Utilities and the Auto Industry: A Romance That’s Meant to Be
In 1882, Thomas Edison opened the first power plant, and 8 years later, William Morrison released the first electric car in the United States. The electric utility and auto industry were born and the two would dabble with the idea of working together.
Henry Ford, a good friend of Thomas Edison, wanted to build an electric vehicle (EV) version of the Model T. He told the New York Times in 1914 “The fact is that Mr. Edison and I have been working for some years on an electric automobile which would be cheap and practicable.” However, continued improvements to the internal combustion engine would usher in the gasoline-powered car and EVs could not compete on range or cost. The missed opportunity of over a century ago is now resurfacing as the growth of EVs is poised to shape the future of both industries.
A Strong Mutual Attraction
Today, improvements in EV range, technology, and cost are encouraging the two industries to communicate and collaborate. It is really about commercial symbiosis – as drivers buy more EVs, utilities and automakers benefit. These synergies are appealing in that each party brings a unique skill set to the table. Utilities have local presence, customer trust and existing relationships. Automakers bring national and global insights, as well as deep expertise in customer segmentation, branding and communication.
This complementary approach among industries is common. One industry sells the hardware, the other sells the commodity needed to operate the hardware. For instance, phone manufacturers work with wireless carriers (think Apple and AT&T) to grow market share. PC hardware vendors team up with software vendors (think Microsoft) to create combined offerings that propel growth and benefit consumers and businesses.
Likewise, many opportunities for collaboration exist between utilities and automakers to get more EVs on the road, including but not limited to: cross promotion, joint marketing, strengthened dealer training, bundled offers, vehicle-grid integration opportunities that may result in profit sharing, relaying incentives and special discounted rates so consumers can save money, providing visibility into EV sales so utilities can proactively make upgrades before there are grid problems, and much more.
And indeed, we have seen small but growing attempts to collaborate. For example, Nissan is engaging utilities nationwide to promote the LEAF. AEP partnered with Honda to test vehicle-to-grid integration via second life EV batteries. Consumers Energy has worked with GM to educate the public on EVs and DTE Energy with Ford and GM on similar projects. Duke is working with Workhorse to provide financing. Daimler is actively reaching out to utilities to promote their electric truck offering, and to ensure the required infrastructure gets deployed. PG&E is working with BMW on a managed charging pilot using on-board vehicle telematics. Many of the automakers are currently working with utilities through EPRI to develop and implement the Open Vehicle-Grid Integration Platform (OVGIP).
However, the small scale of these efforts suggest we’re still at the early stage of this relationship, and there are many challenges to overcome.
What Electric Utilities Can Learn From The Auto Industry
Many utilities have made efforts to engage and educate their customers on the benefits of EVs via email blasts, online campaigns, ride and drive events, and social media outreach. This is good news. However, while effective individually, these efforts are sometimes not tied to a long-term strategy or measurable goals, making it difficult to justify their return on investment when budgets are reviewed.
In contrast, automakers take a more calculated and long-term approach to marketing. They leverage “big data” to segment customers, understand them at every step of their journey, and use year-round marketing and artificial intelligence-inspired techniques to influence consumers.
Automakers also understand the importance of emotional messaging. They appeal to the emotional part of buying a car — because it works. On the other hand, many utilities take a more technically centered approach when engaging customers on EVs. They are quick to emphasize the electric details of the vehicle, give lessons on power trains options, or bring up notions such as kilowatts — which all tend to mute customer interest.
“We talk about the 3 P’s of EVs: purpose, practicality, and performance,” says Greg Bolino, Managing Director of Utilities Strategy at Accenture, regarding the factors that are driving EV adoption. According to Accenture’s global research, one of the leading reasons customers consider an EV is for the environment. In addition, 84% of customers want charging of EVs to be “smart” – a further recognition of the purpose behind switching to EVs.
In addition to the cost and environmental advantages, utilities should communicate the performance that comes with driving an EV. They should talk about the feel of the acceleration and think about how the customer will feel when electric torque enters their life.
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