Business Models for the Electric Vehicle Market

The Plug-In 2011 Conference held in Raleigh, North Carolina, June 18 -21, featured the latest in plug-in electric vehicles. However, the conference was as much about business models as it was the technology of plug-in electric vehicles. Until now, the plug-in electric vehicle industry has been a technology in search of a business model. 

Carmakers still do not have a compelling business model for selling plug-in electric vehicles like the Nissan Leaf or the Chevy Volt PHEV (plug-in hybrid electric vehicle). They have not made the case to Americans for paying a premium price for an automobile with a practical driving range of 60 – 90 miles per charge. That value proposition does not persuade most car buyers. Most drivers think the range is too limited and the risk of being stranded is too great. 

The infrastructure companies, however, are developing business models that generate profits without reliance on grants and subsidies. The big surprise is that their business models for the new industry are not very new.

Dallas Electric Charging GridThe Electric Vehicle (EV) Services division of NRG, inc. (eVgo), a large electric utility, sees an opportunity in consumer anxiety about the range of plug-in electric vehicles. "We create range confidence," said Arun Banskota, President of EV Services. Initially focusing on the Houston and Dallas, Texas markets, EV Services promises plug-in electric vehicle owners that they can recharge at home, at work or at a public charging station, all for a single monthly fee.
The eVgo (EV Services) business model stresses convenience, price predictability and flexibility, a tried and true marketing formula. The company plans to open 140 public charging stations in Houston and a similar number in Dallas. Full access to the three charging solutions adds $89.00 per month to the home electric bill. With a monthly contract, eVgo installs the home charger at no out-of-pocket cost. Normally, the charging unit costs upwards of $2,500.

Manoj Karwa, Director of Electric Vehicle Supply Equipment, for Leviton, Inc. (evr-green), wants the public to see plug-in electric vehicles as just another home appliance connected to the home?s electrical system. "Your clothes dryer and your electric stove are 240-volt appliances, and so is your plug-in electric vehicle," said Karwa.

Evr-Green Products by Leviton Inc. - Home-based charging stations
Evr-Green Products by Leviton Inc. – Home-based charging stations

According to Karwa, Leviton’s evr-green product line plans to sell charging systems for electric vehicles through the multiple distribution channels it uses for its other 28,000 electrical products. For example, customers might buy their home chargers from Home Depot, the local car dealer, or from the Internet. 

For installation, the consumer hires the electric company, a dealer or a licensed electrician for the job. In short, Leviton’s evr-green business model for selling electric vehicle chargers is the same one it uses to sell everything else.

One of the most enthusiastic vendors at the Plug-in 2011 Conference was K.J. Ando, Manager of Cleantech Solutions for Kanematsu USA. He was enthusiastic about the emerging market for commercial chargers for plug-ins, but he was even more excited about selling the heavy-duty electric cords and connectors required by every charger. 

"A commercial charging unit may last 10 – 15 years, but the charging cord and connector usually last a year or less," said Mr. Ando with the smile of a businessperson contemplating the joys of selling a perishable product. That, of course, is the oldest business model of all.