rover’s standard-wheelbase hybrid Range Rover: they’re not proper Porsches or real Range Rovers. But the Bentley and the LWB Range Rover can change this. If the idea of a hybrid Bentley goes down well with Chinese luxury car buyers, it will gain acceptance for Porsche’s hybrids. And if hybrid power is accepted in the limousine version of the Range Rover it won’t be perceived as a dilution of the brand in the standard car.

Creating hybrid versions of range-topping cars enables VW Group and Jaguar Land Rover to exploit the higher margins of big-ticket products and, in time, as the halo effect occurs, to sell hybrid versions of lower-price, higher volume products at a profit. Larger volumes will in turn reduce the cost of hybrid technology.

China is key to widespread adoption of future electric vehicle technologies: as a growing car market with vast volume potential it makes no sense to continue building only a combustion-engine infrastructure to meet the needs of the emerging motorised masses. Last month the premier declared a war on air pollution, yet the country still lacks a vehicle charging infrastructure. Hybrids are therefore the catalyst. It’s good strategy for the carmakers to push hybrid products in China, and to do so top-down, using halo brands and models as cultural influencers. Plug-in hybrids and battery-only vehicles will follow when the infrastructure is there.

So the challenge for global mass-adoption is one of communications, and the audience it needs to communicate with is as likely to read Wired as Forbes. Hybrid systems need to be positioned not so much as a means to supplemental performance or a cleaner, greener conscience as simply the latest and best technology, a must-have.

A premium car without sat nav? No chance. The same surely applies to the technology which is the beating heart of a car.