1. There is a lot of talk going on about EVs and what the future is going to be like. Do you think it is all hype or are we really ready for electric cars?
Bill Russo: Since the 1970s, there has been a growing awareness about the lack of sustainability of petroleum based consumption, with rising concerns over the impact of carbon emissions on the environment, increased pressure on finding alternative energy technologies that can eventually reduce our overall dependence on oil and recent technological advances bringing new energy solutions back into the spotlight. We are entering an era where the interest and investment is there, and technological development capacities are being trained on the right target.
Whether we are at the point in time where marketplace acceptance is possible is a different issue. The biggest challenge to new energy technologies is the availability of alternative and the proven economics of the internal combustion engine (ICE) which has had a 100 year run. Anything that is that well developed and proven a technology will certainly prove a strong incumbent.
It is safe to say that the 21st century will see the emergence of an alternative form of propulsion and the pathway may not be clear today on how the market will ultimately turn. But gradually we are starting to see the early signs that it is starting to turn. More importantly, consumer attitudes towards alternatives are becoming more and more favourable, particularly in places like China and India which are economies which are growing rapidly and are placing even heavier demands on current energy sources. So it is becoming inevitable that the tipping point may be in some of these new emerging economies.
2. What kind of future do you see for EVs? How successful will they be? In 10 years? 50 years?
Bill Russo: You cannot view it from purely a market perspective or isolate consumer acceptance to say when it will become an advantage for alternative technology based on an overall cost of ownership. That is only part of the problem. The other part of the problem is the entire ecosystem that surrounds the alternative technologies, such as the availability of low cost sources of supply, service and infrastructure. People are not going to adopt a technology if the service and recharging infrastructure is not there.
Also, unless the electrical grid is powered by sources other than coal burning electricity generation, it doesn’t do much to just put a battery in a car. You have to power the whole infrastructure with clean energy sources.
3. What role does the government play?
Bill Russo: There are several roles. It is going to take a combination of business and government working together to make a revolutionary change possible and transition from a 100 year old ICE to an alternative propulsion technology.
The whole paradigm of how humans are transported is being revolutionised. Prior to the automobile, the predominant form of transportation for people was the horse-drawn carriage. The automobile essentially automated the role of the horse, by replacing it with a gasoline-powered engine. Now we need to electrify it. In order for that to happen, it requires more than to just place the challenge to the automobile companies to invent the new technologies, because that technology has touch points into so many different systems.
We have a global trend, a clear understanding that with the oil consumption increases that have been seen, the economic development of several of the emerging economies, particularly China and India, are not going to be sustainable unless alternatives become available. China has a national agenda and vision to transition to something other than the combustion engine. With the proper amount of government support and intervention, you can begin to lay together a cooperative effort. It is apparent that China may not have all the pieces of the puzzle but they do have an idea of what the entire picture looks like. You need that first before you start moving in a particular direction.
4. What battery solutions will survive in the long term for EVs?
Bill Russo: Li-ion is proving to be the strongest, in terms of energy density and its ability to be engineered in a safe, reliable and cost-effective way. The cost curve is the first challenge. It is possible to scale up the production, so that wide application drives the cost down to a level where it achieves marketplace acceptance.
The solution which BYD has not only helps to drive the cost curve more aggressively by delivering a plug-in technology at an unrivalled price but also provides a more holistic approach to solving the automotive transportation problem as an integrated whole. They are not trying to build a battery that they can sell to a car company; instead they are trying to build a battery powered car. With so many players involved, there needs to be a cooperative model between the various players.
Several hybrid applications are also available such as mild hybrid and range-extended, which mix old and new technologies. It is heartening to see that in many places, hybrids are becoming mainstream and that if they are not too expensive, consumers will choose to go for a greener solution.
5. In your opinion, what are some of the weaknesses and strengths of Li-ion batteries? Will the cost of lithium make some other less efficient batteries more lucrative in the long term?
Bill Russo: Cost and safety are the 2 key considerations for batteries. Consumers have to believe that the solution they are using is safe and reliable. One of the notable problems witnessed are with li-ion batteries used in Sony laptop computers. These batteries should be able to work in a variety of conditions which you don’t necessarily have control over such as temperature and weather. This track record has not been demonstrated yet for li-ion batteries.
Also, where you recharge and the recharging service need to be managed. These technologies get obsolete very quickly. Buying a car is a big investment and in 3 years’ time, the car should be upgradeable to the latest technology. It is also expected to retain its value in 5 years time when you resell the car.
An advantage which lithium has is that it already has widespread application in batteries in electronics. So there is a cost benefit over its predecessor chemistries.
6. What is the future for recycling?
Bill Russo: Lithium is a renewable resource. Some people have wondered if we are just replacing one scarce source with another. However, unlike other fuels like petroleum and chemicals used in batteries, lithium doesn’t get used and thrown away. The battery has a high recovery potential.
7. What will it take/what is needed to make the prices of batteries go down, and by how much?
Bill Russo: The concept of urban transport is changing to mean shorter distances travelled at lower speeds in congested environments. We no longer need to deliver the same amount of energy in the electric world as we did in the petroleum world, so we can reduce the weight that we are moving around from several 1000 to several 100 pounds (which is basically the weight of the driver).
As part of what determines the number of battery packs is that you are trying to deliver the same level of energy, once we make the cars smaller and easier to move around, the number of cells will also decrease.
Also, with technological development, energy density of the battery will increase and this solution will become more cost effective. As more projects are implemented and the production of these batteries is scaled up, it will drive costs down.
Today we ask consumers to own the car and everything that comes with it, including the expensive batteries. If we make them leasable, which is the solution being provided by Better Place, then the ownership costs are spread out over the entire ecosystem involving the electric grid and the utility companies.
8. What kind of partnerships do you see building between car, battery and mining companies?
Bill Russo: Consumers need a balance of cost performance and infrastructure. The entire value chain needs to coordinate in such a way as to deliver to consumers such a solution.
There are 2 types of innovation. First, there is the technology innovation, which is obviously essential to engineer power range etc. at appropriate prices. The other part of the solution is business model innovation, where you meet the needs of consumers while providing benefits to all stakeholders. This includes companies which develop batteries, which assemble the automobile, which power the batteries, which service these vehicles, as well as the backing of government support through policies that encourage consumers to adopt these new technology vehicles by providing the appropriate incentives and assistance to create the much needed technology and infrastructure.
9. What markets/countries are more likely to adapt EVs?
Bill Russo: It is no coincidence that innovation occurs in countries with the biggest and fastest growing markets. China and India are now becoming the biggest auto markets. Everyone wants to compete in these markets, so no matter where a technology is invented, these countries will have access to it as the technology will eventually be sold in there.
Innovation occurs where consumers will buy and the companies will profit, making these 2 countries the growth engines of the world economy.
In China, there is a national recognition for the need for this process. Policies that guide this change are in place as the government recognises its role as the grand marshal of the parade to coordinate this group of stakeholders.
It is hard to draw comparisons between China and India as they each have their idiosyncrasies. In India, frugally engineered car are more popular as they aim to get people off 2 or 3 wheelers to something more modern. However, this does not solve the social problem of pollution. But there are upgradeable ICE models available which are more fuel efficient and provide greener alternatives, while at the same time being of a lower price compared to hybrid vehicles.
Thus, while India lacks a national vision on how to migrate from a 20th to 21st century propulsion paradigm, China at least knows that they have a problem.
10. You have 1 minute on TV to move the masses to use/buy EVs, what would you say to motivate them?
Bill Russo: Electric vehicles are a wave of the future. This is not one of those – wait till my neighbour buys, I’ll try if they try – things. These technologies are very viable alternatives. Wouldn’t you want to be leading this revolution? If not pure electric cars, you can certainly go for hybrid cars. In the interest of everybody on this planet, each one of us needs to contribute and play our part.
The original interview was posted on: .
About Bill Russo:
Bill Russo, Gasgoo.com's columnist, is a Senior Advisor with Booz & Company as well as the Founder and President of Synergistics Limited. He lives in Beijing and has more than 20 years of experience in the automotive industry, most recently serving as Vice President of Chrysler's business in North East Asia.
Gasgoo not only offers timely news and profound insight about China auto industry, but also help with business connection and expansion for suppliers and purchasers via multiple channels and methods.
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