Wednesday, September 26, 2018Canada's Leading Online Business Magazine

The Electric Car Revolution

By Angus Gillespie

The phenomenon of the electric vehicle is one that has managed to capture the imagination of creative thinkers for many years but that captive imagination has never led to success in the marketplace for a variety of reasons.

In the absence of technology that would allow for efficient electrified automobiles, inventers turned to internal combustion engines. The first gasoline-powered vehicle engine was invented by German Karl Benz, of the famed Mercedes-Benz automotive company. It was a one-cylinder, two-stroke engine that was unveiled nearly 140 years ago. Several years later, in 1885, it was Benz who developed what is believed to have been the first-ever gas-powered automobile. In 1913, the Ford Model T, created by the Ford Motor Company, became the first automobile to be mass-produced on an assembly line for purchase by the public.

Fast forward to 2018 and vehicles have had countless innovations added to make driving easier and more efficient. Now, the move towards electric vehicles has moved far beyond a potential opportunity into one that now is definitely coming – it’s just a matter of how long. And, in the future will cars still be driven by humans or will it eventually be a driverless society.

Somewhat surprisingly, six of the 10 major car companies that appear most committed to electrification vehicles are Chinese. It’s a bit of a surprise because of China’s rather spotty history and reputation regarding carbon emissions and low-grade efforts on curbing greenhouse gas emissions and pollution in general.

The evolution of electric cars has been a much longer one than many people may recognize. They first appeared as far back as the mid-19th century. In fact, it was an electric vehicle that held the vehicular land speed record until the early 1900s. In 1901 an American engineer named Andrew Riker raced his electric car down a one-mile dirt track and reached a maximum of 57mph (92km/hr). The battery-powered Torpedo Racer held onto its record for 10 years. The fastest recorded speed of an electric car as of now is 245mph (394km/hr).

So what perpetuated the 100-year delay in their becoming a viable method for fueling vehicles? The high cost to develop and maintain, a low top speed and a frustratingly short range of battery electric vehicles compared to gas-powered internal combustion engine (ICE) vehicles are the three most common and viable reasons. Although electric vehicles have never been part of the norm for the vast majority of consumers, electric passenger trains have been widely used throughout many large urban cities and regions throughout the world for several decades.

At the beginning of the 21st century, interest in electric and other alternative fuel vehicles has continued to intensify due to growing social and corporate responsibility pressures and concern over the problems associated with hydrocarbon-fueled vehicles, including damage to the environment caused by their emissions. With each passing day there are improvements in electric vehicle technology, but the counter argument to that would be the new gas-powered engines are also much more efficient and less damaging to the environment than in the past, and that shifting from one fuel source to another would be an extremely laborious and expensive proposition.

Automotive Innovation

There are now three types of vehicles in the marketplace: the traditional ICE vehicle, battery electric and the plug-in hybrid. Since 2010, combined sales of all-electric cars and utility vans achieved 1 million units delivered globally in September 2016. While that is an impressive increase, the number of ICE vehicles sold worldwide in that same year was about 85 million.

The past two years have been strong for EV sales in Canada. The total number of PEVs on the road is now at more than 50,000. The latest statistics indicate that battery electric and plug-in hybrid vehicles are selling equal numbers of models.

Ted Graham, Head of Open Innovation, General Motors recently addressed a business audience at the Toronto Region Board of Trade to provide his expert opinion on whether electric cars are ready to take over from traditional ICE vehicles or if they are realistically still years away in terms of any meaningful impact on our everyday lives.

“It’s been very interesting to see how companies that existed for more than a century have looked at how innovation happens in an organization and what to do during times of massive change,” says Graham.

Electricity prices have skyrocketed over the past decade and that unto itself will pose a continuous barrier. Meanwhile, traffic congestion in Toronto costs the region about $11 billion annually. The average commuter spends 66 minutes getting to and from work each day.

Governments around the world have taken aggressive, long-term measures to transition from internal combustion engines (ICE) to electrified engines but it appears there is still a long way to go in spite of the fact there are a number of startup companies as well as the legacy automobile companies working fast and furious to develop electric vehicles so that they will have the required efficiencies to completely replace ICE vehicles. But there remains huge debate and disagreement on just how far away that full transition may be.

“My job is to turn ideas into invoices,” says Graham. “One common aspect with many of these innovations is the advancement of software technology that runs these machines, whether it’s automobiles, engineering or healthcare. As example, radiologists could soon be out of work if machine marketing actually does what it promises to do.”

“When we think of the types of businesses and reinvention that we need it is urgent that we go out and find a way to actively understand the type of changes that are coming,” continues Graham.

As part of his desire to learn more about the industry Graham became an Uber-X driver in 2014 and completed 99 trips over the course of 14 months.

“I had some very interesting experiences with people in the car whom I was probably their boss’s boss,” he says.

“I believe there will be three core factors that will determine success in this industry. Partnering in the future is going to be even more important. Secondly, it’s the idea of feedback and consequences. I was a very proud 4.8-star Uber-X driver and I was also rating my passengers on each and every trip,” explains Graham. “The third factor is a balance of risk and reward.”

The whole idea of a ratings system for both the service provider and the customer is already making a big difference in this new world of technology and transportation. Now an independent contractor can decide when they decide to choose to transact, and with whom.

Graham mentioned how he would often be pulled over near a taxi stand on a Saturday night, when a cabbie would get out and take a picture of his licence plate and then send it to insurance companies on Twitter hoping for his delisting.

“What’s interesting is that as the word got out that I was doing this experiment and writing an article for The Globe I ended up being in five different insurance company boardrooms and talking about new products that might be created for the sharing economy,” he says.

Since joining General Motors as Head of Innovation Graham says he has developed a deep respect for company CEO Mary Barra and her assertion that as a company it is critical to connect with the customer beyond the car. It’s something he’s witnessed in GM’s work with EVs.

The Chevy Volt sold about 18,000 cars in the U.S. last year, making it No.3 in electric car sales.

“We’ve got the Chevy Volt with the extended range being able to travel 236 miles on a single charge,” reveals Graham.

Other EVs that have gained early traction in terms of sales include the Tesla Model X, Model S, Nissan Leaf, and Hyundai Ioniq BEV.

Part of this innovation journey for Graham and his innovation team has been to have humility because it’s no secret there are still many challenges to overcome. In that regard, Graham is actively seeking partnerships to solve such critical issues as cybersecurity and lightweight materials that will help propel the industry towards an electric, autonomous future.

ICE, Hybrid & Electric

Joining Graham at the TRBOT were two automotive experts, Matt Stevens, CEO at Fleetcarma and Dennis DesRosiers of DesRosiers Automotive Consultants Inc. Both clearly believe electric vehicles have a future, although Stevens believes the future is now, while DesRosiers says it’s going to take a considerably longer period of time than that.
Moderating the panel discussion between Stevens and DesRosiers was Heather Ferguson, Vice President, Environment, OPG.

“We are uniquely positioned to be world leaders in electrification transportation. We have done some very heavy lifting here in Ontario to build out a very clean electricity grid. It is now about 90% free of greenhouse gas emissions,” says Ferguson.

The carbon intensity in Ontario is actually much lower than jurisdictions and that is something Ferguson believes should be made known. Germany is at 560 grams per kilowatt hour; California is 216g per kw/h and Ontario is at 40 grams per kw/h.

“We now have to look at the higher emitting carbon sectors, which is transportation and it is clearly the next major sector to decarbonize,” adds Ferguson.

The transition would be felt beyond just the environmental benefits but it would also result in economic enhancements.

“When you think of the massive investment we made to clean up our electricity system, if we take that investment and transition it into the transportation system and spread those significant costs over a larger customer base you will actually reduce customers’ electricity rates,” explains Ferguson.

Stevens is very bullish on the arrival of electric vehicles and has been involved in the design of more than 15 hybrid vehicles ranging from cars to lunar rovers. He believes there are three camps regarding the future of EVs. First there is the camp that believes electric vehicles will not be the thing; there’s the camp that believes electric vehicles will be the future – but no time soon; and there’s the camp that believes you need to buckle up, it’s about to move fast – and that’s the camp Stevens is in.

“The reason I see most people moving from the second camp to the third camp that I’m in is for one simple reason and it’s the realization that EVs are not going to win because they’re perfect. I could come to you and say your next vehicle is a good thing for the environment and your kids. Or, I could say do you want a car that is faster, smoother and more convenient than your current vehicle that starts every day with a full tank. It will require significantly less servicing and is a fundamentally better vehicle than what you have today,” he explains.

But Dennis DesRosiers is not nearly so optimistic about the timeframe. He’s had more than 48 years of experience in the automotive industry, so he’s seen his share of technological advancements in his time.

“Signs point to electric vehicles but there are still many roadblocks. Companies are spending millions of dollars in the technologies,” he begins. “However, to date this entire movement has failed miserably.”

DesRosiers has some undeniable statistics to back up his claim to this point in time. In the past 17 years hybrid vehicles have resulted in a grand total of 220,000 units. At the same time consumers bought 25 million ICE vehicles.

“Electric vehicles have just finished their sixth year of availability and supplied about 20,000. In those same six years we bought 10 million ICE vehicles,” notes DesRosiers.

Efficiency Comparatives

There was a time when people would spend more money for something less efficient because of the hope it would one day be the in-thing for a certain demographic of the population. That’s not the case or the sales pitch anymore. If you purchase new Chevy Volt the first scheduled powertrain maintenance is after 240,000km.

“Yes, you have switch to and from winter tires and you’ll have to do a brake change at about 150,000km,” says Stevens.

Most people in Canada own a new car for 7.5 years and drive it for 140,000km. Stevens points to the fact that if you were driving a Chevy Volt you would never hit the first scheduled powertrain maintenance for that vehicle.

“I bought a Chevy Volt just over six years ago. I had put 225,000km on it before I was recently rear-ended at a stop light by a distracted driver and it was written off,” says Stevens. “When I bought that car six years ago the battery in that car was $16,000. Today it is a $2,800 battery. Continued improvements in the batteries and lower prices will continue due to intense competition.”

Since losing his Chevy Volt, Stevens has been using a Chrysler 300 Sport Edition rental, which clearly isn’t to his liking.

“While driving here I had to stop for fuel and felt like a moron standing beside my car while it filled, because I’m not used to that anymore,” he laments.

The response time of the engine was very slow. It took about a second-and-a-half to react. My Chevy Volt could probably take it off the line,” he continues.

DesRosiers interjected by saying “I’m trying to get my head around a $2,800 battery versus $1,000 in oil changes over the entire life of the vehicle.”

There are currently 42 different types of makes and models of electric vehicles in Ontario but up until about 18 months ago all of them were sedans. More recently there has been a noticeable surge in the production of SUVs, pickups and minivans such as the Chrysler Pacifica.

“As people can get an EV in the type of vehicle they want that is where we’re going to see a big rise in sales,” says Stevens.

There is a difference between the hybrids and the fully electric, and Stevens doesn’t group them together. He notes that the reason for using the non-plug-in hybrid and the purpose of the battery is to make the gas engine more efficient. It is the same as doing direct injection and not using a carburetor. Its sole purpose is to make that gas engine work better. It should be noted that GM produces both the Chevy Bolt and the Chevy Volt. Besides the fact that one is built like a traditional sedan and the other is a hatchback crossover, the biggest difference is that the Volt is a plug-in hybrid while the Bolt runs exclusively on electricity.

“With my Chevy Volt, of the 225,000km I put on it, for 70% of those kilometres the engine was never running,” he says.

DesRosiers believes that electric vehicles being viewed as a solution for climate change issues related to the auto sector and greenhouse gas emissions have some fundamental flaws related to the approach not the least of which is that by the year 2030 another 6 to 8 million more vehicles will be on the roads. Forecasting for EVs reveals that ICE vehicles will still outsell electric vehicles by a ratio of between 3-to-1 to 5-to1.

Although those vehicles (EVs) will help, if you really want to help with greenhouse gases in the auto sector you really have to look at other issues,” he says.

Available charging stations, availability of vehicles and a greater understanding of the short-term and long-term benefits are all factors that seem to be preventing the EVs from taking off at the pace some would hope to see. As part of the crisis with a shortage of charging stations is that the range of the battery-powered vehicles are still an obvious shortcoming.

The other factor slowing down the movement to EVs is that the technology of traditional ICE vehicles has continued to improve rapidly and is now spectacular and so people are saying why should we take the risk on this still largely unproven technology, whose price point, while certainly more affordable now, is still quite high for most consumers.

If you add up all the collective announcements related to the EV development industry it totals more than $100 million according to DesRosiers. And he’s in no way believes there is any type of conspiracy to keep EVs out in order to keep the traditional ICE vehicles in production. They are there, for consumers who want them. But consumers remain skeptical for many of the reasons outlined.

“To put forward a notion that the auto industry doesn’t want to advertise or sell them (EVs) is bogus,” he emphasizes. “EVs account for 2% of current sales but about 15% of the models in showrooms are EVs,” says DesRosiers.

Statistics from 2017: Source: Fleetcarma

• Electric vehicle sales in Canada increased 68% year-over-year.
• Ontario EV sales more than doubled in 2017, with year-over-year growth hitting 120%. Also noteworthy, New Brunswick had the highest year-over-year growth at 124%.
• The total number of plug-in vehicles on the road in Canada is up to 47,800.
• In Quebec, EV sales exceeded 2% of all passenger vehicle sales for last four months of the year.
• The all-electric (BEV) category outpaced the plug-in hybrid (PHEV) category, with year/year growth of +92% compared to +48%. While Canada used to be the land of the plug-in hybrids, there is now a notable shift towards BEVs.

In Ontario two years ago there were 1,800 EVs sold. Last year that number increased to 2,400, so while it represents a large 75% increase, it’s beginning from a tiny base. While it’s expected about 14,000 EVs will be sold in Ontario in 2020, there will be 900,000 ICE vehicles rolling off the lots. Energy holds an exciting future, but that future may still be a bit farther down the road. But Stevens remains optimistic that his projections are on line.

“In five years I think that 20% of all new vehicles will be electric,” he concludes.

“Although EVs are progressing, for a number of reasons, you are now still better off with an ICE vehicle,” counters DesRosiers.

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