Competition Heats Up In Auto Battery-Charging Business

With the first mass-scale electric vehicles rolling off US car lots, a new class of automotive entrepreneurs is emerging to develop charging systems and outlets.

“A lot of firms big and small see this and ask ‘how can I innovate?'", says Rob Peterson, spokesman for GM’s Chevrolet Volt program, which just started delivery in late 2010.

To start, all those electric vehicles, EV, will need to be refueled, or repowered, and dozens of companies—from giants like Siemens to startups like ECOtality—are rushing to build plug-in charging systems to keep them on the road.

EvaTran charger
Source: EvaTran
EvaTran charger

But Virginia-based EvaTran plans to make that refuelling habit easier by rolling out a home-based-induction charging system this year.

Induction charging means no plugs are required. The driver parks the part of the recharging unit attached to the car near the unit on the wall and the power flows wirelessly.

Consider it a larger version of Duracell’s myGrid charging pad that can charge cellphones and other small electronics.

“It’s much more power,” EvaTran CEO Tom Hough points out, comparing the recharging of a Chevy Volt to a Blackberry. “When you talk about that much power, it’s a whole new ballgame.”

Remembering to plug your car in might seem inconsequential, but the average American’s driving routine has been the same since the advent of the interstate highway.

With more EVs on the road in coming years, a whole consumer habit—stopping at a gas station and filling a tank—is being kicked for good.

John Gartner, senior analyst with cleantech research group Pike Research, points out that while the operational savings—of both time and money—will be apparent to EV owners as they fly past gas stations, the idea of “pulling the car into the garage and then going off to your life” will require a new routine.

Expected to hit the market in July 2011, EvaTran’s induction charger system creates a 6-to-12-foot “box” where you can park your car and still have it charge up.

But Pike’s Gartner says he’s skeptical that a new technology like EvaTran’s could make inroads at this point in the market’s development.

“I haven’t heard much talk around induction,” he says, pointing out that the EV sector’s efforts to date have focused on standardizing plug-in charger technologies.

The potential size of the EV market is also unknown at this point.

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Research firm Zpryme expects EV sales to grow over 36 percent annually from 2011 to 2016, from 43,400 vehicles to 203,200, with a total rolling EV fleet of 730,700 vehicles by 2016.

California utility PG&E expects to see 300,000 EVs needing recharging in its territory alone by 2020.

Zpryme expects sales of home-based charging stations to grow from 25,400 today to 125,900 units in 2016, eventually becoming a $1.1 billion market on its own.

While it’s a huge opportunity, it’s also EvaTran’s biggest challenge.

Early entrants in the EV market have partnered with specific charger makers—Nissanwith AeroVironment and GM with SPX.

That relegates firms like EvaTran to the aftermarket, and since buying the car and the charging system usually happens at the same time, there’s not much of an aftermarket.

But early EV buyers have grumbled about the difference between the sticker price and the “all-in” price - which factors in costs of the charger, potential home rewiring to handle the new equipment, and the availability of various federal and state tax credits to offset those costs.

Car makers spending millions developing new EVs won’t want to see these external issues harm sales, says Pike’s Gartner.

In the future, he adds, car dealers could simply describe their EV’s requirements, and then let buyers find a charger elsewhere—whether it’s at an auto parts chain, like AutoZone , or a home improvement retailer, likeLowes .

He estimates the typical charger system costs about $2000-$4000 for hardware and installation.

“That space is going to come down quickly” in price, adds Gartner..

EvaTran’s unit will have a $2000-$3000 price point, says Hough.

While he says he’d love to see a more robust aftermarket for charging stations, Hough’s not waiting for it to happen, adding that “Nissan and GM aren’t the only the people in the game.”

He wouldn’t name names, but he says it’s “safe to say” he’s signed non-disclosure agreements with seven automakers for their upcoming EV launches.

Aside from dedicated EV makers like Tesla Motors , carmakers FordMotor , Honda and Hyundai have EV’s planned for the next two years, as do BMW’s Mini, Daimler’s SMART division, and Volkswagen’s Audi.

GM just invested $5 million in wireless charging start-up Powermat.

Detroit Auto Show 2011 - A CNBC Special Report
Detroit Auto Show 2011 - A CNBC Special Report

Hough adds that fleet buyers are also seeing benefits in the flexibility of induction charging versus managing a lot of plug-in chargers.

“Picture a rental car lot,” he says, adding his system will make it easier for EV drivers to park and take off, and still have the EV ready for the next driver without requiring staff to plug them in.

The good news for EvaTran, and the whole segment, is that the EV is unlikely to be a passing fad.

Unlike other alternative fuel technologies that garnered a lot of press in recent years – from fuel cells to compressed natural gas, or even the first generation of EVs – automakers have EV programs well in place.

With many new models debuting over the next several years, Pike’s Gartner says it shows automakers see EVs as crucial to their future - for their marketing benefits, their fleet fuel efficiency affects, and the revenues they’ll generate.

According to some media reports, GM CEO Dan Akerson has already said he wants to triple or quadruple 2012’s planned sales of 45,000 EVs by mid-decade.

“The US auto industry sees this as key to its rebirth,” Gartner says. “There’s a lot of commitment.”