Gaining Back The EV Revenue Stream Henry Ford & Thomas Edison Gave Up
By Preston Roper
It’s well known that Henry Ford and Thomas Edison were great friends late in their lives. But what many people don’t realize is that the two collaborated on an affordable electric vehicle, and at a time when 40% of automobiles were electric.
In the early 20th century, Edison said, “Electricity is the thing. There are no whirring and grinding gears with their numerous levers to confuse. There is not that almost terrifying uncertain throb and whirr of the powerful combustion engine. There is no water-circulating system to get out of order — no dangerous and evil-smelling gasoline and no noise.”
At the time, it was rumored that the Ford/Edison EV would cost between $500 and $750 (between $10,000 and $16,000 today) and would go somewhere between 50 and 100 miles on a single charge. However, the project ultimately failed due to Henry Ford’s insistence that the car use Edison’s nickel-iron batteries and the fact that those batteries were ultimately incapable of powering an electric car under many circumstances.
So, the history we all know is that Ford and the rest of the automobile industry embraced the internal combustion engine, and in doing so, gifted the oil industry the most lucrative recurring revenue stream of the industrial age: consumers buying gas at the pump. Today, Big Oil is the third largest industry, behind only food and alcohol, but also the largest generator of greenhouse gas emissions. [Note: Some studies indicate the livestock industry is the largest generator of greenhouse gas emissions.]
However, 100 years later, Ford and Edison’s dream of electric vehicles is very much alive. Not only are EVs becoming a common sight throughout the world, but models like the Tesla Model 3, Nissan Leaf, Chevy Bolt, and Honda Clarity are proving EVs can be an accessible and affordable alternative to, as Edison would say, “evil smelling gasoline.”
A Charging Challenge for Utilities
One thing Ford and Edison couldn’t have seen coming is the challenge that arises when too many EVs attempt to charge on the same local grid at the same time, and the new business opportunity it opens up for automobile OEMs and utilities alike. Utilities want EV loads they can balance, and OEMs want recurring revenue and technology they can give their customers to charge their cars on an electricity mix optimized for clean energy generation. Today, they have the technology to implement both. This is the focus of the Enel X e-Mobility group — accelerating the electrification of transportation.
Navigant has estimated that by 2027 there will be over 50 million EVs on the road globally. Other reports have forecast that by 2022 electric vehicles are expected to cost the same as their gas-powered counterparts — without incentives. By that time, EV adoption will have hit the inflection point for exponential growth, as people realize they can have the vast majority of their transportation needs met without paying for gas or the expensive maintenance of traditional engines.
However, too many plug-in vehicles not well integrated into the grid could be an expensive result for utilities and their customers alike. Consider this: charging just one electric vehicle can be equivalent to adding two or three homes to an electric grid, requiring new energy infrastructure if electricity demand exceeds current supply. Plugging in millions of EVs could require significant increases in electricity generation to meet the new electricity demand, if everyone charges at the same time. The good news is that there are ways to dynamically manage the complex ecosystem needs, economically and reliably for all.
Smart Grid Charging Brings Recurring Revenue
To address this complex infrastructure challenge, major advancements in smart grid electric charging software are giving automakers new opportunities to realize the recurring income they gave up to oil and gas with ICE vehicles a century ago with the EVs they sell today. Much like the data that OEMs can provide insurance companies to reward safe driving behavior, and income earned for streaming entertainment services, OEMs are designing new business models around the sale of electricity used to charge the cars they sell.
Smart grid charging innovations, coupled with grid services programs offered by regional utilities, give OEMs new growth opportunities. By allowing EV drivers to take advantage of financial and environmental incentives like slightly shifting their charging to times of day when demand is lower, or when renewable energy is abundant on the grid, all stakeholders win. This is because utilities and grid operators can compensate EV drivers to reduce their energy consumption during peak times through curtailment auctions and demand response programs, rather than turn on or build more expensive, dirty peaker plants or rewire entire cities with more electrical infrastructure.
Creating Electric Opportunities for the Masses
Enel X recognizes the opportunity to create shared economic value across stakeholders to incentivize a win-win strategy for sustainable EV adoption and infrastructure. Through our work with automakers, utilities, and consumers, we want to expand energy service market opportunities for all. For example, a number of forward-thinking OEMs are leveraging our JuiceNet platform, including Car2Go and Honda. Specifically, our Honda partnership illustrates a new source of savings for drivers, utilities, and automotive equipment manufacturers alike.
With JuiceNet software built into a telematics system, demand response and grid services capabilities require no additional hardware and are automated for EV drivers, requiring no manual intervention. Enel X technology monitors electricity markets for when energy demand spikes, and our system can automatically adjust a car’s charging load to reduce strain on the grid. Scheduling charging when electricity demand is low and renewable energy is in great supply is one example of how EV drivers are able to charge with the cleanest electricity on the market. Also, by avoiding charging during times of peak electricity demand, smart charging or “managed charging” programs can potentially cut costs for utilities by avoiding the need to build expensive peak power generation plants or grid upgrades that might otherwise be necessary.
Enel X is dedicated to developing innovative products and digital solutions in sectors in which energy is showing the greatest potential for transformation: cities, homes, industries, and electric mobility. With automakers setting ambitious EV plans, like Honda making two-thirds of its global automotive sales electric by 2030, the intelligent EVSE market opportunities are also expected to increase to keep pace with growing demand for electric vehicles.
One hundred years ago, Henry Ford was focused on selling as many cars as possible. Had he had the foresight to understand how lucrative the transportation fuel industry would become, he likely would have seized the opportunity to gain a foothold in that market. Today, gasoline and diesel automobiles have no option for gaining recurring revenue from the fuel they consume. However, EVs do, and now is the time for OEMs, utilities, and drivers to take advantage of the opportunity.
About the Author: Preston Roper is Enel X General Manager, North America, e-Mobility, a smart grid electric vehicle charging company with the technology and expertise to funnel EV charging revenues to OEMs. It has already deployed over 42,000 stations worldwide, and its technology is utilized by nearly a dozen vehicle and EVSE OEMs worldwide.
This article was published in partnership with Enel X; vintage photo from the Collections of Henry Ford, via Flickr (CC BY-NC 2.0 license); Madrid Car2Go & Enel X image from the company.
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