Status and power in the family home

As prestige brands like BMW enter the electric vehicle market, we could see energy self-sufficiency become the ultimate luxury good of the 21st century.

Four years ago, when Business Spectator first looked at the charging networks that were being set up to service electric cars in Australia, there was a question hanging over the industry: would drivers want to swap batteries at services stations or plug them in and wait for them to charge?

Well, the bankruptcy of battery-swapping company Better Place in mid-2013 answered that question pretty definitively.

However, another looming question will affect business models of car and battery manufacturers, as well as the companies building networks of charging stations. Namely, how often will drivers charge their vehicles away from home?

That question is a lot bigger than it might seem at first glance, because hidden within it are big implications for distributed electricity networks, the electricity sources that power those networks, and even for Australia’s carbon footprint.

When we work out what drivers want to do with electric vehicles, a lot of those questions will be answered.

Consider the new purpose-built all-electric vehicle just released by BMW in Australia.

The i3, which looks a bit like a smallish SUV, has been designed as an electric vehicle from the ground up. A lot of its body is carbon-fibre, its floor (without the conventional ‘tunnel’) is flat, and its navigation system and user interfaces are built for drivers who might suffer ‘range anxiety’ if they don’t know how much charge they have and where the next jolt of energy is coming from.

Nothing special in that per se.  But reading the profile of the i3, which retails for around $64,000, brought back something a marketing guru told me four years ago. While many people worried that EVs were too expensive, he said the problem might be that they ended up being “too cheap”.

“Buying cars has never been about price,” he said. “They'll sell them as being faster, or better looking, and then mention that they're also cheaper to run."

And they are ... cheaper to run, that is. BMW says a full charge of the i3’s lithium ion battery uses about as much power as running a normal family fridge overnight. That will take you 130 kilometres, which even in a very economical petrol-driven vehicle would use about $10 of fuel.

The i3 can be fitted with an optional ‘range extender’, which is a small petrol-driven generator that charges the vehicle as you drive.

For example, a driver can tell the automated charging system to keep the batteries at 90 per cent and, day to day, for short runs to the shop, the range extender won’t kick in because the batteries are likely to have been charged overnight.

However, if driving out of town, when the battery hits the pre-determined level, the petrol engine starts. While it can’t fully replace the energy being expended, it can slow the rate at which the battery depletes, giving a top range of around 330 kilometres.

EV manufacturers speak about the ‘cost of ownership’, which is not unlike the way consumers think about their mobile phones. Rather than thinking “can I afford $800 for a phone”, consumers are used to thinking “can I afford $60 a month?”

In the case of an EV, the cost of ownership is that ‘fridge’ level of electricity use), and the resale value of the vehicle.

There is, of course, the cost of the battery. BMW is guaranteeing the i3’s battery for eight years, and the company points out that BMW buyers often upgrade their cars on a three to five-year cycle. And as the battery is made up of eight separate ‘pods’, the company can replace faulty pods without touching the others.

That’s all interesting enough from a consumer’s perspective, but where EVs start to get really fascinating is in the way they will change existing energy markets. That will be determined by how consumers use EVs in the real world.

BMW thinks it has seen the future in this respect. As described above, it isn’t battery swapping. Surprisingly, it’s not even likely to be a national network of charging stations.

That’s because there are so many different ways to charge the vehicle.

If you drive 300 kilometres to spend a night away somewhere, there is a cable to plug into any normal 10A power plug. It’ll take 11 hours to fully recharge, but then you’ll probably be eating, drinking, sleeping and so on.

If, by chance, your hotel had a charging station of its own, you could get a full charge much more quickly. There are a handful of places in Australia that will charge your car at 50A, and get it back to 80 per cent full in 30 minutes. More likely, however, will be a charging station that zaps the car with 36A, and reaches full charge in three hours.

The US firm ChargePoint has installed a network of 80 charging stations in the major capital cities. But here’s the thing – BMW is pretty sure that most i3 drivers won’t use them most of the time (in fact, it give each buyer a swipe card to allow them to use these charge stations free of charge).

Think about your own intra-city car use. Will you really drive more than 130 kilometres in a day? Or more than 300 kilometres if you have a range extender?

That means the company expects most people to charge their cars at home, where a 16A charging station, installed, costs just under $2000.

But there’s more. ChargePoint is now shifting its focus in the US to installing home chargers, and also sees a business synergy in installing solar systems at the same time.

As its president and chief executive, Pasquale Romano, told the Wall Street Journal recently: “Combining solar and an EV can give you some pretty dramatic economic benefits. And if you have an EV, you are immediately thinking about ‘Hey, how can I really take the next step and really reduce my fuel costs, and energy costs for my house, car, everything?’ Solar is just an easy way to do that.”

If, as both ChargePoint and BMW envisage, the home is where most EVs are charged -- with other charging stations being used only occasionally as stop-gap measures -- then the home becomes the locus of virtually all energy use, whether powered by long-distance distributed power, local power/storage networks, or even the consumer’s own solar/storage system.

Some still expect all those lithium ion batteries to become a giant storage reservoir that will feed energy back into the grid at peak times. That’s possible, but consumers’ need for autonomy and reliability of their cars may stand in the way of that grand vision.

More importantly, from a marketing point of view, the fact that prestige brands such as BMW and Mercedes are getting into the EV game may see the changes in energy use taking place first among higher socio-economic groups.

We could be about to see energy self-sufficiency, a low-carbon footprint, and state of the art green-gadgetry becoming the status symbol of the 21st century.