The electric vehicle (EV) market continues to make news, including a recent announcement for a pilot program in Germany between the Hertz Corp. and IBM. The two companies are trying to boost electric vehicle adoption through the use of intelligent recharging solutions, and they are using IBM employees and Hertz vehicles to test it out.
The Hertz On Demand global car-sharing club will supply electric vehicles to the car share fleet used by IBM employees in Germany to drive between Stuttgart Airport and the company’s campus in Ehningen, about 19 miles away. Employees will charge the cars at charging stations on the IBM campus—stations powered by intelligent IBM software that optimizes power usage from renewable energies. The software also balances the demand and availability of electricity to prevent load peaks.
The companies are gauging the acceptance and practicality of electric vehicles and IBM’s intelligent recharging infrastructure. The program shines a light on a key hurdle to EV adoption—though prices are coming down and consumer interest is growing, concerns linger about battery life and the availability and practicality of charging options. The program also calls attention to the EV market itself and the potential business opportunities it represents across the electronics supply chain.
Potential Growth
Indeed, sales of hybrid electric vehicles (HEVs) and plug-in electric vehicles (PEVs) are expected to grow 20% per year between 2011 and 2017, according to a report released late last year by market research firm Pike Research. Also, makers of EV charging equipment are expected to rake in $4.3 billion in revenue by 2017—up from just $400 million in 2011. Such figures are good news for the distributors, manufacturers, and other materials providers supporting the EV market.
Northern California-based Steven Engineering is one of those distributors, and company leaders say its electric vehicle business is growing. In particular, Steven Engineering has been busy supplying automation components and systems for production equipment throughout the New United Motor Manufacturing Inc. (NUMMI) plant in Fremont, Calif., where Tesla Motors is about to start producing its Model S EV sedan (see the figure).
Steven Engineering, which specializes in industrial automation and electronic components, is also supplying the radio-frequency identification products used throughout the plant, which vice president of marketing Paul Burk calls “a nice opportunity” for the company. Burk and company president Ken Walter expect such opportunities to grow, especially in states like California that are making big investments in the EV market.
Earlier this year, California announced a $120 million investment to install more than 10,000 charging points throughout the state. The new “Electric Expressway” will include 200 public fast-charging stations and 10,000 “plug-in units” at 1000 locations. Burk and Walter also point to the growing affordability, reliability, and cost-effectiveness of electric vehicles.
But obstacles still exist. Most electric vehicles can only travel about 100 miles before needing to recharge using today’s lithium-ion (Li-ion) batteries, and charging options are limited. This remains a key barrier to electric car adoption, and research continues into affordable, lightweight, and compact battery technology that can power a typical family car several hundred miles or more on a single charge.
In the meantime, charging station investments like those in California are a vital part of the move toward more widespread adoption of electric vehicles. Pike Research analysts expect EV charging stations to number more than 1.5 million in the United States by 2017, with more than 7.7 million stations worldwide.
Distributors such as Steven Engineering are capitalizing on the opportunity. In addition to its work with EV manufacturers, Steven is growing its business with makers of charging stations and equipment, which require a wide range of electronic components, including voltage control and monitoring products, relays, switches, and more. As these and other projects continue, industry watchers are hopeful the sector will continue its upward climb.
“For us, this business is really growing,” says Burk. “And we think it will continue to grow.”