Tipping Point


Industry giants start the EV revolution.

Fortnightly Magazine - June 2010

Who killed the electric car? Well, as it turns out, the body never was found.

A lot has happened in the four years since a biting documentary film lamented the electric vehicle’s (EV) demise. Automakers and utilities have launched an unprecedented collaboration—to build and market a car that will never visit a gas station. Later this year the first mass-market, fully electric car—the Nissan Leaf—rolls onto showroom floors. Many other models will follow.

“We are definitely at the tipping point,” says Mark Perry, director of product planning for Nissan. “The question is whether it will be a gradual or a rapid transition, and I don’t know if anybody really knows that answer.” In some regions, utilities expect rapid growth in EV sales.

“Our mid- to high-case range is 100,000 to 200,000 cars by 2015,” says Ted Craver, CEO of Southern California Edison. “By 2020 we’re looking at between 450,000 and 1 million cars—and this just covers our service territory.”

It’s difficult to overstate the impact on the nation’s utilities of tens of millions of EVs—each one a roving reservoir of stored electric power.

EVs’ most enthusiastic proponents envision a future in which cars are charged overnight—ideally by off-peak wind generation—and driven to work where the battery is topped off by on-site solar panels. At peak hours, vehicle-to-grid (V2G) transfer would allow utilities to pull small amounts of energy out of cars to shave load, effectively turning customers into micro-vendors. This scenario would of course necessitate smart pricing, robust wireless communication, distributed generation, advanced metering infrastructure, and, incidentally, a whole new business model for utilities.

There’s some disagreement over which parts of that vision ultimately will come to pass and when, but the challenge isn’t a question of technology.

“We understand that every one of these things is do-able, we’ve already done a lot of it with OnStar,” says Britta Gross, GM’s director of global energy systems and infrastructure commercialization. “It’s really a no-brainer to take power off these batteries; in fact, we do this every day in battery labs.”

North America’s regulatory patchwork is a hurdle, no doubt, as is the challenge of harmonizing communications standards across several industries, but the biggest x-factor might be the person at the heart of this futurist’s fantasy: the driver. How consumers choose to interact with their EVs will go a long way toward shaping the market for the auto industry, for utilities, and for the rapidly sprouting third-party vendors in the EV space. And those drivers are about to get behind the wheel.

Learning Curve

Since the earliest days of the automobile, the industry has focused almost exclusively on the internal combustion engine. The fuel source, while not necessarily an afterthought, wasn’t particularly difficult to understand. Gasoline formulations evolve and the oil market fluctuates, but it’s nothing compared to the Byzantine complexities of the utility world.

“We’ve had to learn a lot about the auto industry, but it’s probably a bigger learning curve for them to learn about us,” says Michael Rowand, director of technology strategy at Duke Energy. “Our rate structures, our planning issues, our regulatory environment is completely foreign to them.”

Misconceptions and gross simplifications actually ran both ways, initially. Car companies thought of electricity simply as fuel, with little understanding of how utilities make money, the vagaries of rate commissions and state regulators or the nuances of investor, public and cooperative ownership. By the same token, utilities often compared EVs to appliances, not fully considering that these machines draw power at varying voltage and intermittent times, then drive across town and plug in somewhere else—completely unlike a clothes dryer or air conditioner.

But while the two industries have important differences, they share one critical commonality:

“They’re both giant, capital-intensive industries that take a long time to fundamentally change,” says Mark Duvall, director of electric transportation at the Electric Power Research Institute.

But the seeming inevitability of EVs taking “a long time” was a luxury neither side could afford. By the middle of the last decade, decision makers in both industries acknowledged that collaberation was needed to craft technical standards and devlop a common vocabulary. In 2007, the Infrastructure Working Council (IWC) was convened to bridge the gap.

Managed by EPRI on behalf of the industry stakeholders who fund it, the IWC set about collating the various efforts of industries and regulators to develop EV standards. The first challenge: a universal charger.

Starting With the Plug

“The automotive companies and the utility companies made it very clear that there needed to be one single connector standard throughout North America, whether you plug your car into 120 volts or 240 volts,” says Duvall. “It had to be simple and cheap and safe and every vehicle had to be able to plug into every charge station.”

The IWC went to work, along with the Society of Automotive Engineers, to design a universal charging system. The result, after a two-year effort, was a standard device for connecting the car to the grid, known as the Electric Vehicle Supply Equipment (EVSE), able to accommodate different types of EVs with varied requirements for battery charging.

For the Chevy Volt, for example, a plug-in hybrid set to go on sale in December, and which will travel only a short distance on battery power, drivers can make do with a so called “Level 1” charge—basically a standard wall socket using existing wiring—but only so long as they aren’t in a hurry. That’s because the full charge at 120 volts will take about eight hours.

A faster charge—whether for a fully elecric vehicle or a plug-in hybrid with an auxillary internal combustion engine—would require a 240-volt “Level 2” charge. The EVSE connector will work for both.

“It’s a very good standard, it takes into account a lot of vehicles,” Duvall says. “People call them chargers, even companies that make them call them chargers, but they’re not technically chargers in my mind because they don’t convert power. EVSE provides AC electricity to the vehicle and the vehicle has an AC to DC converter on board that charges the battery.”

A certified EVSE will require professional installation, but utilities are working to make the process easy for customers.

“It currently would take 30 to 50 days to go through the full process of having a residential charging installation,” Craver says. “You have to get the thing permitted and inspected— there’s actually many steps involved in getting one of these higher level chargers into the home. We’re trying to make sure we’ve got a process that’s as streamlined as possible.”

That’s not just a matter of customer satisfaction. Utilities need to know where on the grid the high-draw EVs will be, to avoid overloads on local transformers.

“If you own a plug-in Prius and you change it out for a Nissan Leaf, you might go overnight from a 1.4-kW, level-one, 120-volt charge to a 6.6-kW, 240-volt charge,” says Rowand. “It’s not the same as changing out one air conditioner for another.”

Despite such complexities, the collaboration around EVSE has been impressive. All parties seem genuinely proud of how effectively, and quickly, the various IWC stakeholders have been able to solve common problems. It’s a huge first step for making widespread EV adoption viable—and it’s something genuinely new.

“We didn’t have that with the last generation of vehicles,” says Gross. “We quibbled, and couldn’t agree. This was approached as a joint industry collaborative effort; that’s made a big difference. And the next big part to check off is where we’re headed with communication standards.”

Two-Way Data Highway

Realizing the true potential of EVs requires advanced wireless communication that allows utilities to manage these rolling batteries—to keep track of their location on the grid, control the time, speed and rate at which they are charged, and perhaps eventually control V2G functions. The IWC is working on it, but a communication standard is 12 to 18 months off. In a way, though, the timing is perfect.

“The great news is that what might look like confusion is actually a fantastic opportunity,” Gross says. “The utility sector didn’t have anything cast in concrete on the smart-grid communication protocols, and of course on our side it was a blank piece of paper, too. How fortuitous! This kind of luck doesn’t happen so often, where you actually have the ability to do the right thing from the start.”

The first generation of EVs and plug-in hybrids won’t be equipped with wireless that connects directly to utilities, although the EVSE can be networked to provide some load-shaping capabilities. Some cars rolling off the assembly lines can be set to charge at off-peak hours, much like a programmable thermostat. Managing charging for the Leaf even could be performed remotely via cell-phone interface with the vehicle’s navigation system.

Truly robust vehicle communication is a few years away—and for now that’s OK for both industries because it gives them a chance to work out the kinks. The need for advanced communication will grow, however, with the number of EVs on the road (see “Beta Testing Under Fire”).

“If you have 100 million vehicles in the near future, you want them all to be capable of demand response, charging off-peak, detecting price signals and communicating vehicle information,” says Duvall. “There are near-term objectives but there’s a long-term vision that the auto industry and the utility industry have to really work together to support.”

There’s some debate on whether the plug or the car itself is the communication lynchpin. Communicating directly with the car requires utilities to enter a whole new type of customer interface. Making the EVSE the hub requires communications with smart meters, home-area networks and other charging stations.

“Frankly, in the long term it’ll probably be a little bit of both,” Rowand says. “By definition the car will be smart. The Chevy Volt out of the gate will be smarter than any appliance in the house today. The question is whether it’s easier to use a smart plug to achieve the utility goals.”

Networking through the EVSE makes a lot of sense to utilities. It’s just one more step in the smart grid already envisioned. In the short term, most utilities see the primary value of EVs in the context of managing charge. Just being able to control when and how quickly cars are charged will allow utilities to shape the transportation load. But keeping tabs on vehicles in real time would offer more sophisticated data to better predict load requirements. For example, the utility could know that an EV 100 miles from home and low on juice soon would have to plug in somewhere for a fast charge.

Automakers have been communicating with vehicles for years—GM’s OnStar being the best-known system. Mike Tinskey, manager of vehicle electrification and infrastructure at Ford, says that rather than communicating directly with vehicles, utilities could piggyback off the carmaker’s wireless stream.

“We believe a better way to do this is a bridging action, to have our servers talk to the utility servers,” he says. “This really simplifies a complex or a fragmented market for us.”

Ford, which has been in a technology partnership with Microsoft for several years, envisions using the Hohm platform to bridge the gap between utilities and EVs.

“Microsoft could actually talk to a utility that has no smart meters,” Tinskey says. “It knows through that linkage that a vehicle in a given area shouldn’t even try to talk to a smart meter because it doesn’t exist. But even more importantly, it would inform the driver of a tiered rate structure for that area. If you go to Northern California, where PG&E has deployed a tremendous amount of smart meters, and is considering an electric vehicle rate and other rate structures that may change hourly, then the driver needs to have that linkage as well, server to server.”

In a sense, the carmaker becomes a service provider to the utility, tracking the EV’s location and status. Ford has no plans of charging for such services.

“We both need something out of the relationship,” Tinskey says. “They provide us with all of their rate information and the feeds, and in turn we provide them with information about the electric vehicle and its charge schedule. It’s a win-win, and I don’t foresee any dollar transactions. I think it’s the near- to mid-term solution because it offers the most value to the customer and it solves a lot of the issues the utilities are concerned about.”

Hot Spots for Early Adopters

For utilities, among the most pressing concerns is predicting the pockets of early adopters. While a plug-in hybrid might be the load equivalent of clothes dryer or plasma-screen TV, even a small concentration of EVs could overwhelm local transformers.

Southern California Edison modeled its EV hot-spots by looking at hybrid ownership in its service area on zip-code basis. It also created a Web site for prospective EV owners providing information they need on things like connection requirements and rate options. The site encourages customers who are ready to buy EVs to “raise their hands early” to help the utility refine its infrastructure preparation.

“We want to make sure we’re ready for customers who really want to own electric vehicles,” Craver says. “We expect Southern California to be one of the largest early adopter areas, so we have to make sure the neighborhood circuits and all the equipment really can absorb the increased load.”

Duke Energy expects EV concentrations in central Indiana, the Triangle region of North Carolina and the Charlotte area. The company expects EVs numbering in the hundreds next year, and thousands in 2012.

“Beyond that we’ll have to see what the market does,” Rowand says. “We’ve done our models based on different adoption rate estimates that are out there. In five years 2 percent to 5 percent of vehicles sold nationally are going to be electric. We’re getting a lot of interest from our customers.”

Rowand says he’d like to see more vehicles faster, and insists it’s essential to make smart charging a part of the mix as early as possible, even if the number of EVs remains low in the next couple of years (see “Mobile Load”).

“Our entire system was built around stationary, predictable loads,” he says. “You tell me the day of the week, the temperature, the relative humidity, size of your home and location, and we do a pretty good job of predicting your load. But with vehicles you have a mobile premise: overnight at home, at work during the day or in a Wal-Mart parking lot for an hour or two. It’s also a variable load. Are you charging at 120 volts? 240? Or potentially even faster than that? We need to make sure the ability to smart charge the vehicle is an expectation from the beginning.”

Stop and Swap

How quickly EVs penetrate the transportation market seems to depend most keenly on a single technology: battery storage. The average motorist drives about 40 miles each day. This accounts for the most common excursions; going to work, running errands, picking up the kids and so on. But longer trips are problematic. A weekend getaway or family road trip requires some method of covering longer distances between charges.

The plug-in hybrid provides an intermediary buffer to this problem. Cars such as the Volt can travel 40 miles on electric charge alone, then the gas-electric engine kicks in. But fully electric vehicles don’t have a back up fuel source. If depleted far from home, EVs need either a speedy charge, or a new battery.

Outwardly at least, car companies and utilities both favor the former option. A 240-volt Level 2 charge takes about 3 hours, far too long to spend at a roadside station. But new direct-current fast-charge technology enables a dead battery to get an 80-percent charge in less than half an hour.

“We believe that DC fast charging is the solution,” says Nissan’s Perry. “We’ll be demonstrating DC fast charging in six states beginning in December.”

As impressive as such a fast charge might seem, however, pulling over for 30 minutes every 100 miles would make that trip to grandma’s house a bit of an ordeal. Option B envisions pulling into a station where the spent battery is swapped for a fresh one in less time than it takes to pump a tank of gas. But that scenario raises a key question: who owns the battery?

Utilities certainly don’t want to own them any more than they want to own a customer’s refrigerator. And automakers resist the idea of battery swapping due to the warranty issues it might raise. But at least one company is betting big on the concept of third-party battery ownership.

Better Place’s business model is a combination of infrastructure—remote charging and battery swap stations—and software that supports communication among car, driver and utility. It’s a support service that ostensibly allows the EV to become more than just an urban runabout.

“Somewhere between 60 percent and 75 percent of all the energy that the average driver needs will probably be delivered at the home,” says Hugh McDermott, vice president for utility alliances at Better Place. “Another 10 percent to 20 percent can be delivered at the place of work.”

The swappable battery, he says, is the last piece of the puzzle.

“I’m in San Francisco,” McDermott says. “I want to know I can get to Tahoe for the weekend and not get stranded, so locating battery swap stations along key transport corridors is going to be part of the eventual deployment.”

Better Place has begun massive projects to bring its system to Israel and Denmark—both small, highly developed countries with strong state support for EVs. (Israel, in fact, is aiming for 100-percent EV adoption by 2020—about 2 million vehicles.) The company has projects announced for California and Hawaii, as well as Ontario, but McDermott admits the U.S. regulatory patchwork is a major problem.

“It’s challenging for us to operate in the U.S.,” he says. “There’s no coherent national policy on energy.”

Another problem is the system requires cooperation from automakers. Vehicles must be designed with batteries that are easily swapped from below. Nissan, through its alliance with Renault, has a relationship with Better Place in Israel and Denmark; Renault will deliver 100,000 battery-swappable EVs to Israel between 2011 and 2016. But at this point, Perry says Nissan has no similar plans for the United States.

Ford also has no current product plans for vehicles with swappable batteries. McDermott takes the domestic stiff arm in stride.

“Remember, this is a reset for many in the industry,” he says, referring to the first, aborted attempt to build electric vehicles, often referred to as EV 1.0.

“Resistance comes from a variety of things, as basic as DNA—they’re slow to move and slow to change—all the way to very calculated commercial interests,” he says. “Certain companies will publicly tell you battery swaps and EVs have no future at all whatsoever, but privately, behind the scenes, they are furiously trying to catch up. In the meantime they’re trying to extract the maximum value from platforms they’ve already invested in, such as fuel cell, hydrogen and hybrids. They’re trying to milk those investments while they catch up, but EVs crossed the watershed about a year ago.”

Getting Customers to Care

In the United States, the battery-swap issue is precisely the type of question that will have to be worked out in the market. If a viable third-party ownership model ends up working for batteries, that solution could lead to V2G technology.

“Vehicle-to-grid frankly is farther down the road,” says SCE’s Craver. “We see the promise of it, but not enough work has been done to understand the impact all the charging and decharging has on the life of the battery, the most expensive component of the vehicle.”

If someone else owns that expensive component, however, and if they can resolve technical concerns about V2G applications, then EVs rapidly would become more functional and valuable (see “Dealing with Disruption–Electric Vehicles). Effective inter-industry collaboration on standards in North American has created an EV market where meaningful competition on products and services is possible. Likewise, the utility industry’s growing need to engage customers in their electricity-buying habits might convince companies to invest more in EV-related infrastructure and marketing than they otherwise might.

“It will be interesting to see what dynamic will play out, because the vehicle is the most intimate appliance, the one customers care about the most,” says Duke’s Rowand. “It’s kind of hard to get customers engaged because they just don’t care that much about a refrigerator. But they care about their car. Ask anybody, they know what they paid when they filled up at the gas station last week.”

To the degree EVs help consumers connect the dots between their energy use patterns and the real-time cost of electricity, it could extend to the way they think about their entire energy profile and serve as a catalyst for utilities to deliver a new range of services.

“Will that awareness translate into the rest of the home?” Rowand says. “We definitely have an opportunity, especially in the early going. As people have a lot of interest and look for more information about vehicle performance, we’ll be looking at how we incorporate that into our customer communications, our energy efficiency programs, and our overall smart-grid communications with our customers.”

Automakers will keep close tabs on EV drivers, too, to find out what works, what doesn’t and just how much they actually want to interact with the vehicle and utility.

“We don’t want to overwhelm drivers with too much information,” says GM’s Gross. “We’re funny consumers, all of us, and we’ve got to look at the space with a level head. What do we really want to do with these vehicles? What are the best issues on the grid to go first? Maybe it’s just getting all the wind and all the solar we can and applying it to the vehicles as they charge.”

It’s a pivotal time for both industries, and the excitement surrounding EV space is palpable on both sides. Car companies and utilities recognize that collaborating on standards was just the beginning, and that they only will be seeing more of each other in years to come.

“We’re going to get our feet wet over time,” Gross says, “and we’re going to walk deeper and deeper into that water until we can take full advantage of swimming with the utility.”