The trends of today it is said typically provide the picture of tomorrow, and relative to the drive for eco-friendly vehicles two prevalent trends - one macro, one micro - appear to point to a concerning (electrical) energy squeeze for the Triad regions.
The worldwide political fall-out of Fukushima's nuclear accident has effectively created a moratorium on new generation nuclear power-station builds across the globe; nowhere seemingly immune no matter what the reality of local geography/seismology. This then means that incumbent nuclear stations will be retro-fitted for continued use via lifecycle extension and that the greater part of the world's additional energy needs for faster growing EM countries will have to come from fossil-fueled power-stations.
The West and Japan relative to their own eco-ambitions then sit in an uncomfortable middle-ground, between ambition and reality. One in which energy availability itself for the first time in modern industrial and consumer history looks to become an increasingly finite resource. And as such will require greater monitoring, appropriated use and thus inevitably greater cost burdens for industry, commerce and people.
Given this emerging scenario, the oil companies amongst others might well point out the innate irony: that it is in this new context - a sociological 'new norm' which parallels the economic version - that the ideal of hybrid and full-electric vehicles are now being nurtured. However, this new reality is not seemingly recognised by many, and poses sharp contrast to the eco-car scenarios previously envisaged where an EV user could re-charge his/her vehicle battery over-night – to re-quote that much banded saying - "for pennies".
As the very basics of Economics purvey, the nature of finite resources is that they ultimately engender a balancing demand-supply price-mechanisms. And it is relative to this, in parallel to our 'green consciousness', that an emergent corners of the energy & auto sectors have grown and merged on a hypothesis for more efficient 'intelligent energy' supply and use..
'Smart-Grid' is a term which has come to pass into common commercial parlance, yet realistically little has been achieved thus far at any national-level. The proliferation of e-charging spots which appeared in city-centres as promotional facilitators for EVs – and seeming apotheosis of the ideal - in truth no more than unintelligent 'dumb' charging terminals that smart-grid enthusiasts philosophically abhor.
Instead in the best free-markets notion, instead of a state-led 'top-down' immersion in the eco-ideal the commercial world prefers consumer-led or at least consumer-inspired change, building on present-day usage of electrical, gas and water meters, and so the most visible developments of smart-systems directed at home and industry, considered as offering greater market opportunities and thus more robust eco-consumer orientated business models.
Since the Kyoto Protocol, Japan has of course led the automotive eco-tech, very probably due to the fact that it historically has been 'energy constrained' what with its need to import oil and now its nuclear sector effectively frozen. Just as Toyota's Prius was created to help answer the 'oil' constraint, so after Fukushima and a new 'electrical constraint', so Toyota and others will be pushing the boundaries to retrieve 'more from less'. Lesser known outside of Japan is Toyota's involvement in house-construction aswell as as its famous 100-year plan, so it comes as no surprise that (as the FT quotes) its CEO and family scion Akio Toyoda says "we must find a planet-friendly way of using electricity", Toyoda conveying a world in which people "dialogue" with their cars relative to their required use.
To try and create this "dialogue" is the newly announced $12m JV between Toyota and Microsoft. Its aim to develop an intelligent-link systems between (wo)man and car and home via their hand-held smart-phones using 'cloud computing' so as to provide remote viewing of vehicle energy levels within a Hybrid's or EV's battery pack, allows for automatic 'topping-up' via home charging, and a 'remote control' of the vehicle functions: the one described being cabin pre-heating on chilly mornings.
[NB exactly how energy efficient such convenience functions truly are when presumably using neccessarily high Watt / Amp electric-element heating is open to debate].
Such an effort by these two corporate giants is hardly surprising, both Microsoft and Toyota have seen their respective brand powers diminish, the software firm relative of course to Apple and Google aswell as other smaller enterprise efforts to change the playing-field in IT, whilst Toyota's recent history of a series of vehicle call-backs tarnished its reputation for product quality, even if it could be argued that it was able to gain by passing the buck (literally) onto its suppliers. Both companies needed to re-assess their strategic directions over the last few years, and this initiative appears to be a high-profile reaction to their much changed competitive environs and providing a possible new business platform and brand differentiator.
Given the merging of Auto & IT, both companies wanting to be major players in automotive evolution & indeed revolution for this a very different new era for Triad regions. For Microsoft it is set to provides a second-tier of vehicle intelligence that moves beyond its SYNC multi-media platform exploited with Ford. For Toyota it adds a rational new step-forward dimension to its Hybrid lead: now offering Prius & Aurus, and showcasing a 7-seater Prius for 2012 and a Yaris hybrid concept. So beyond rolling out eco-cars, it wants to be seen to lead responsible eco-consumerism.
[NB. The early 21st century rise of personal mobile IT devices, with the specific growth of smart-phone & 'applications' ("Apps") technology, now supported by the 'Cloud' builds a semi-virtual world in which the 'interface' is becoming ever more a prime-broker between the individual and the world at large. Philosophically, the emergent semi-virtual world the physical world has become comprises of 3 aspects: the human...reliant upon personal technology...itself reliant upon the network (the web). Jean Baudrillard's & Umberto Eco's ideas of a semi-virtual world reliant on symbolism which is increasingly indistinguishable from the physical world has never been so apt, from Seoul to San Francisco to even the Piazza San Piedro in olde worlde Rome. (Increasingly in tourist locations visitors are 'looking' at what is physically infront of them by viewing pictures/text/sound on smart-phones). Baudrillard cited the Car (using the iconic Citroen DS) as imbuing man's creative spirit and public wonder that was once the reserve of the Gothic cathedral. Ironically the near omnipotence of the Catholic Church and its 'all-seeing eye under god' which monitored past society has arguably morphed into a less obvious but more possibly more intrusive 'cloud' assisted networked world].
So the world at large, and specifically in the Triad region (inc S.Korea), is increasingly connected, yet energy-wise is becoming increasingly sparse. And as any first-grade economics student knows: connectivity and scarcity are basic tenants of economics.
The classical economist David Ricardo set out the discipline's theorum of 'competitive advantage' in his book 'The Principles of Political Economy', stating an 'each to his own' capability by which countries and individuals could best utilise their innate resources to best economic advantage, developing and concentrating capability as necessary to create competitive advantage.
This basic viewpoint was not lost at the namesake but unrelated Ricardo Engineering, a company which has been a prime-mover to seize its place as an 'engineering integrator' for both old-world and new-world auto-technologies. It recognised that personal mobility developments were to be set within the broader energy framework – much as it was in the early 20th century when petrol's portability and innate combustable power led to its dominance.
Thus Ricardo set itself the task of moving centre-stage relative to new and old world demands, becoming the theoretical and practical protagonist in the eco-auto sphere, with a large PR push to raise its profile amongst both old and new clients and importantly the capital markets'. Given its previous public listing liquidity availability and enterprise valuation buoyancy were always high on the agenda, these credit squeeze of late demanding greater attention given to the equities, bonds and notes investment arena.
As a listed company it sought to regain both real and importantly perceived renewed competitive advantage by positioning itself centre-point between old and new worlds, this central positioning strengthened by a wide capability reach spanning from the practical of design, development and manufacture related to conventional ICE tech, through to engineering solutions provision for Hybrid and EVs, through to the arguably esoteric and pseudo-academic by participating in the scenario-plotting of vehicle-linked 'intelligent energy networks' and indeed the creation of consequentially opportunistic new business modeling. Thus its set out to both retain its past - as seen with the co-design and manufacture of McLaren's road car engine,
aswell as active as a research partner in the many UK based eco-research programmes, aswell as EU efforts such as the MERGE Project which itself is directed at forming a tenable picture for Smart-Grids and e-Vehicle Charging, especially so regards the critical issue of harmonised standards for the 2020-2030 time frame.
Here Ricardo works with 4 other UK participants, amongst an EU body of 18, Ricardo along with Germany's TU the project's primary influencers.
The outcome of the EU's MERGE initiative - combined with similar efforts in the US & Japan - are intended to ultimately act as the industrial foundations for consumer directed initiatives such as that seen by the Toyota - Microsoft JV. Thus a development of lower and upper complimentary layers.
MERGE spans the UK, Ireland, Portugal, Spain, Greece, Belgium, Germany & Sweden, yet it must be noted that presently such grand plans for eco-change have been undermined by the ramifications of the financial crisis; in particular the Euro-soveriegn debt crisis. Ireland & Greece have imposed austerity measures as part of their pact to take EU central funds from the E60bn European Stability Mechanism. Portugal and Spain had previously refused the austerity route in face of public national pressure, but Portugal has announced it too will access the ESM meaning tough oversight expected from Brussels (and indeed Germany & the UK as exposed lenders).
The contrast today is clear, since the fore-running ideology of MERGE was formed at a time of prosperity and aspiration, when 'new world' ideals were supported by higher national GDP earnings and had the availability of a supercharged credit-driven financing environment. The general optimistic for broad-based e-charge networks thus found government fiscal backing and promoted a climate by which the likes of BetterPlace - whose Isreali roots underpinned a political agenda for de-coupling from petroleum – could muster interest.
It was to this buoyant eco-platform that carmakers had to react, both seizing the new-tech arena for themselves and in a pragmatic manner, utilising their eco-tech R&D work as marketing messages that would provide a halo-effect to the ICE propelled cars that make up their real income stream.
Critics may argue that many carmakers – excluding Toyota and Honda – have been little more than cynical, commercially-minded opportunists but the reality is that whilst PHEVs and EVs are far from being the majority of vehicles on our roads, the eco-impetus has pushed their R&D and critically put pressure on ICE development which given its market dominance has an arguably greater overall ecological effect: the CO2 g/km reductions in new cars over the last decade tell a convincing story.
Indeed whilst the press and the auto-industry has been inundated with research, reports and good news stories relating to advanced eco-tech, little has been mentioned about the status quo, and its the global good of eco-tech developed ICE powered cars, nor indeed the structural economic good that the system already in place offers.
The development of nations and peoples should be based upon balanced perspectives, and in this regard oil and petroleum has had a very bad ride of late, ranging from the Gulf of Mexico BP spill (the BP drilling ban now overturned) to oil price volatility concerns which translates into higher input costs for industry and consumer.
However, the oil industry's infrastructure has been in place for over a century, its has served Western economic development in that time and now serves EM development, Venezuela being a prime example. The sector constitutes not only a vertical value-chain but over recent decades we have witnessed it create a lateral value-chain which feeds into it at many links along the vertical, from safety-equipment engineering on drill-rig platforms to the creation of multi-product convenience shops at petrol stations, and in turn the bolt-on of petrol stations to supermarkets which have allowed for price savings in bulk fuel buying by supermarkets to be translated into petrol price savings. The oil sector then has undoubtedly provided immense economic good and is intrinsic to the economic activity of the modern world: from allowing the stock-piling of oil to serve national interests when necessary, to the ability of an individual to ironically but responsibly walk or cycle to their nearest petrol station to do food shopping.
Thus whilst we forever read about the emergence of PHEVs and EVs, society is guilty of demonising petroleum and the conventionally powered car.
Thus a balance must be struck when intelligently discussing the future of the car and the industrial sectors that support personal mobility. To overtly promote EVs which still are far from proven given the functional shortcomings in range performance and more limited climatic operational window is a fallacy. To single-mindedly promote only ICE based vehicles too is a fallacy when Hybrid technology is proven, and EVs presently have a utility limited role in contained environments (eg industrial parks, gated communities, academic campus or leisure parks) and distance specific delivery routes.
But we must also be aware of each technology's own limitations, especially during this fiscally finite time, and so be realistic about the innate scenario development and associated business modeling.
We will no doubt see in time a greater proliferation of PHEVs and EVs, but they should be born into a consumer and commercial environment that sustains them. The “top-up for pennies” argument that has been deployed to date will in the mid-term falter as the 'Fukushima Effect' of constrained electrical energy supply takes hold, the electrical capacity also constrained by costly and/or ineffectual solar-wind-wave green-tech projects which provide a minute amount of power, and by the restraints upon 'dirty' fossil-fuel powered stations awaiting 'clean' type builds.
This then sets the picture for 'Smart-Grids', one where more limited electrical energy creates a re-drawn pricing curve, and one where the onus is put on the user to think smartly with his/her use of associated technologies – as seen by the Toyota – Microsoft initiative.
This new era of electrical energy constraint then also creates the foundations for a successor to ENRON, itself an energy market broker between competing power-generation companies, buying and selling blocks of current and future energy; plus possibly creating a similar market for the consumer market where by energy is bought by the private individual on a more frequent market basis, not unlike cash-equities, bond or 'alternatives' dealing markets. Hence we could see the end of quarterly bills and the emergence of metered energy bought immediately - much like that used in rental accommodation over the decades in the UK and elsewhere – but in this case offering the user much more flexibility about his/her energy use.
In conclusion, petroleum still has by far the major sway over automobile production and use, and will continue to do so. The emergence of PHEVs and EVs have put a philosophical pressure on ICE, but ironically the 'in-use' pricing differential though remaining a broad spread will contract as the electricity generation capacity and reserves start to diminish.
The greatest irony could be that whilst we've been bombarded by the idea of “post peak”, “limited oil” over the last decade as part of the eco-tech story, the real-world story could well be that of “limited electricity”, so by virtue slowing the development of the EV unless the 'Smart-Grid' hypothesis can made tangible.
As David Ricardo and Harry Ricardo would have well recognised, the 'Smart-Grid' scenario will very probably need to be in place as a precursor to the consumer's full acceptance of EVs.
