{"id":674,"date":"2012-05-09T17:30:00","date_gmt":"2012-05-09T22:30:00","guid":{"rendered":"http:\/\/www.riverbendadvisors.com\/blog\/?p=674"},"modified":"2018-01-03T11:58:54","modified_gmt":"2018-01-03T16:58:54","slug":"electrification-of-transportation-definitely-not-your-fathers-buick","status":"publish","type":"post","link":"https:\/\/www.riverbendadvisors.com\/blog\/2012\/05\/electrification-of-transportation-definitely-not-your-fathers-buick\/","title":{"rendered":"Electrification of Transportation &#8211; definitely not your father&#8217;s Buick"},"content":{"rendered":"<p>Our April 24 Boston Security Analysts Society lunch<a href=\"http:\/\/www.riverbendadvisors.com\/blog\/2012\/04\/electrification-of-transportation-a-disruptive-event\/http:\/\/\"> session on the Electrification of Transportation<\/a> explored the potentially disruptive impact to multiple industries of the electrification of transportation.\u00a0 The internal combustion engine was &#8211; literally &#8211; the economic engine for much of the 20th century, so the far-reaching impact of a change is hardly surprising.<\/p>\n<div id=\"__ss_12871058\" style=\"width: 425px;float: right;margin: 0 0 0 10px;\">\n<iframe loading=\"lazy\" src=\"http:\/\/www.slideshare.net\/slideshow\/embed_code\/12871058\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\" width=\"425\" height=\"355\"><\/iframe>\n<\/div>\n<p>Our panelists talked about the<strong> drivers<\/strong> (increasing fuel economy standards, oil independence), the <strong>size and scope of the transition<\/strong> (affecting as well as requiring the involvement of multiple industries, consumers and policymakers), the <strong>major challenges<\/strong> (battery life, consumer acceptance, existing and new infrastructure) and <strong>business models<\/strong> (using A Better Place&#8217;s battery-swapping\u00a0 model as both an example and a counterpoint).\u00a0 The framing presentations by Itay Michaeli of Citigroup and Ron Minsk of the Electrification Coalition provide a significant amount of information.\u00a0 I&#8217;ve included Ron&#8217;s in this post and Itay&#8217;s is available <a href=\"http:\/\/www.riverbendadvisors.com\/blog\/wp-content\/uploads\/2012\/05\/EV-for-BSAS-Apr-24-2012-Itay-Michaeli.pdf\" target=\"_blank\">here<\/a>.<\/p>\n<p>The discussion and Q&amp;A opened up topics that could fill their own sessions.\u00a0 I&#8217;ve selected just a few that demonstrate for me why the electrification of transportation should be getting a lot more attention from investors and investment professionals.<\/p>\n<ul>\n<li><strong>The natural tendency to assume that the auto companies have the most at risk and the most to lose.<\/strong>\u00a0 Consider it from a different angle.\u00a0 The century of the internal combustion engine spawned two mega-industries &#8211; autos and oil.\u00a0 Looking at market cap and corporate health, one could argue that&#8217;s worked out a lot better for oil companies than it has for car companies.\u00a0 Electrification may offer the automotive industry a chance to capture more value while being a significant threat to oil (72% of US petroleum consumption is for transportation).<\/li>\n<li><strong>Will buying a car become like buying an iPhone?<\/strong> A Better Place offers just one take on what might be very different business models for cars in the future.\u00a0 Theirs is a subscription model.\u00a0 Instead of buying minutes, the customer buys miles (by swapping batteries).\u00a0 That revenue stream allows the customer to buy more car for the money, just as a smartphone buyer pays a discounted price for the hardware.\u00a0 The company says that, in its initial market in Israel, this model allows the consumer to buy the equivalent of a Camry for the price of a Corolla.<\/li>\n<li><strong>Big Oil really isn&#8217;t Big Oil<\/strong>.\u00a0 Exxon Mobil is the largest US corporation by sales and the second largest by market capitalization.\u00a0 It wields significant political power.\u00a0 But, measured by total oil &amp; gas reserves, it&#8217;s puny (see Ron Minsk&#8217;s Chart #8).\u00a0 90% of the world&#8217;s oil reserves are held by national oil companies partly or wholly controlled by their governments.<\/li>\n<li><strong>Building an auto industry isn&#8217;t easy.\u00a0 <\/strong>China established an ambitious program to develop an automotive industry.\u00a0 And like developing countries that skipped landlines to build cell networks, China looked to highly fuel-efficient and electric vehicles.\u00a0 They&#8217;ve found that it&#8217;s very hard to build a quality car &#8211; the fit &amp; finish that automakers worldwide have had to develop.\u00a0 Electric vehicles are new and not easy.\u00a0 They are not yet producing cars at the volume they expected.<\/li>\n<li><strong>Consumers want widespread availability of charging stations &#8211; but they may not actually use them<\/strong>.\u00a0 Cars spend 90% of the time parked at home or work.\u00a0 The addition of just one charging station in a Japanese EV pilot resulted in customers using more of the battery&#8217;s charge when driving.\u00a0 They didn&#8217;t use the charging station, but they were comfortable driving more because they knew it was there.\u00a0 What&#8217;s the business model for charging stations that people don&#8217;t use?<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Our April 24 Boston Security Analysts Society lunch session on the Electrification of Transportation explored the potentially disruptive impact to multiple industries of the electrification of transportation.\u00a0 The internal combustion engine was &#8211; literally &#8211; the economic engine for much<\/p>\n","protected":false},"author":1,"featured_media":593178,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46,47],"tags":[],"class_list":["post-674","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-esg","category-transportation","","tg-column-two"],"_links":{"self":[{"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/674","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=674"}],"version-history":[{"count":7,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/674\/revisions"}],"predecessor-version":[{"id":1002,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/674\/revisions\/1002"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/media\/593178"}],"wp:attachment":[{"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=674"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=674"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.riverbendadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=674"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}