Take a look at that car sitting in your garage or driveway.
While you may love it, let’s be honest it is a significantly underutilized asset as it probably sits there unused and getting older 95% of the time. It provides no value to you when not in transit (collectors cars aside) and it declines in value every day that goes by. This flexibility of being able to jump into your car at a moment’s notice, however, is a reasonable tradeoff for its low utilization, high cost and decline in value.
As an owner you have been content with this scenario of a car being an underutilized and negative asset because until recently, and with the exception of mass transit, you haven’t had many alternatives.
In the future, however, you might decide not to buy a car but use a combination of car sharing, ride sharing, autonomous vehicles and micro- and mass-transit systems for your transportation needs. Or you might purchase a car but then put it into a car or ride-sharing network similar to how Airbnb works.
If you live in a dense, urban location, all of the above are highly likely in the next 10-15 years. However, if you own a home, have kids and live in the suburbs or rural area you might still prefer or need the flexibility of owning a vehicle.
If you fall into the latter category, you may have an opportunity to have both the flexibility that comes with vehicle ownership and to turn your car into an income-generating asset. What will enable this potentially huge opportunity is the large battery pack used in electric vehicles (EVs).
The Electric Vehicle Breakthrough
While electric vehicles are still a tiny percentage of new vehicle sales, they are poised to see significant growth in sales (I estimate reaching 16% by 2025) when they become more cost competitive, have longer battery ranges, are able to charge more quickly and charging infrastructure is ubiquitous outside the home.
But on top of all of those gaps that EVs need to close with cars powered by an internal combustion engine (ICE), electric vehicles need a key breakthrough that propels them into a new and superior category. The need a breakthrough that compels consumers beyond early adopters to make the switch. EVs need to transition from being viewed as inferior or similar to ICE vehicles in many attributes – to a product that gas-powered cars fundamentally can’t compete with.
Think of cell phones versus smartphones. At their foundation both devices are used as mobile phones, but with the emergence of mobile applications, smartphones in essence became small portable computers that could be used for everything from being an alarm clock to online shopping to monitoring your heart rate. And a smartphone also could be used for making/receiving phone calls.
And while not as dramatic of differentiation between cell phones and smartphones, I do think that EVs need to evolve beyond just the analogous comparison of being like a more energy efficient cell phone than the ICE version. EVs need a compelling differentiation that shifts them into a completely different category.
By the very nature of being powered by electric motors and energy stored in batteries, EVs are capable of doing things and solving problems beyond just the movement of people and things. As such, electric vehicles have a similar opportunity as the in my smartphone analogy, to eventually surpass ICE-powered vehicles because of a fundamental competitive advantage – their battery pack.
When electric vehicles transition from just being used for transportation to also being deployed as mobile energy storage vehicles, ICE vehicles will no longer be able to compete with EVs. Cars might actually create more value for their “owners” and utilities when they are sitting still, rather than when moving.
At that point it will be the beginning of the end for gas-powered vehicles.
In part 2 of this series I will delve into the potential EV breakthrough of using electric vehicles as mobile energy storage vehicles.