Monday, 2 June 2008

New Business Opportunity – Electric Cars – Beyond CO2 to Merged Industry Sectors

In this last review of EVs, investment-auto-motives looks beyond today and the near-term to posit a long-term convergence scenario generated from the logical conclusion drawn from the increasing 'electrification' of vehicles. One that highlights the potential for major industrial cross-pollination that could bring about major changes to business case possibilities and the owners of IPR & associated tangible assets.

Whilst the CO2 challenge is the central driver behind the promotion of Hybrids and Pure EVs could there be yet another additional 'invisible' propagator behind electric vehicles?

The massive rise in electronic integration into the common car, let alone specialist vehicles, demonstrates the emerging centrality of electronic hardware and software. Such energy hungry items put ever increasing demands on the electrical load of the standard combustion engined car running a mass of 'parasitic' ancilleries such as ever higher ampage alternators. So it makes sense to alter and develop the basic principles (including powertrain) of the car to allow for an evolutionary 'electric platform'.

The massively expanded scope of electronics is already impressive, and is only set to grow as it spans:
- vehicle control (ie X-by-wire & CANBUS)
- vehicle diagnostics (for optimum running & service count-downs)
- sophisticated instrumentation displays (derived from or akin to Microsoft, Apple etc)
- multi-media formats
- personal communications
- greatly expanding telematics

Momentarily focusing on the subject of telematics, the role of telematic boxes/systems is expected to become central to the design and use of vehicles, industry expectation that legal requirement will demand the factory installation and possible retro-fit of the technology, as seen in Saudi Arabia today and expected in Brazil in 2009 and Europe by 2011. This has the potential for:
- e-call (emergency services notification)
- e-anti-theft (as in Brazil)
- e-pay (tolls)
- e-mileage rates (insurance and road taxes)
- e-infrastructure (traffic-flow management & 'Green Dynamics')

[Not surprisingly given the potential the investment community has had a close eye upon those growth ambitious and restructured Tier 1 & 2 Suppliers (like Magneti Marelli & Continental) that are in a position to exploit this burgeoning OE market].

Information Technology's rapid (some say exponential) rate of growth has greatly altered the world we live in and the way we interact with it. And in the automotive case, the ability to create ever broadening and specific realms of electro-mechanical and electro-chemical, functionality control.

For years electrical engineers have bemoaned the limitations of of the conventional 12 volt, heavily multi-wired, multi-fused, multi-relayed, electrical system – itself a development of the previous 6V version – now nearly 100 years in its application. But as stated, the rapid integration of electronic equipment and supposed needs/wants/desires is turning the car into effectively a mobile electronics platform. And given that this technology content is, by innate Dollar, Yen & Euro value, an increasing cost and value creation 'hook' when compared with the mechanical systems content, it is not surprising that fundamental systems – especially the core aspect of propulsion technology – have meta-morphosised to support what is in reality already an e-car.

Thus Hybrids and especially pure EVs offer a far more synergistic basis....especially so if Lithium-Ion based, even if the issues of reliability, durability, scaled production, and disposal remain to be conquered. This we suspect the real importance of the L-ion vs NiMHyd tussle isn't simply the functional performance of one versus the other, but the desire to reach a battery standard that can be applied across the board from MP4s to vehicles to gain massive economies of scale production and so profitability.

(This would be a major achievement for especially Japanese industry eager to help pull the country out of the economic dearth it has been suffering for over a decade).

Such powerpack standardisation – L-ion & beyond - would greatly assist a plethora of electronics stake-holders including not only battery producers but electronic & IT hardware producers, software developers, and even web-based service providers such as Google and Yahoo - the latter of which are keen to put their massive Market Capitalisation values to greatly expanded use in synergistic virtual to physical world 'lifestyle solutions' businesses - mobility being perhaps as important as communication as intrinsic to the human existance.

The merging of Autos, IT and Service Provision means that the business-model permutations offered by technology and brands could be immense. So the Hybridisation and Electricfication of vehicles could very well lead to the 'Hybridisation' and 'Electricification' of the intrinsic bases of industry; generating a new industry and service revolution within this, the information age.

As its stands, we are some way away from that horizon, but look to the leading-edge combined demand requirements for mobility and information 'platforms' (vehicles) within military applications and such examples may provide the latter-day technology base to help create tomorrow's consumer world that merges cars, communications and of course the opportunity for entrepreneurialism to bring the 2 together.