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Author's profile photo Christopher Koch

Where Will We Get Our Next Tankful of Electricity?

/wp-content/uploads/2013/11/272723_h_srgb_s_gl_321367.jpgDo you know where the first automobile pulled up to get the first tankful of gas?

It was at a pharmacy in Wiesloch, Germany in 1888, where Bertha Benz (yes, that Benz) stopped on her way from Mannheim to Pforzheim in the first automobile. (She didn’t ask the pharmacist to clean the windshield because there wasn’t one.)

Other places where people stopped in the early days included general and hardware stores and blacksmith shops.

But then the oil industry quickly took over from the pharmacies, blacksmiths, and shopkeepers. And why not? It had an exploding market ready to consume a new commodity that to that point had seen few takers.

Today, it’s hard to imagine anyone besides oil companies (okay, there’s the odd convenience store) dispensing fuel.

But what if vehicles need something other than gas? This is a question that electric vehicle owners ask themselves all the time. Where will the gas station network for electric cars come from?

The answer isn’t so simple. You see, unlike oil companies in the last century, electric utilities today are kinda busy. They’ve already sunk huge sums of money into an electric grid that consumes far more (and generates far more profit) than a network of charging stations would. Worse, most utilities operate at very low margins and are highly regulated, which makes big investments in a new network difficult.

Oil companies could branch out by adding charging stations alongside the pumps, but that could be a little too much “creative destruction” of a rich source of revenue for their shareholders to handle. Tesla has boldly proclaimed that it will build a network of charging stations for its electric cars across the United States by 2015. Great for Tesla owners, but what about everyone else?

What Is the Most Natural Fit?

Ultimately, it seems like the most natural fit for electric utilities to build the charging infrastructure, given their expertise with energy delivery. And some are doing it, such as German utility RWE, which has constructed networks of charging stations for such customers as municipalities, fleet operators, and utilities across Europe.

But some big issues remain to be resolved that gnaw at utilities’ core business model and expertise. For example, electric vehicles driving across Europe will cross multiple countries and electrical grids. Sounds like the utilities will have to become as adept at handing off customers’ charging and billing needs as cell phone companies are with their roaming capabilities.

Drivers Will Rent

And what about fleet management? It’s as likely that drivers of electric vehicles will share them as buy them. In that case, you need the expertise of a rental car company.

While utilities like RWE have shown the agility to go with the flow of a radically new business model, many others aren’t ready. In that case, a new kind of company with a new business model could emerge – one that combines all these skills into a single entity.

What do you think will happen? We put this and a bunch of other questions about the future of electric vehicles to utilities experts inside and outside SAP. You can see what answers they came up with here.

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