The key to commercializing electric vehicles is to develop advanced energy storage devices. Batteries appear to be good enough, but not a great long term platform for automobiles. We can also store electricity in the form of chemical bonds of hydrogen and as a physical charge inside capacitors. (Imagine lightning in a box!)
Electric vehicles are not iPods - and require very different energy storage and delivery systems to match the performance of combustion engines. The future of electric vehicles is likely to evolve around the tight integration of all three major energy storage systems.
Hyundai understands this long term focus on integrating battery and fuel cells and might be trying to position itself in this new era of electric vehicles.
Hyundai’s decision stands out from the string of recent announcements from GM, Nissan, Rennault, China’s BYD, India’s Tata who all plan to sell commercial all battery electric vehicles by 2011. GM, Honda and now Hyundai have all been clear that they are not likely to bet the farm on an all battery energy storage system given the cost and performance potential of fuel cells.
Where are we in the Hydrogen Fuel cell Hype Cycle?
Hydrogen fuel cell vehicles are electric cars. The electricity is stored in the form of chemical bonds of hydrogen then converted in electricity via a fuel cell.
Fuel cell vehicles were over hyped during the Dotcom Boom of the 1990s, before becoming the target of intense criticism as the technology failed to meet expectations. But research and commercialization has not stood still.
While it might seem ambitious to target 2012 for fuel cells, we must remember that only two years ago, lithium battery based electric cars were deemed ‘too far’ away. And now Detroit and the rest of the world is accelerating electric vehicles around incredible advances made in lithium batteries. Why not expect the same disruptive advances in nanostructured membranes and systems used in hydrogen fuel cells?
While most current media reports around hydrogen remain negative and filled with doubt, there are a number of ways to begin volume production sooner than anticipated. Skepticism is always healthy when thinking about alternative futures, but we must pay close attention to developments and update our energy roadmaps to better reflect performance trends related to hydrogen production and storage. Research and commercialization is not standing still and there is a very strong case to be made that the chemical bonds of hydrogen are a more plausible method for storing electricity than batteries. Hyundai seems to be taking a more optimistic outlook.
China is following suit. Warren Buffet’s latest investment to the list of major news indicators that fuel forecasts saying that the dominant days of the combustion engine are coming to an end.
Through his Berkshire controlled MidAmerican Energy, The Oracle of Omaha has invested $230 million for a 10% stake in China’s car and battery maker BYD. BYD could soon become a global leader in electric propulsion auto systems and a mainstream vehicle brand.
Electric cars are coming in 2010-12 but we need to innovate energy storage solutions.
Recharging electric vehicles is not as simple as ‘plugging in at night.’ Our aging electrical grid and home wall sockets are not a suitable foundation for mainstream growth in battery vehicles- and automakers understand this.
Watch in the weeks and months ahead as electrical grid startups and electron storage companies like Shai Agassi’s Better Place gain more media attention and venture backing.
But what other innovative business models might emerge around electron-based transportation fleets? How about ‘swapping’ boxes?
Business models to watch
Batteries are clearly positioning themselves to launch the electric age of vehicles. Only time will tell how long they will remain the sole device for delivering electrons as capacitors and hydrogen fuel cells evolve.
The most innovative part of this transition from liquid fueled combustion engines to electric powered motors, is not likely to be the storage device, but the business models of refueling.
Swapping out Solid Boxes of electrons
While Shai Agassi’s Better Place business plan features a network of electric charge stations, the most ingenious method of reaching customers is probably the ‘battery swap’ station.
This might be the disruptive energy system we’ve been waiting for. Rather than plug in or fuel up using a hose, might we simply pull into a station and swap out boxes of energy?
Batteries make sense, but looking forward solid state hydrogen could emerge as a game-changing form of electron storage.
We’ll look at the enablers of energy storage systems on another day!
For now, we revel in Warren Buffet’s shake up in the auto and utilities industry, and for the investor attention towards energy storage!
And also the potential that China’s saving eco-grace might be helping us move beyond the combustion engine!
Reuters provides highlights from the publication- ‘within twenty years China could create a world-leading industry and a domestic market alone worth up to US$219.4 billion, even if less than a third of drivers go electric.’ Not only is it plausible that China could emerge as a leader in this new industry, the report suggests is it the ‘Realistic Choice’ given expected constraints of oil supplies and carbon emission regulations.
Could rhetoric of ‘Independence’ fade, as Electric Cars go global?
We have written on several occasions (below) about how electric vehicles, based on the integration of batteries, hydrogen fuel cells and capacitors, are quickly becoming a globally integrated industry.
McKinsey does not need a crystal ball to conclude develop a forecast that China could tap its manufacturing might to lead the world in development of low-cost energy storage systems needed to transform the auto industry.
China’s real opportunity- Killing the combustion engine?
The world’s strategic opportunity is not to move beyond oil, but to kill the combustion engine platform which makes oil’s monopoly possible. Shifting to electric motors creates opportunities for ‘all’ energy inputs to create transportation fuels via electricity and hydrogen. (e.g. Today, you cannot put solar electricity into a combustion engine that uses liquid fuels) Domestic energy resources are only valuable to the transportation sector in a post-combustion engine and liquid fuel era.
Now we will see if this McKinsey & Co report brings a new way of thinking to a larger conversation dominated by the rhetoric of ‘energy independence’ that is not aligned with the reality of our global economy. The real upside of global economic interdependence might be the accelerated development of electric vehicles and industrial power provide by China.
