Sunday, February 24, 2013

Electric Cars: A Matter of Managing Spatial Scales


The UK government has recently announced that it will fund up to 75% of the costs of installing charging points for electric vehicles in garages and driveways. (http://www.bbc.co.uk/news/uk-politics-21503532). The estimated cost of installing a power point capable of charging two cars is about £10,000 with local authorities expected to contribute £2,500 towards this cost. The report says that the government estimates that it will cost between £1,000 and £1,500 to install charging points for drivers with off-street parking for power points in their garages and driveways. Rapid chargers will cost about £45,000 each. The government believes that 75% of costs is an appropriate level of incentive for individual drivers and local authorities to invest in such technology. 

This may seem like a great idea for improving everyone’s environmental quality but, as a Commons Transport Select Committee has already asked, is this the best way to use government funds. The incentive only works if people buy electric cars, can afford the additional costs of installing such power points and only if the burden on the electricity generating system allows recharging (a big surge of power demand in domestic supply overnight might not be a good idea).  Maybe installing power points maybe an answer but it is not convincing that the right question is being asked.

The question that should be asked is why aren’t people buying electric cars? Ron Adner used the EV (electric vehicle) as an example in his recent book ‘The Wide Lens’ as an example of having to undertake ecosystem style thinking about innovations and their economic development or acceptance. Reducing the issues of EVs to one key component, Adner argues that the need to buy an expensive, cumbersome, lengthy to recharge and soon obsolete battery is an important impediment to purchase. Adner uses the example of Better Place to illustrate how rethinking the ecosystem can result in a novel solution to the battery issue. Better Place envisages a system where the battery is replaced when it runs low on power through a network of battery replacement stations. The operation is a quick change over of a discharged fro a charged battery with the car driver having as much ownership over the battery as a driver does over the petrol in a petrol station (http://www.betterplace.com/). This system transfers ownership of the battery from the driver to the battery exchange company. Better Place can now deal with, problems of obsolete batteries and charging requirements in bulk with all the benefits that brings.

The scheme was launched in Israel and Denmark that the firm believed would be ideal test sites as their relatively small size meant that a network of battery replacement stations could be established at relatively low initial investment costs. Unfortunately, extension of this novel way of thinking about EVs has not been a success in the US or Australia and the company has had to move out of these countries (http://wheels.blogs.nytimes.com/2013/02/06/better-place-proponent-of-e-v-battery-swapping-pulls-out-of-u-s-and-australia/). This does not necessarily mean that the idea is wrong just that all parts of the ecosystem need to be in place before successful acceptance can be achieved. The business model relies upon all potential actors in the network or ecosystem agreeing to run the battery replacement system as each actor benefits from participation in the network. Central to this set of relationships is the involvement of major car manufacturers who sign up to making electric cars compatible with the robotic battery replacement stations. Only Renualt had agreed to this. Without this key set of actors in place, the network or ecosystem had no chance of success.

The relative success of the battery changing strategy in Israel and Denmark and its failure in the US and Australia highlight the need to think about the ecosystem approach advocated by Adner and the importance of scale issues within it. Establishing a network of battery-changing stations requires investment but without this network the concept and practice of battery-changing would not catch on. The practice is only advantageous if there is a demand and supply of electric cars that in turn depends upon the ‘solution’ of the battery issue. Use of an electric car is a very personal issue with the decision to buy or not located in the individual and their specific context. Just this simplified description crosses and defines a range of scales all of which need to be aligned to enable the network or ecosystem to work. If none of these actors across the scales in this simple network can see an advantage to themselves in taking the plunge into electric cars then there is no way the system will even develop.

The micro-scale of the individual needs to be explored and barriers to adoption of the electric car clearly stated and translated into ecosystem or network terms. Likewise, the scale of the individual firm operating a battery-changing centre needs to be understood and linked to the other actors so it is to their advantage to adopt the new technology. Car manufacturers operate at a global, macro scale but with supposed sensitivity to local contexts and are driven by economic needs at these scales. Add the complexity provided by the competitive, established network of petrol stations, cars and owners, all forming an aggressive ecosystem at all the same scales into which the electric car network is trying to meddle and you have an idea of the complex cross-scale issues that need to be addressed. Maybe the government should spend funds on trying to resolve how to manage these multiple spatial scales of actors and networks to produce an economically viable, self-sustaining ecosystem for the electric car rather than putting the responsibility on the individual car owners to respond in the way the government wish to a few incentives at a single scale.

 

 

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