2. The Nexus between the Power and Mobility sectors – What’s Fundamentally Changing in a “Green Mobility” World

Main takeaways:

• Spurred by developments in storage technology, we’re beginning to see electric vehicles that are high-performance, affordable, and with mass market appeal
• The article shows how three additional trends are collectively poised to further transform this sector: (i) vehicular autonomy, (ii) digitalisation, and (iii) systemic integration of electric vehicles in the broader power network
• This integration of power and mobility is a sign of an increasing convergence of sectors that were earlier seen as independent verticals

?“The first step is to establish that something is possible; then probability will occur.” (Elon Musk)

The world of road, rail and air travel in the 20th century has depended largely on hydrocarbons embedded in the earth’s crust. There was a time when electric cars had a market share in excess of 30%, before the internal combustion engine (ICE) was developed. The ICE however relegated electric cars to an oddity. They were costly and not practical for covering long distances without supporting infrastructure.

Until now!

After decades of stagnation, storage costs have now begun reducing sharply, with prospects of an even sharper reduction over the next ten years. The past five years have seen upstarts like Tesla and increasingly mainstream car manufacturers (Toyota, GM, Nissan, Ford, etc.) unveil a series of electric cars. These cars have either been high-performance and expensive, marketed as aspirational products (e.g. Tesla) or as middling hybrids sold at comparable prices to their standard product offerings (e.g. Toyota, Nissan). Increasingly, the two ends have begun to converge with high-performance, affordable, mass market vehicles for multiple customer segments. Car manufacturers have also provided the charging infrastructure to support their electric fleets.

And it isn’t just about storage! Three additional trends are collectively reshaping the sector:

• Vehicular autonomy
• Digitalisation
• Integration of electric vehicles in the broader power network

Vehicular Autonomy

I will focus here not on the technical advances that make autonomous vehicles possible, but on the impact of autonomous vehicles. An average vehicle typically spends around 5% of the day being driven. But an autonomous vehicle can be used upwards of 70% of the time. This allows its fixed costs to be spread over a far higher number of kms travelled over the same time period. My previous article on Renewables (see link) used the term “Levelised Cost of Energy” or LCOE. We can similarly think in terms of the “Levelised Cost of Transportation” or LCOT, with the aim of minimising the cost per km of travel over the lifetime of the vehicle. This will however require a change in ownership and usage patterns, i.e. I should be prepared to either rent my own vehicle to others when not using it myself, or not own one at all. If we achieve this, then we get a very different mobility system:

• Lesser cars on the road, with much lower emissions
• Far lower need for parking spaces, freeing up valuable real estate in cities
• Lesser time needed for journeys (lower congestion, savings of time spent searching for parking spots)
• Affordable “point-to-point” travel, thus also becoming competitive with public transport for some journeys
• More journey time can be used for more productive tasks and (dare I say it?) for relaxation

Digitalisation

Arguably, one of the biggest advances in a vehicle has been one of the least visible – a growing number of deeply embedded sensors and computational algorithms. The vehicle will thus have fewer mechanical parts and be less prone to breakdown. And like any other IT device, it can be upgraded from time to time with better software. Tesla for instance can handle several upgrades and operational issues with its cars remotely, without any need to visit a garage.

Digitalisation is also changing the surrounding eco-system, creating new business models for mobility. For example at retail points, we may no longer need to walk out physically with a purchased item unless we want. We may just ask a digital assistant to aggregate our purchases and schedule a delivery at an appropriate time. From retailers’ perspective, they can stock display items to allow customers the “touch and feel” of a product. But the actual items themselves need not be stocked at the back of the store. The storage depots or warehouses can all be located outside city limits, reducing the need for large delivery trucks to enter the city. This can thus lead to a reshaping of logistics businesses from both customer (B2C) and retailer (B2B) perspectives, while also reducing the carbon footprint.

Systemic integration of electric vehicles in the broader power network

Vehicular storage can be both sources and sinks of electricity. Vehicles can accommodate this capability around their primary function – that of transport. This secondary function must thus be based on charging the vehicle when electricity is cheap, and selling when electricity is more expensive and when the system needs more options to balance supply and demand (in addition to power plants and grid-level storage).

In addition to the physical network, vehicles also need to be able to “converse” with the world of connected devices that are capable of transacting with each other in a secure space. Designing the protocols for this IoT network will also be critical. For example, Blockchain technology is evolving at the moment, and is not without its detractors. But it is clear that regardless of the technology, this added layer of connected devices is bound to play an important role in years to come, in which the world of mobility will be embedded.

This integration is one of the signs of an increasing Convergence of sectors that were earlier seen as independent verticals. Tesla and Solar City are the obvious “Exhibit A” in this phenomenon. But we’re also seeing IT companies venturing into energy management, energy companies venturing into mobility and property management, and all companies developing an increasingly sophisticated Digital core.

We’re on the cusp of a world of Convergence. In the next article, I’ll discuss yet another example of this Convergence – Building-Integrated Photovoltaics or BIPV.