Global Opportunities for SMEs in Electro-Mobility. Project Nr:

Transcription

1

2 Global Opportunities for SMEs in Electro-Mobility Project Nr: Deliverable D2.1: Mapping of the e-mobility supply chain of electric mobility in USA Project funded by the European Commission under the Seventh Framework Programme Funding Scheme: Topic: Document, Version Coordination Action (CA) GC-ICT c Electro-Mobility For Review by partners Due date: May 2015 Submission: April 2015 Work Package: Main Editor: Dissemination Level: WP2 Frauke Bierau Public

3 Editors: WP leader: Main editor: Contributors: Gereon Meyer Frauke Bierau Gereon Meyer, Beate Müller Reviewers:

4 Legal notice Editors Main contributors: WP leader: Frauke Bierau and Beate Müller VDI/VDE-IT Gereon Meyer, VDI/VDE-IT Deliverable of the project GO4SEM Global Opportunities for SMEs in Electro-Mobility Project funded by the European Commission Project number: August

5 Table of Contents Executive Summary USA Report Introduction Situation and Framework Conditions Government Charging Infrastructure Technology Buyers/ Users/Market Substitutes Trends FEV value chain Overview on the FEV supply chain in USA Incumbents Suppliers Analysis of dynamics within porter s Five Forces SWOT analysis of supply chains including societal and economic factors Attractiveness of supply chain and qualifying and competition factors for entry into supply chain Attractiveness of supply chains as derived from analysis Qualifying and competition factors for entry into supply chain as derived from analysis Entry Points for European SMEs... 31

6 Executive Summary USA Report The US has the largest electric vehicle market with around 285,000 EV and PHEV passenger cars and 9,000 PHEV buses sold up to The evolution of this new market is comparable to the early phases of the introduction of hybrids in the US, though faster. The US global leading position is due to the headway position in related technologies and to the success of the Tesla Model S launched in The US foresee up to 3 million EVs on their roads by The US also seeks to reduce their strong dependency on foreign oil imports in order to guarantee more economic stability and sustainability. Other motivations for the development and implementation of electric mobility in the US are the creation of jobs in the emerging PEV industry and the reduction of CO2 emissions. In order to promote the PEV market, the US government has launched some major initiatives and funding programs. For example, the EV Everywhere Grand Challenge of the US Department of Energy (DoE) aims at making PEVs accessible and convenient for the average American family. Therefore, it follows the three main strategies of technological R&D funding are pushing of the installation of charging infrastructure, raising the consumer acceptance and demand for PEVs. Monetary incentives such as tax reductions between $2,500-$7,500 or complete exemptions, depending on the state, or free charging at certain public facilities are provided to PEV drivers. Additional non-monetary benefits include the use of high occupancy vehicle lanes for PEV drives and exemptions from a potential general ban on driving in city centres are important incentives. Clean cities is another important program from the DoE to facilitate the deployment of low emission vehicles and user-optimized urban charging infrastructure. Clean cities operates in collaboration with communities, catalyzing up to 15 communities as real-world laboratories for PEV use in 24 states to date. Public organizations and private companies in more than 100 coalitions contribute to the build-up of green transport solutions in communities by placing public charging stations at relevant facilities, such as shopping centres or hospitals. In addition, the DoE wants to accelerate the development and deployment of solutions for wireless power transfer (WPT) such as consumer-friendly inductive charging stations. US industrial activities related to electric mobility are located both in the traditional vehicle manufacturing area in Michigan, mainly by long-established US car manufacturers, and in the high technology industry clusters of the Silicon Valley (sometimes called the new Detroit ). Non-US-American OEMs are settled in a belt around the traditional automotive center of Michigan. New players in particular settle in the West Coast Region, e.g. Tesla Motors in California as a novel site for car industry. In both cases, high integration into the global supply chains of automobile manufacturing is combined with local partners for logistics and engineering services. All traditional US car manufacturers are engaged in developing low emission vehicles and regularly introduce new generations of PEVs on the market. They are following various strategies serving multiple car segments and developing full electric and plug-in hybrid drivetrains. 1

7 The US market is highly competitive, particularly in the IT and electronics sectors. The US is a world leader in semiconductor chips manufacturing and computing technologies having companies such as Intel, IBM, Qualcomm headquartered in the main automotive regions. There is equally substantial expertise in connectivity, infotainment systems and technologies for their integration into the vehicle on the US market. The US EV supply chain faces difficulties, with one issue being battery production. Also the US assembles final battery packs of imported battery cells from non-us suppliers rather than manufacturing its own batteries. In 2014 Tesla started the construction works of the battery gigafactory which shall equip as many as half a million Model S vehicles per year by in-house production. Because of the liberal structure of the automotive market, the industry welcomes new suppliers to boost competition, but those who enter the market need to cope with a highly competitive market exhibiting advantages for players with good business networks. The US electric mobility market appears rather attractive to European companies for various reasons. The US provides excellent framework conditions - market entrance for SMEs is facilitated through political and economic stability, low entrance barriers and consumer openness towards e-mobility. Moreover, the US market is open for new entrants and allows a high integration in the global supply chains of the US automobile industry, often in innovative clusters with local suppliers and high-ranking R&D facilities within close proximity. Furthermore, strong governmental support for vehicle automation and technologies promotes synergies of automation and electrification. However, the highly competitive industry also poses barriers towards new entrants in the supply chain. The complex legal framework and region-dependent differences can cause difficulties in production flexibility, however domestic suppliers benefit from their existing business network and their ability to utilize economies of scale. It is commendable to join one of the relevant industrial networks and alliances when entering the market and choose niches where US firms suffer a lack of know-how. One example is the Electric Drive and Transportation Association (EDTA) promoting battery, hybrid, plug-in hybrid and fuel cell electric drive technologies and infrastructure. Hence, SMEs can follow three general strategies to enter the market. Firstly, given their profound experience in many key technologies of the electric power train, European companies are well-positioned to get into business relations with PEV companies on the US market. US-consumers appreciate plug-in hybrids due to their longer range for greater distances within the large country. Being world leaders in safety and ADAS, Autosar and power electronics, European companies can create added value in the US supply chains. European SMEs with excellent skills in hardware and software development for in-vehicle systems or for the integration of the vehicle in the grid and traffic systems have good opportunities to integrate in the US plug-in electric vehicle supply chains. Secondly, SMEs have an attractive portfolio for the supply chain of new entrants such as Tesla, Google or Apple, requesting know-how in vehicle automation, battery management and production. 2

8 And thirdly, new market opportunities in related business fields arise at the same time, for instance in charging infrastructure or mobility services. The area of new hardware and software for charging facilities or automobiles and the development of new business models for home or workplace charging is particularly attractive. There is a need for smart devices for grid and communication networks, as well as for integrated smart systems for the improvement of security and battery management systems. The US market invests in green energy technologies. As the European industry for alternative energies is the most advanced in the world, especially regarding technologies for solar, thermal and photovoltaic power generation or wind power, such companies can contribute significantly to the promotion of these technologies in the US. 3

9 1 Introduction Smart electric mobility is being regarded one of the major paths to sustainable mobility at least for urban areas. Governments, societies and industry in many countries already pursue this path. Some promising markets for electric vehicles (EVs) are evolving and many more emerging. This development provides opportunities for European small and medium sized enterprises (SMEs) in global EV supply chains, especially since electric mobility requiring new technologies, services and business models, changes the traditional automotive supply chain and opens it for new players. The EU-funded Coordination Action GO4SEM is aimed at spreading awareness of global market trends and opportunities and on investigating matching innovation capabilities of European SMEs. This analysis results in strategic advice towards SMEs, but also policy recommendations towards pub-lic authorities for strengthening SMEs in this endeavor are derived. The present report provides information on opportunities for European companies in the U.S. supply chains for electromobility. This analysis is especially aimed towards SMEs. New developments and trends related to electric mobility in U.S, as well as potential entry points for European SMEs on this market have been investigated in detail. The first chapter Situation and Framework Conditions sets the stage by detailing the targets, motivations, strategies and governmental policies for promoting electric mobility. For the latter this concerns implementation plans, incentives and R&D funding budgets in the field of electric mobility. It follows a short look on the distribution of charging infrastructure and related issues as well as on technology developments specifically promoted and emphasized in the U.S. Then the country s car market with special emphasis on electric vehicles, the popularity of electric mobility among vehicle customers, specific customer preferences and market expectations. Finally, possible substitutes for electric mobility in the U.S. are examined. These are gas or fuel cell powered vehicles that also provide to lower emissions from traffic as well as public transport or car sharing that serve the purpose of delivering transportation and thus making car use or even ownership unnecessary. Within the second chapter Trends particular to the U.S. s current development in electric mobility are discussed. Chapter three, FEV Value Chain, deals with the automotive industry s activities using two approaches, the Porter s Five Forces Analysis and the SWOT Analysis. The first section gives an overview of the electric mobility supply chain in the country including OEMs and suppliers. Then follows an analysis of potential future supply chain developments employing the Porter s-5-forces analysis. Finally, the SWOT analysis carried out from the viewpoint of the U.S. electric mobility supply chain follows a PESTEL assessment (political, economic, societal, technological, environmental, legislative, market size and growth as well as specifics on segments, drivers and constraints). It complements the dynamic analysis to prepare the conclusions made in the next chapter Attractiveness of the market and entry points for European SMEs. In the first section of this conclusion, general aspects of why the U.S. market is attractive for European companies are derived based on the information and analysis of the previous chapters. Subsequently, qualification factors that European 4

10 companies have to bring for entering this market and the competition factors awaiting them are discussed. Finally, possible entry points in the electric mobility market are provided. 5

11 2 Situation and Framework Conditions 2.1 Government A driving motivation for the development and implementation of electric mobility in the USA is the high rate of oil imports. In order to reduce this strong dependency on foreign oil, the U.S. government seeks the substitution of oil in the energy and transport sectors combined with an increase of energy efficiency; bearing in mind that oil is a limited resource and that the political stability in some oil exporting regions is a serious concern, the broad introduction of vehicles powered by alternative fuels helps to increase national energy security. Plug-in electric vehicles (PEVs) have immense potential for increasing the country s energy, economic, and environmental security, and they are foreseen to play a key role in the future of U.S. transportation. Besides an assurance of the U.S. energy supply, the profit for a replacement of conventional vehicles by electrified ones is also the saving of money by cutting the costs for expensive fossils. A further motivation for the promotion of electric mobility to the government is the mitigation of the impact of climate change and emissions due to energy production, in order to protect the health and safety of American citizens. In 2012, the U.S. Environmental Protection Agency (EPA) announced the new standards for CO 2 emissions and fuel consumption. According to these regulations, an annual CO 2 reduction of 5% per year for passenger cars and of 3.5% for light motor vehicles is demanded between 2017 and Additionally, the motivation for creating jobs and building a new PEV industry in the United States encourages the electric mobility development. A full transition to electric-drive vehicles (including all-electric vehicles, plug-in hybrid electric vehicles, and hybrid electric vehicles) could reduce U.S. dependence on imported petroleum by more than 80% and greenhouse gas emissions by more than 60%. 1 Therefore, the U.S. government aimed at having one million electric vehicles on U.S. roads by 2015 or at least to be the first country with one million electric vehicles running. 2 Due to lower sales, however, the country is nowhere near reaching the desired number this year, but is so far leading the market. 3 On this account, the government promotes the development of nextgeneration electric cars and relevant technologies and launched a couple of promotion initiatives and funding programmes. In 2012, the U.S. Department of Energy launched the EV Everywhere Grand Challenge, the latest in a series of Clean Energy Grand Challenges. It is an innovation programme which offers financial support to companies for developing PEVs and is aimed at making electric- 1 DOE analysis: 2 "Raising the Volt-Age: Is Obama's Goal of 1 Million Electric Vehicles on U.S. Highways by 2015 Realistic?". Scientific American

12 powered vehicles as affordable and convenient as gasoline-powered vehicles for the average American family within a decade. 4 The explicit goal for the year 2022 of this initiative is to enable companies in the United States to produce a 5-passenger affordable electric vehicle with a payback time of less than five years. This car must have a sufficient range and provide for a fast-charging ability to enable average Americans everywhere to meet their daily transportation needs more conveniently and at a lower cost. The programme pushes technological R&D activities by reducing the production costs of PEVs in particular for batteries, i.e. R&D on advanced batteries such as new Li-ion and post-lithium technologies, by promoting the development of charging infrastructure in order to enable convenience of fuelling PEVs and by setting up activities that help to raise consumer acceptance of PEVs for creating market pull. Since the U.S. government strongly supports vehicle automation, technologies for V2X communication and Advanced Drive Assistance Systems (ADAS) and technologies that generally bring synergies for road automation and energy efficiency forward are encouraged. Vehicle Weight Reduction Battery Improvements And Cost Reduction Electric Drive System Cost Reduction Figure 1: Topics of the EV Everywhere Challenge A major part of the programme is focused on the development of technologies that are needed for the reduction of costs, i.e. advanced batteries, electric drive systems, lightweight structures, and enabling technologies such as advanced climate control which helps to improve the vehicle range (see Figure 1). The targets are a reduction of battery costs by a factor of four down to 125$/kWh, a reduction of electric drive system costs to 8$/kW, and a reduction of the vehicle weight by nearly 30%. Weight reduction is to be achieved through the introduction of new materials and multi-material solutions to the vehicle structure. In the field of energy storage technologies, new advanced lithium-ion as well as post-lithium technologies is being investigated. In making a national commitment to building electric vehicles and most of their components in the United States, the federal government has invested $2.4 billion in electric battery production facilities as part of the American Recovery and Reinvestment Act in and nearly $80 million a year for electric battery research and development. The DoE intends to accelerate the development of solutions for wireless power transfer (WPT) and 4 EV Everywhere Grand Challenge 2013, 5 American Recovery and Reinvestment Act, 7

13 launched various projects within the EV Everywhere initiative. The deployment of consumerfriendly inductive charging stations shall be supported. To make electric mobility more attractive for potential customers, the U.S. federal government and several states have granted incentives and tax exemptions for drivers of battery electric vehicles and plug-in hybrids. Monetary incentives like price reductions and incentives have proven to be useful for the ramp up of the PEV market. Federal tax reductions between $ $7.500 are granted for the purchase of a PEV, depending on the size of the vehicle battery. In addition, regional tax reductions of up to $2.500 are offered in some states (for example California). Certain municipalities and employers offer subsidies for the use of PEVs. Furthermore, free charging is offered at certain facilities like shopping malls, restaurants, stores, and free parking on several places. 6 An important non-monetary incentive with a strong impact especially in large metropolitan areas is the permitted use of highoccupancy vehicle lanes for PEV drivers. A further non-monetary incentive is the exemption of PEVs from a potential general ban on driving in city centres. Many states offer own incentives, such as high occupancy vehicle lane exemptions and tax credits or rebates. Some utility companies also offer lower electric rates in certain areas provided that a separate meter for PEV charging is used. Clean Cities is a programme from the DoE, initiated early in 1993 to facilitate the deployment of alternative fuels vehicles including charging infrastructure in collaboration with communities. Meanwhile, Clean Cities has built around 100 coalitions in more than 24 states across the country as community partnerships with local and statewide organizations in the public (e.g. local governments, state and federal government agencies, national laboratories) and private sectors (e.g. OEMs, fuel suppliers). In these coalitions, almost 18,000 stakeholders participate to implement alternative-transportation solutions in their communities and to facilitate collaboration and community planning among one another, thereby contributing to Clean Cities' goals and accomplishments. 7 Public charging stations are being placed out of consideration for typical habits from drivers that are accessed through market analyses, for example at libraries, shopping centers, hospitals, and businesses in several states. Moreover, the idea is to help solving critical issues like e.g. codes and standards, siting, grid integration, permitting, and signage. The consumer acceptance shall be increased, e.g. by consumer education and exposure to PEVs, innovative ownership incentives, and leadership by example among public and private fleets. 2.2 Charging Infrastructure Public charging infrastructure is far developed in the US. 9,267 public charging stations and a total of 23,395 public charging outlets have been reported for March Federal Tax Credits for Electric Vehicles, 7 U.S. Department of Energy: Clean Cities 8

14 For a broad installation of public charging infrastructure, the collective efforts of Federal government, automotive industry, national laboratories, and national universities are considered to be required in close collaboration. The deployment of electric vehicle supply equipment has been quickly growing, such that from a number of 15,192 non-residential slow and fast charging stations installed across the U.S. in 2012, 8 this number has almost doubled within two years and now exhibits a stock of 8,569 charging stations, providing for a number of approximately 26,200 public charging points. 9 Across the United States, uniformity for the physical connections and grid interfaces including socket, outlet, plug, cable, and connector vehicle inlet are desirable, but not yet the case today. American plugs support 120V and 240V, whereas in the EU common plugs support 240V and 360V, and Japanese plugs can go up to 500V for fast charging. ACEA, the European Automobile Manufacturers Association, recommended a global agreement on standards for AC charging and DC quick charging. 10 Thus in May 2013, the universal combined charging system (CCS) was unveiled as the future common standard in Europe and the U.S. for multiple levels of electric vehicle charging. 11 The CCS and the appropriate COMBO plug which creates a single connector for one phase AC, fast three phases AC, and fast DC connections, were modeled on the charging connectors used previously by certain manufacturers (such as Nissan on the LEAF & Mitsubishi on the imiev) with backing from American and German carmakers. The COMBO plug will be implemented as the new charging standard on vehicles from Audi, BMW, Daimler, Ford, General Motors, Porsche, and Volkswagen and thus be a direct DC charging standard additional to the Japanese CHAdeMO system. 12 Charging issues for PEVs in the U.S. are regulated by the Society of Automotive Engineers (SAE), 13 which introduced the SAE J1772 standard for electrical EV connectors. While J1772 is not mandatory by any federal agency to sell an EV, it has now been adopted by many car manufacturers worldwide. 2.3 Technology In the US a lot of effort and funding budget was put into advancing the technology and scaling-up the production of batteries (lithium-ion and post-lithium technologies). A major focus of the EV battery technology development activities in the U.S. is on more robust, safer and higher-energy density lithium-ion batteries. For this purpose, new materials are developed which enable for a significant increase of energy storage capacity and power density. 8 Global EV Outlook, International Energy Agency Danish Technological Institute: Case Study on Electric Vehicles

15 R&D activities are supported by a comprehensive battery research program from basic materials research and diagnostics to scale-up processes to ultimate deployment by industry, as established e.g. at the Argonne National Laboratory (ANL). 14 The Battery Performance and Cost (BatPac) model developed at ANL captures the interplay between design, performance, and cost of advanced battery technology. According to this model, both the combination of lithium- and manganese-rich high-energy cathodes (LMRNMC) and silicon alloy anodes as well as the lithium metal battery technology are most favorable for meeting the EV Everywhere cost goals regarding battery technologies (see Figure 2). Over the past few years, researchers of the NASA and the California Institute of Nanotechnology have been working on the lithium-air battery technology, which in theory has an energy density comparable to that of gasoline; a Li-air battery can hold 5 10 times as much energy as a Li-ion battery of the same weight and double the amount for the same volume. In a Li-air battery, the anode is made of lithium; the cathode is oxygen, but instead of carrying oxygen as a reagent in the battery, it draws the oxygen from the environment. 15 This technology is still in the research phase. A large issue for an open system such as a Li-air battery is the yet low cycle stability due to the possibility of uncontrolled incidence of air which can lead to degradation of the battery and requires additional isolation steps. Figure 2: Estimated costs for PEV battery at volume production, DOE (2013) Furthermore, they are market leaders in semiconductor chips and computing technologies as well as in electric drive systems, lightweight components, advanced climate control, infotainment systems and vehicle integration

16 2.4 Buyers/ Users/Market The U.S. car market is the biggest worldwide, Likewise, the U.S. is the country with the biggest market share of electric vehicles and plug-in hybrids on the roads. Overall, the U.S. automotive market is the biggest worldwide, and cars are the most common traffic means for U.S. citizens with over 253 million vehicles registered according to the statistical survey of the Federal Highway Administration (FHWA) of the U.S. Department of Transportation, last published for This is for a great part due to the lack in alternative public transportation means which are difficult to establish in typical U.S. urban areas with large distances to local infrastructure as well as plenty of space around homes and work places. Figure 3: Cumulative sales of plug-in hybrid electric vehicles (PHEV) and battery electric vehicles (BEV) 17 Sales of plug-in electric vehicles grew steadily in the USA (see Figure 3). This is in part a regional phenomenon since the major part of these sales took place in California where very favorable legislative conditions exist for electric vehicles. Special to the US market is that there is a large part of privately owned EVs versus fleet operators and public sector. By May 2015, approximately 335,000 roadworthy plug-in electric cars have been sold since On the U.S. market, there is already a large range of various PEV models available. As of now, nine American car manufacturers are providing a total of 17 plug-in electric vehicles (PEVs) permitted for the use on highways. The most sold vehicle is the PHEV Chevrolet 16 Department of Transportation: 17 Electric Drive Transportation Association (EDTA) 2015,

17 Volt, followed by the EVs Nissan Leaf and Tesla Model S and the Toyota Prius Plugin. 19 In addition to electric cars, there are various models of electric motorcycles, utility vans, and socalled neighborhood electric vehicles (NEVs) for covering short distances available on the market. The dynamics of the evolution of this new market is comparable to early phases of the deployment of (conventional) hybrids, though it seems to grow faster: while it took the sales number of hybrids 60 months to reach ten years ago, this accumulative number has been achieved for PEVs in only 40 months. As can be seen in Figure 2, the sales numbers of PHEVs and EVs have roughly the same growth rate ever since which can be explained with both technologies serving specific user expectations of the U.S. market. UC Davis has performed the first consumer study based on real data of the first deployments of plug-in electric vehicles in California. 20 They found that users were moved to buy electric vehicles wherever incentives were put in place. The customers are mostly higher income, house-owners. 20% of PEV buyers lived in households with more cars than drivers. Often they already owned solar panels and 30% of PEV buyers owned a hybrid before. Most customers expect to charge at home in the night. Whether a full electric vehicle or plug-in hybrid was bought depended on the daily milage that should be covered. Hence in suburban areas that tend to be very widespread in USA, more plug-in hybrids were bought. America is widely reckoned as a consumer society with high price consciousness paired with open mindedness to new technologies and innovations. Americans are in general mostly willing to adopt innovations as long as they serve their needs to the full extent and don t cause higher costs. Typical American users are commuters driving mostly the same daily routes. Among those, urban commuters usually prefer battery electric vehicles while plug-in hybrids are more used for driving longer distances. 2.5 Substitutes Substitutes for electric vehicles are services that relieve users from the need of car ownershipvehicles running on other alternative fuels that can also conform to the required emission reduction or public transport. Carsharing systems have a long tradition in the USA and after a phase of electric carsharing projects in the 1990 s that all have been abandoned, electric cars are being step by step reintroduced into carsharing. This is also due to favorable legislation e.g. in California and due to community support for instance when arranging for pre-payment of parking space. Carsharing systems reduce the need to buy cars, but they also serve as a means to familiarize the public with electric vehicles and to demonstrate the advantages of EVs. In contrast, other ridesharing systems as Uber and Lyft provide easily accessible mobility when needed and 19 Electric Drive Vehicle Market and Public Policy Update, David Howell, IEA IA-HEV Plug-in Hybrid Electric Vehicle (PHEV) Demonstration and Consumer Education, Outreach, and Market Research Program: Volumes I and II. Kurani et al, Institute of Transportation Studies, University of California, Davis, 2010 ( ) 12

18 thus completely substitute the need for a car or even for driving a car. However, recently Uber announced a pilot with Chinese electric vehicles in Chicago. Public transportation serves as another substitute of the need of driving and thus also to buying an electric vehicle. It is, however, rather underdeveloped in most US-American urban areas that are not big cities and thus not a major point to be considered in this context. As for hydrogen cars, the U.S. Department of Energy (D.O.E.) is the lead federal agency for the support of applied research and development of hydrogen and fuel cell technologies. The DOE has announced a funding budget of up to $35 million for the advancement of hydrogen technologies, primarily regarding the production, delivery and storage of it, while also working on lowering the costs to promote the early adoption of hydrogen and fuel cell applications such as by light duty fuel cell electric vehicles (FCEVs). 21 In 2012 there were approximately 500 FCVs registered in North America. The number of registrations is predicted to reach 50,000 to 70,000 by 2023, representing a market share of 0.02%. 22 Especially California and Hawaii have already taken the initiative to develop an infrastructure for hydrogen fuelled vehicles. The D.O.E. expects the number of public stations for fuel cell vehicles nationwide to rise up to 50 or more by the end of Hydrogen infrastructure is also developing for buses, medium- and heavy-duty fleets, and material handling equipment, but unlike for consumer stations for fuel cell vehicles, fleet stations can be centrally located to meet private fleet needs. 23 The federal government, state government and even regional and local governments have also implemented incentives to encourage the purchase and use of natural gas vehicles (NGV) in order to reduce America s dependence on foreign oil and to diminish greenhouse gases. NGV as an alternative fuel is incorporated into the policies of the Clean Cities Program (See chapter 1.1). This program has expanded the use of natural gas in a variety of applications, such as school buses, transit buses, airport vehicles, taxis and delivery fleets. 24 However, in 2012 only 0.06% of all low duty vehicles and 0.25% of all medium and heavy duty vehicles were fueled by NGV in the U.S Tomorrow s Vehicles. What will we drive in 2023?, Fuels Institute,

19 3 Trends In line with the objectives of the U.S. government programmes, corporate and public research institutions are currently pushing the performance of electric vehicles, their components and the required charging solutions to the limits. Some further breakthroughs in terms of increased range and convenience as well as reduced costs can be expected to occur. Some important trends, the Tesla story and on-route charging, are summarized in this chapter. Further significant trends for electric mobility are resulting from the general objective of increasing energy efficiency in transportation. Examples include the superefficient car promoted by the Rocky Mountain Institute 26 as well as a recent initiative of the DOE for achieving synergies of road vehicle automation and energy efficiency. 27 The Tesla Motors Story Tesla Motors was founded in 2003 by a group of engineers and entrepreneurs in order to trigger a more sustainable future of individual mobility, and substantially changed the setting of the electric vehicle industry. Five years after its establishment, the start-up released the Tesla Roadster which was based on the Lotus Elise, a traditional British sports car, and modified to run on an all-electric drive system. Roughly 2,300 vehicles were produced and sold to early adopter costumers. While the Roadster was not necessarily a revolutionary model, it was instrumental in proving that electric vehicles were not inherently compromises and in establishing the Tesla brand. The sports car was discontinued in 2012 when the company took the next step in its entry strategy. In its next phase Tesla released a pair of midsized vehicles that could serve as affordable, everyday drivers with no compromises. The Tesla Model S is a seven-seat sports sedan that is competing with Mercedes, Audi, and BMW in the $50,000 to $100,000 price range. The new SUV Model X shall serve the American consumers proclivity towards large vehicles and will be based on the Model S platform. 28 From a financial perspective Tesla Motors hasn't reported a profit since its IPO filing in , and faced in the last two years some legal complications to sell their cars directly due to its little political influence in the industrial car lobby. However, in spite of the profitability loss the company keeps investing strongly in R&D and has gradually overcome these problems. Other essential problems Tesla is facing as any others companies in the PEV industry are the quickly changing market environments and technologies, which potentially have large impact on the customers. Nevertheless, Tesla is one of the leading companies on the global EV market and is even imposing these new technological trends itself Patrick Davis, Automated Vehicles Symposium, San Francisco

20 In early 2014, Tesla indicated its idea to establish a plant for mass manufacturing of EV batteries in the U.S. and officially announced this in summer Together with the Japanese battery cell producer Panasonic as a strategic partner Tesla intends to start construction works on the so-called gigafactory for battery production in (see Figure 4). By 2020, the gigafactory shall be capable of producing battery cells with a total capacity of 35 GWh per year, sufficient to equip 500,000 Tesla cars. The intention of Tesla is to transform from a series manufacturer to a mass volume producer; the gigafactory is expected to considerably contribute to reach this goal and furthermore, to enable the car maker to become the world's largest Li-ion battery provider. In the run-up to real large-scale production, Tesla and its partners will have to invest approximately $4-5 billion in this project through The company aims at achieving economies of scale and minimizing costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead. Figure 4: Gigafactory for EV battery production, Source: Tesla (2014) In June 2014, Tesla Motors announced that it intends to share patents to spur electric car development. As announced Tesla CEO Elon Musk the sharing would include all of Tesla's patents such as several hundred current ones and several thousand in the future, according to the company s fundamental idea to speed the growth of sustainable transport; however, no patents owned by Tesla s strategic partner and supplier Panasonic would be included in the sharing move. In addition, Tesla Motors will continue to file for patents in part to keep competitors from attaining them and subsequently blocking others from using the information contained. 31 Furthermore, Tesla is planning to join forces with BMW and Nissan in order to cooperate on expanding the charging networks, both in the USA and worldwide. 32 The cooperation CALSTART I-710 Project:

21 between the companies is an important step towards the development of a universal single fast-charging standard worldwide once the key carmakers on the respective electric vehicle market have adopted a universal DC charging standard. Moreover, the collaboration is expected to push electric car sales and hence presumably facilitates the transition of the automobile market to environment-friendly electric vehicles. Nissan has found early success in the U.S. with the Leaf and BMW recently introduced the i3 to the U.S. market; BMW has plans to further introduce another electric car on the U.S. market with its plug-in hybrid i8 sports car. At end of April 2015, Tesla launched a new home Battery, the Powerwall, which charges using electricity generated from solar panels, or when utility rates are low, and powers the home in the evening. In other words, this battery helps solving the mismatch between energy demand and the availability of solar energy. It also serves as a backup and offers independence from the utility grid. This system will avoid that excess solar energy is sold to the power company and purchased back in the evening by the consumer. The 10 kwh model of the Powerwall has an introduction price of $3,500. This new product could be a signal that Tesla is taking first steps to switch the company s focus into energy storage, where demand seems to be very large, instead on exclusively EVs. However, this possible outcome will be determined when the gigafactory is operating. On-route EV charging The application of on-route charging technologies for electric vehicles is another important trend in the USA. In 2012, the California Department of Transportation (Caltrans) released the Draft Environmental Report/Environmental Impact Statement (EIR/EIS) on the Interstate 710 (I-710) Corridor Project for an improvement of air quality and public health, safety, and the design of the highway with the horizon year The Interstate Highway 710, also called Long Beach Freeway, runs from the Ports of Los Angeles and Long Beach to East LA, through the city of Los Angeles, and represents the principal goods movement artery in the region and transportation connection for freight between the two harbours today. 34 Due to the heavy pollution the Long Beach Freeway is causing for the city, several concepts for the deployment of zero-emission trucks are considered within the EIR/EIS. According to a study by CALSTART, 35 an independent California-based organization that evaluates and works on the commercialization of clean transportation technologies, there are yet no major technological barriers to the development of a heavy-duty vehicle transport system (truck and infrastructure power source) that can move freight with zero-emission trucks through the I-710 in California. In fact, the report suggests, that there are already several technical approaches that would achieve the desired outcome. From the technical options proposed, CALSTART appraised a dual mode or range extender hybrid electric U.S. Environmental Protection Agency EPA: 35 Preliminary Assessment: Technologies, Challenges and Opportunities, I-710 Zero Emission Freight Corridor Vehicle Systems, CALSTART, June

22 vehicle (HEV) with some electric-only capability as the most feasible solution for achieving the Zero Emission (ZE) corridor. This vehicle is to be combined with an infrastructure power source such as overhead wiring or in-road, which would then enable for the use of smaller battery packs aboard the vehicles. One of the power source solutions selected is the catenary pantograph system developed by Siemens. 36 Some barriers to the implementation of the truck transport system are posed by the missing of sustainable overall economic models and business cases. In this context, also wireless on-route charging is considered an option, and thus subject to intense research and development activities. At NASA Ames Research Center, a wireless fast charging system has been developed that is capable of charging an electric vehicle while it is stationary or in motion. The CTI wireless charging system is safe, fast, and with expected efficiency exceeding 90%. 37 The main objective of the research project is to develop Pulse Transmission Nanocomposite Magnetic Resonant Coupling (PNMRC), which will enable onthe-road wireless dynamic charging while the vehicle is in motion. Another promising approach currently tested in the U.S. is the On-Line Electric Vehicle (OLEV) technology invented at the Korean Advanced Institute of Science and Technology (KAIST). 38 The OLEV technology uses the proprietary method of Shaped Magnetic Field in Resonance (SMFIR ) to remotely send electric power over a significant distance. SMFIR is a base technology that can be used for many different applications where electric power needs to be supplied without using conductive wires. The OLEV was chosen as one of the 50 Best Inventions of 2010 by the TIME magazine. 39 In 2011, OLEV Technologies Inc. as an official licensee of the OLEV wireless EV charging system founded a company based in Boston, Massachusetts, in order to commercialize this technology for heavy duty electric vehicles

23 4 FEV value chain 4.1 Overview on the FEV supply chain in USA Within the traditional vehicle manufacturing area in Michigan mainly long-established U.S. car manufacturers are located. Non-US-American OEMs are settled in a belt around the traditional automotive center of Michigan. Particularly new players settle in the West Coast Region, in the high technology industry clusters of the Silicon Valley (sometimes called the new Detroit ) which thus became a novel site for car industry. In both cases, high integration into the global supply chains of automobile manufacturing is combined with local partners for logistics and engineering services. The value chain for PEVs as evolved in the U.S. to date is depicted in Fehler! Verweisquelle konnte nicht gefunden werden.. Figure 5: PEV value chain in the U.S. 18

24 4.2 Incumbents The US s automotive industry is a critical part of the national economy and the US is one of the largest motor vehicle markets in the world. All the established US car manufacturers are engaged in entering the electric mobility market and traditional manufacturers are engaged in developing low emission vehicles and regularly introducing new generations of PEVs on the market. By this, they are following various strategies. The Chrysler Group has a broad electrification strategy that fills the gap between minicars and full- sized pick-up trucks. 41 Chrysler s near term deployment includes 140 plug-in hybrid pickups for a three year demonstration program after killing its plan to build a hybrid Ram pickup. In April 2013, Chrysler also released an electric version of the Fiat 500 onto American roads starting in Los Angeles. Chrysler intends to build the car specifically for the United States and plans to do all engineering work for the vehicle at its headquarter in Auburn Hills, Michigan. Ford, also headquartered in Michigan, is mainly developing hybrid and plug-in hybrid vehicles in its facilities just outside Detroit. In February 2013, Ford s Fusion Energi plug-in hybrid model has been launched 42, the development and market introduction of a commercial hybrid model has been announced for the year Figure 6: Tango T600 model by Commuter Cars In 2010, General Motors introduced the Chevrolet Volt extended range EV in 2010 on the U.S. market. The Volt can cover a distance of up to 40 miles fully electric and after travel up to 375 miles in extended range. GM Electric Motors started to manufacture key parts of electric vehicles at its Baltimore Operations plant in This makes GM the first U.S

25 carmaker with in-house component manufacturing, 44 as usually the components for cars are being imported by the OEMs. At the GM plant, electric motors and drive units are manufactured for the new Chevrolet Spark EV for sale first in California and Oregon and then for exports to Canada, Europe, and South Korea. For powering its various plants, GM uses renewable energy from solar, hydro, and gas resources. The site in Baltimore is partially powered by a 1.23 megawatt rooftop solar array, expected to generate 9% of its annual energy consumption and save approximately $330,000 during the project duration. Furthermore, start-ups have also been entering the PEV markets with new vehicles. One example is the Tango T600 by Commuter Cars, located in Spokane, Washington. 45 This urban model has a low range of only 130km but is able to speed up to 100km/h in five seconds, and with its narrow width of only 99cm reminds of a combination between a motorcycle and a sports car (see Fehler! Verweisquelle konnte nicht gefunden werden.). Future models of Commuter Cars are announced to be much cheaper than the current price of the Tango T600 of $108,000 and to have longer ranges. Chrysler s subsidiary Global Electric Motorcars is producing the e2. Modelled after the golf cart, it costs just $7,000 but has a range of just 35 miles. New entrants comprise on the one hand start-ups that take advantage of new business opportunities and on the other hand non-automotive conmpanies that push into the electric vehicle market. A prominent example of the first group is Tesla (see chapter 2) which started small by developing its own technology for electric vehicles and pushed into a niche market of electric luxury cars. There it created a strong brand image and was thus able to grow and extend the portfolio into other segments. Tesla is now at the point to prepare for mass production. In September 2014, Tesla announced the decision for Nevada as the construction site and location of the future Tesla Battery Gigafactory 46 (see chapter 3). The battery gigafactory is designed to reduce cell costs much faster than the status quo and, by 2020, reach an annual production capacity that exceeds the volume of This is going to be a challenge for the effectiveness of Tesla s existing value chain structures, as many components and subsystems that had been manufactured in-house so far will need to be delivered by suppliers. There are also other newcomer vehicle manufacturers that try to find a niche market by either building luxury cars as e.g. Fisker or by producing small cars as e.g. Tango, Myers or ZAP. Another case is the development of electric mini-buses by Phoenix. The other group of newcomers are Google and, as recently announced, Apple. These two companies extend into the automotive market to add a product into their portfolio that is not as much a car but rather a personal mobility device that primarily provides for services and connectivity while being mobile. Thus the car extends beyond the current concept of a car as much as the smartphone extended beyond the regular mobile phone. These companies 44 spark-electric.html

26 concentrate on electric cars because it is the plattform that enables many innovations easily, one of which is automation. 4.3 Suppliers In the automotive sector suppliers and OEMs have traditionally a strong and hierarchical relationship. This enables them to innovate products together, however, in this partnership suppliers are often the ones that push innovations to success. This is especially true for the case of electrification, since the electric vehicle, although by now many models are on the market, still needs innovation for energy efficiency and integration of components etc. in order to gain a broad market share. There are also new suppliers for batteries, e-motors, electronic components that did not belong into the conventional automotive supply chain. They bring in key knowledge that the traditional suppliers and OEM lack. Figure 7: Tesla Model S Suppliers, Source: Tesla (2014) As widely known Tesla Motors is the world s biggest manufacturer for battery electric vehicles today, headquartered in California. Many components and subsystems for the Tesla Model S are provided by international suppliers worldwide, however the key components of the electric power train and energy storage systems are manufactured in-house (see Fehler! Verweisquelle konnte nicht gefunden werden.). Tesla s intention to achieve a significant reduction of battery costs due to scaling effects refers to the minimization of costs caused in the development process of the battery, such as R&D, setup of laboratories or production facilities, labor costs, etc.; though, the parts of a lithium ion battery most vulnerable to cost reductions are indeed raw materials which make three-quarters of the total costs (seefigure 8). It shows that the disappearance of all non-material costs can lead to the targeted 30% cost reduction. The biggest challenge for Tesla will be providing raw materials in a sufficient 21

27 amount to keep up with the massive demand of the factory. Running at full capacity the factory could consume up to 17% of the global lithium supply. 47 Figure 8: Overall battery cost breakdown While there was no battery manufacturing for electric vehicles in the U.S. until 2008, the DOE targets a share of global capacity on production Li-ion batteries for vehicles by Various companies have yet established production in several geographical regions (see Figure 9). New battery manufacturing plants are mainly located in the traditional regions around Michigan and the Silicon Valley, but then more and more production sites for large scale production have been arising at the Western coast region and especially, in the Eastern part of the United States. Several traditional U.S. carmakers started the development of selfmade batteries for electric vehicles. For example, General Motors is moving ahead in this regard and insourced battery production for its all-electric Chevrolet Spark EV. In May 2014, the company announced that the whole production of the minicar's battery for the 2015 model-year would be done at GM's battery assembly plant in Brownstown, Michigan. Before, GM had purchased the batteries from the battery manufacturer A123 Systems. 49 A123 was a strongly supported battery cell manufacturer who eventually was bought by the Chinese Wanxiang group after insolvency. A123 then continued to produce Li-Ion batteries for automotive applications. Effectively, battery costs have already dropped from $1.000/kWh (2008) down to $325/kWh in By 2020, the industry anticipates a 50% price reduction for energy storages, to approximately $175/kWh Deutsche Bank (2009) 22