May 24, 2024

For many who own electric cars (EVs) or potential owners of EVs there is a major issue the best place to charge the batteries. While traditional automakers continue to invest in producing more all-electric vehicles and trucks, there’s no extensive network of charging stations for all kinds of vehicles. This makes EVs easier to use.

“We’re going to have the ability to produce and deliver millions of EVs,” declared MIT Prof. Charles Fine at the final session of the semester’s MIT Mobility Forum. “It’s unclear if whether we’ll be able to charge for them. This is a massive, huge gap.”

Indeed, making electric vehicle charging stations as common as gas stations could trigger an important change across the U.S. vehicle fleet. Although the automaker Tesla has developed an extensive network of more than 2000 charging stations in the U.S., and might enable some of them to work with other brands of vehicles Independent companies seeking to create a business out of it are trying to get significant momentum.

“They don’t have a business model that works yet,” said Fine, the Chrysler Leaders for Global Operations Professor of Management at the MIT Sloan School of Management in a discussion about startup companies. “They aren’t yet able to define their supply chain. They’ve not figured out their client value concept. They’re still trying to figure out their standards for technology. It’s a highly, extremely undeveloped area.”

The May 12 event attracted more than 250 people as well online audiences. It is the MIT Mobility Forum is a weekly program of discussions and talks throughout the academic year that span extensively across the spectrum of design and transportation. The forum is run by the MIT Mobility Initiative, which is dedicated to advancing sustainable and accessible modes of transportation.

Fine is a renowned expert in the fields of entrepreneurship, operations strategy and management of supply chains. Fine has been with MIT Sloan for over 30 years. From 2015 until 2022, he was also serving as the founder president dean, dean, as well as chief executive officer of the Asia School of Business in Kuala Lumpur, Malaysia, an alliance that was a collaboration between MIT Sloan and Bank Negara Malaysia. Fine is also the co-author of Faster, Smarter, Greener: The Future of the Car and Urban Mobility (MIT Press in 2017).

When Fine spoke, he spoke about the stages of growth for startup businesses, focusing on three phases that companies attempt to “nail it, scale it, and sail it” — which means, determine the idea and viability of their business and then try to expand it, and then function as a larger corporation. Startups that charge for business are in the middle of these phases.

While at the same time the major automakers have announced significant investment plans in EVs which will total $860 billion over the course of the next year, Fine noted. Of these, Ford says it will invest $50 billion into EV production before 2026. General Motors plans to spend $35 billion on EVs in 2025. Toyota has announced that it plans to invest $3 billion into EV production by 2030.

With all these cars potentially being introduced to the market, Fine suggested, the most important issue is a sort that is a “chicken and egg” problem between electric vehicles and the networks that is required to support them.

“If you’re a startup company in the charging business, if there aren’t many EVs out there, you’re not going to be making much money, and that doesn’t give you the capital to continue to invest and grow,” Fine stated. “So it’s important to wait until they earn a profit before they can expand further. But, on the other hand what’s the point of buying an electric vehicle in the event that they don’t believe they’ll be in a position to charge for it?”

People who live in single-family homes are able to install chargers. Many others aren’t in this scenario. Fine stated: “For people who don’t have fixed parking spots and must rely on public networks it’s a chicken-and-egg issue. They aren’t able to buy an EV without knowing what they’ll need to do to be capable of charging it, and charging companies won’t be able to develop their networks unless they are aware of how they will make money.”

The event included a Q&A discussion and audience participation that included a variety of questions, as well as comments from industry veterans which included Robin Chase SM ’86, the co-founder and the former director of Zipcar. She expressed a sense of hope that charging startups are likely to gain momentum in this market in the near future.

“The right companies can learn very fast,” Chase stated. “There’s no reason why they can’t correct those scaling problems in short-ish order.”

In response to the audience’s other concerns, Fine noted some of the issues that need to be dealt with by independent charging companies including unifying standards and interoperability between charging stations and automakers.

“For a driver to have to have six different apps, or [their] car doesn’t fit in the plug here or there, or my software doesn’t talk to my credit card  connectivity, standards, technical issues need to be worked out as well,” Fine stated.

There are also various regulatory issues, like grid policies as well as what consumers are billed that must be resolved in a state-by -state manner, so even startups of modest size must have experienced and efficient legal departments.

All of this allows to predict, as Fine stated, that big automakers from the past will start investing more into charging soon. Mercedes was, he said recently announced that it was joining forces with charging companies ChargePoint along with MN8 Energy to develop about 400 charging stations throughout North America by 2027. It is likely that other charging companies will need to join in to secure their huge investments planned within the EV sector.

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