Analyst Report: Electric Vehicles Give “Mobility as a Service” a Jumpstart


As automakers struggle to reinvent themselves amid falling demand, shifting regulations and, in the case of Detroit’s Big Three, decades of accumulated overhead, we’re seeing old lines between industries redrawn. In fact, it’s a web of alliances among automakers, utilities, insurers and nimble technology companies that may define our future mobility — how we get around and how we pay for it — as a set of services. Those who successfully package and sell these services could win big, as electric vehicles and the smart grid move toward the mainstream.

Mobility as Services

The idea of “servicizing” a business isn’t new. It describes the decades-old model of selling a mix of products and services, rather than only products, thereby using fewer resources while reaping on-going revenues (and, ideally, boosting profits). Xerox’s move in the 1990s to provide businesses with “document services” (the ability to photocopy and print documents), rather than just selling them machines, for example, has become standard fare for B-school case studies. Tech companies increasingly provide software and hardware as services, saving energy and materials along the way.

How does this apply to transportation — to mobility-as-a-service for mass-market consumers? The old models are taxi fleets and public transit. More recently, startups have seized on social networking tools and the Internet to sell flexible, personal mobility as a service. For example, car-share company Zipcar rolls insurance, fuel and maintenance into an annual membership fee, plus hourly or daily rental rates for a fleet of cars and trucks. Web-based startup Zimride matches Zipcar users and other drivers with potential carpoolers through Facebook or; the company charges a subscription fee for organizational and enterprise customers.

Zipcar and other car-share networks such as City CarShare in San Francisco, PhillyCarShare in Philadelphia, Autolib (an all-electric network) in Paris, and Daimler’s Car2Go pilot projects in Germany and Austin, Texas, offer transportation on-demand, using the web and mobile devices to match cars and drivers; they’re locally- or regionally-based; and some also employ GPS to connect customers with cars. They’ve nixed the lengthy paperwork and brick-and-mortar presence of traditional rental car giants, making them fierce new competition. Such networks have a growing user base, but they’ve struggled with profitability.

Mobility Plans: Your Car as an Electronic Device

We’re moving toward another phase of mobility as a service in which the car is marketed like other electronic devices. Just as you purchase a phone and pay your provider every month for a package of services, a growing number of companies are now experimenting with services — insurance, energy, maintenance — packaged around plug-in vehicles.

Batteries are typically the most expensive part of an electric vehicle, and it presents a major obstacle to mass market pricing. Electric vehicle infrastructure startup Better Place, which aims to build and operate battery-exchange and charging stations, often uses the phone plan as an analogy for its business model. Instead of minutes, founder Shai Agassi envisions users purchasing mileage plans (managed online) to use batteries owned by the company.

Better Place isn’t the only company working on battery services. Norway-based automaker Think’s proposed business model represents something of a hybrid between Zipcar’s car-sharing scheme (fuel, insurance and parking are rolled into Zipcar’s subscription and hourly fees), traditional vehicle ownership and Better Place’s battery scheme. Think plans to lease the batteries for its vehicles (expected to be on the market by the end of 2010) as part of a comprehensive “mobility pack.” For a monthly fee, drivers will get maintenance (tracked via electronic controls in the car), replacement batteries, and (in some countries) electricity and insurance, all managed with an online interface.

Battery leasing being new to most drivers, it seems wise for Think package it with services such as insurance, which users are accustomed to paying for on a monthly basis. Down the road, using technology akin to GridPoint’s vehicle-to-grid software platform to collect data about driving habits (speed, mileage, etc.) automakers — or outside insurers working in partnership with automakers and grid operators — could cover drivers based on actual driving, rather than only demographics and legal records.

Another company, EVoasis, also aims to package several services around electric mobility. As Times Online reports, the startup wants to retrofit old gas stations into high-voltage recharging stations (starting with a pilot project in London and aiming for five more by the end of 2009). The company would offer subscription packages and per-use fees for 20-minute rapid charges at low rates, subsidized by revenue from higher-margin products sold at on-site Internet cafes for waiting customers, and with Zipcar-like hourly rentals.

Emerging EV Service Providers
Like the car-sharing networks, Think and several other plug-in car makers are launching their vehicles city by city. They’re accomplishing this with partners. Think is working with the Austrian government and electricity supplier Vorarlberger Kraftwerke on a small pilot program (called the Vlotte project) to gather data on how electric cars will impact the power grid. “Mobility as an innovative energy service” is how Austrian Federal Climate- and Energy fund managing director Eveline Steinberger described the venture in an announcement in January, calling it “a first example of the future link between the transportation sector, utility companies and information technology.”

As plug-in cars begin to make up a larger portion of the auto fleet, utilities anticipate new demands on the power supply. To meet growing demand without having to invest in new power plants, they want some control over how much juice flows into vehicle batteries at any given time. Utilities also see an opportunity to run energy both ways, using plug-in cars to store energy from renewable but unpredictable sources (e.g. wind and solar). Software is key to this kind of energy management.

The Renault-Nissan Alliance is working on utility-partnered pilot programs in California, Oregon, Portugal, Israel and elsewhere at city, state and national levels. Mitsubishi just signed on with the Oregon project this month, and will provide a fleet of its electric iMiEV to help with development and testing of charging infrastructure with on-road vehicles and real-life drivers. General Motors is on the hunt for “plug-in ready communities” for the initial launch of its extended-range electric Chevy Volt, and has identified San Francisco and Washington, D.C., as prime candidates.

While Renault-Nissan has in some cases partnered with Palo Alto, Calif.-based startup Better Place, the alliance’s most recent deals engage directly with utilities. In San Diego, for example, San Diego Gas & Electric has agreed to develop, install and maintain charging stations throughout the area. In Ireland, it teamed up with the national government and ESB, a semi-state-owned utility, to begin deploying infrastructure for an electric fleet. Part of a growing trend, Daimler has worked up similar deals with utilities in Italy and Germany.

We can expect to start seeing more plug-in cars (some all-electric models, others with small gas engines to extend range) coming onto the U.S. market during the next three to five years. But even if General Motors, Chrysler, Think, Tesla Motors, Fisker Automotive, Ford, Toyota, Daimler and Renault all hit their targets for launching alternative-fuel vehicles in this timeframe, we’ll remain years away from true mass market adoption.

In the meantime, unconventional service providers will continue to forge alliances, refine their models and woo drivers away from the status quo of vehicle ownership.

Josie Garthwaite is a Staff Writer for Earth2Tech.

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