By Bryan Hansel, ,
Published May 07, 2015
Technology evolves in unpredictable ways. When the first functioning lasers were created, scientists applauded the technical achievement, but no one knew what to do with them. They were called "a solution looking for a problem." Today, you’d be hard pressed to find an American home without one or two buried deep inside a DVD player or computer.
Similarly, commercial activity was actually prohibited on the Internet’s early precursors. Now, one estimate of e-commerce spending suggests more than $130 billion changed hands online last year. The Internet has truly become the world’s marketplace.
It looks as if something similar may be happening in the electric vehicle industry. For years, electric cars have attracted all the attention and most of the research dollars. When gas prices reached record highs two summers ago, the biggest impediment to adoption – up-front cost – no longer seemed like a deal breaker. At four or five dollars a gallon, a vehicle you can plug in at night starts to look like a great idea.
With gas prices since returning to a much lower level, the investment calculation becomes more difficult. There’s certainly an environmental benefit to driving an electric car, but on a global scale the greenhouse gas emissions of any single family are quite literally infinitesimal. And the “chicken and egg” problem remains with which comes first: a substantial market share for electric cars or the distributed network of charging stations that make their use more practical.
In the end, I believe it is precisely these practical considerations that will limit the appeal of the next generation of electric cars. For example, city dwellers are thought to be ideal purchasers of electric cars because they typically have shorter commutes and live in areas with higher median incomes. But if you have ever lived in a place like New York, Chicago or San Francisco, you know that dedicated parking places aren’t the norm for most residents. -- Imagine trying to keep an electric vehicle charged when you don’t even know what block you will be parking on each night.
Suburbanites have their garages, but that brings up range issues. The Chevy Volt will reportedly only go 40 miles on a full charge before the gasoline-powered back-up generator will kick in. That might not even cover a back-and-forth commute. Full battery charges can also take up to eight hours for many vehicles, severely curtailing unplanned trips.
On the other hand, commercial electric vehicles make a lot of sense. For in-market delivery vehicles or repair trucks, range isn’t an issue. Many commercial trucks have regular routes of 30 miles or less. They are also depot-based, with much of the infrastructure needed to charge and manage the vehicles already in place.
Commercial vehicles get heavy use. The per-mile costs savings from driving an electric vehicle really add up when you’re talking about a truck that has a predicted service life of 200,000 miles. Large fleet operators are also better able to handle the initial up-front expense in return for a promise of long-term cost reductions.
The other major difference is that electric commercial vehicles are available now, while most electric cars are still in development. Smith makes the Newton, which is powered exclusively by battery, runs without noise or vibration, and stores electric energy during a process called regenerative braking. It has a top speed of 50 mph, a range on one battery charge in excess of 100 miles and a payload of over 16,000 pounds.
The final concern with electric vehicles is simply the novelty of their technology. In many ways, the engines are simpler and less prone to breaking down, but they are also different. Your neighborhood mechanic won’t have much experience fixing them any time soon.
This is why Smith is exploring a decentralized, “build, sell and service in one place” model that will allow us to manage the total customer experience over the full lifetime of the vehicle. Deploying electric vehicles in a commercial fleet is a big leap for customers used to managing traditional gas or diesel powered trucks. Our co-located production, sales and service facilities will allow customers to experience the truck beforehand, watch it being built and trust the people who assembled it for service.
Smith is looking to locate these new facilities in markets where we see the greatest economic potential based on customer demand and community support for electric vehicle and manufacturing initiatives. From the day we finalize a site, we believe we can have the facility up and running in 180 days, with minimal capital expenditure of between $3 and $5 million. Each site will have the ability to produce up to 1,250 trucks each year per shift, with a maximum of three possible shifts.
As each facility ramps to scale, Smith will create 100 or more green manufacturing jobs. We also expect the economic impacts to extend beyond just the jobs we create. Our model calls for only the cab, drivetrain and battery cells to be produced elsewhere. Smith will look for local sources for all other components—like tires and wiring.
Bryan Hansel is CEO of Smith Electric Vehicles U.S., an all-electric commercial truck manufacturer.
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