Electric mobility: The business model is key to success

Energy providers have good prospects

Electric vehicles (EVs) and plug-in hybrid vehicles (PHEVs) can obtain a market share of almost 25% in Western Europe by 2020. The chances of electric mobility experiencing a breakthrough have improved as a result of technical innovation, rising customer acceptance, new players on the market and the political framework. However, what will be decisive is whether pilot projects can produce sustainable business models. E-mobility is not only interesting for car-makers, but also for energy providers. In addition to the expected changes in their core business (additional demand and sales), setting up and operating charging stations, battery service and leasing, combined deals or full packages (including the vehicle), offer attractive prospects.

Electric mobility is starting to develop into the premier technology. Customer acceptance is rising, new batteries now provide adequate range, the EU is exerting pressure with its CO2 directives on car-makers, and new market players are shaking up the competition. Many customers now view electric vehicles as being easy on the environment and their wallets. By 2020, electric cars could be as much as 20% more economical than conventional vehicles. And the product range means drivers won't be forced to drive only compact cars in the future – electric SUVs and sports cars will be available too. What's interesting is that these vehicles are coming not only from the big brand names, but new brands are also starting to emerge, such as Tesla, Think! or Miles. Even if this is only a temporary development, at least they are driving innovation and creating the necessary lighthouses that usher in new technologies.

Business model is key to success
However, whether electric mobility will indeed become commonplace depends on whether current pilot projects develop into sustainable and profitable business models. Most current activities are collaborations between carmakers, public bodies, energy providers and technology partners. While government is responsible for the statutory framework and subsidies, energy providers supply (besides electricity and a network infrastructure) billing know-how and customer contacts. And OEMs are focusing on developing the vehicles. Such collaborations produce complex interfaces, and can slow down progress in solving investment and profit sharing issues.

What's essential is that project partners develop clearly defined joint business models. Besides short-term goals, which are to be achieved in clearly segregated project phases, a concept for long-term and profitable collaboration is necessary. Other success factor are clearly defined roles and exit scenarios, which are necessary in early development stages should the framework suddenly change. If these are lacking, ambitious projects can deteriorate into simple marketing actions and grind to a halt in the wake of partner disputes.

E-mobility is an attractive long-term segment for energy providers
Electric mobility is attractive for energy providers for a number of reasons. Besides additional sales potential, it can help develop new long-term business potential. And it also fosters the provider's images. But the willingness to accept risks is necessary to fully develop the potential of electric mobility. Products must be tailored to the customer and redeveloped. Detailed billing schemes must be defined and infrastructure solutions found. Assuming a 25% market share of electric vehicles, the pure sale of additional electricity will only slightly exceed Austria's annual increase in power requirements in a good economic year. Therefore, energy providers must clearly define the benefit they expect for their company and what role they will play in the partner's network. The market is only now developing and provides various positioning options for energy providers. These range from complete provider and infrastructure service provider to pure energy supplier.