Suppliers to the EV Market Say it’s Not All Bad News
As with the weather and politics, everyone seems to have an opinion about electric vehicles (EVs) and their future in the United States.
The temperature has been rising in the debate lately, and in a high-profile way: Witness Tesla founder Elon Musk and his recent feud with a New York Times columnist over what Musk felt was unfair coverage of their new car in the newspaper.
But while we often hear from customers, car manufacturers, and the media in the electric car debate, one side that’s rarely heard from are the suppliers and distributors of EV parts and charging stations.
These are the people and businesses behind the front lines, who in some cases are betting big on the EV market to support their own franchises, and in other cases, are big corporations who are using their wealth and success in other areas to dip a toe into the EV market.
I spoke to several U.S. businesses who are suppliers and/or distributors in the EV market last week, and while of course there was no unanimity about the future of EVs, they didn’t sound nearly as doom-and-gloom-ish as so many others are.
Their basic message: Relax, people. Rome wasn’t built in a day.
Governments Don’t Create Markets
Josh Kahn is an executive vice president of Precision Spring and Stamping Corporation, an Illinois-based outfit that makes precision metal formed components. More relevant here is that for the past two years, Precision Spring has been working with Tesla as a supplier, and is soon to be in business with another domestic EV automaker.
Outside of the U.S., Precision is currently supplying springs and wire-forms to a Japanese company that’s doing transmissions and getting into electric trucks for service vehicles for companies like FedEx. According to Kahn, Precision’s automotive sales business is about 65-70 percent of their workload, but the EV market accounts for about 10 percent.
Kahn is bullish about the future of the EV market, but he admitted that Precision Spring did hedge a little when given a seemingly big opportunity in the recent past.
“There was a carmaker that we were talking to that promised to have 85,000 of their electric cars on the market, and they presented a large opportunity for us to be in business with them,” Kahn said. “But ultimately, we didn’t do it because we didn’t believe in their numbers, and as it turned out they only sold 5,000 (EVs). So sometimes you do have to be careful.”
Kahn thinks that one of the reasons the perception is out there that EV sales have been disappointing is that the government has put too-high expectations on the market.”We don’t believe government can create a market, that because the government wants to have 250,000 vehicles on the road, it’ll happen,” Kahn said. “The products will create the market, but there needs to be a good product out there, and those are still improving and getting better.”
Kahn said that even though EV sales are only 10 percent of their business, Precision is “fully committed” to growing its EV sales, and that the EV part of their business has been growing steadily over the past three years.
Charging Stations Multiplying, but Faster In EU
One of the big factors in slow growth is generally accepted to be the dearth of charging stations in big cities; the fear of getting stranded in your Nissan Leaf or Fisker and having no way to get your car home is a legitimate one. But every week new stations seem to be sprouting up, and that’s in part due to a pair of companies of vastly different sizes who are selling stations to business owners and municipalities.
ChargePoint, a California based start-up founded six years ago, sells charging stations worldwide to retailers, grocery stores, shopping malls, apartment complexes, and any other business interested. Company CEO Pat Romano is as enthusiastic as anyone you’ll ever talk to about EV’s future, and he also said the expectations for fast adaptability have been unrealistic.
“I usually chastise the press for making sensationalistic predictions, because this industry is a whoosh, not a bang,” Romano said. “If you look at the level of sales for EVs compared to the sales of hybrids, for example, EVs are right there.
“Look,” Romano said, “our business is doing awesome, but there’s just no way you can change the whole automobile industry in a matter of a few years.”
A few of the reasons Romano thinks the EV market has been slower to grow than some expected are that:
- For most people, buying a car is a once every 7 or 8 year experience, and they need to be certain their car is reliable;
- The price of EVs are still too high for many consumers;
- Carmakers are still improving the product.
ChargePoint currently has 11,046 ports in their network in the U.S., and while not providing exact sales figures, Romano said in the last 18 months his business has grown significantly. With 100,000 new electric vehicles projected to be on U.S. roads in 2013, he also feels the “gestation period” for EVs is still growing.
While Romano’s business is wholly dependent on EVs, Baldor Motors, a division of ABB Inc., sees them as less than one percent of its business. ABB sells charging stations and supplies to municipalities and retailers in Europe and the U.S.
Cal Lankton, ABB’s director of EV charging infrastructure, said ABB has been in the EV market since 2010 but is having more success in Europe than in America.
He pointed to a recent project ABB developed in Estonia as a “smooth, relatively quick transaction.”
“When you’re dealing with smaller countries and a smaller land area, and smaller governments, you can get things done a lot quicker,” Lankton said. “Truthfully, the EV market here has been slower than we’d have liked, but our EV business is still growing.”
Lankton pointed to an EV price comparison between Europe and the U.S. to make his point about Europe’s EV advancement. ”Over in Norway, a Tesla Model S is cheaper than a BMW; that’s not the case here,” Lankton said. “You also have to look at gas prices (in Europe) that are so much higher; it becomes more urgent to switch to an EV when gas is so expensive.”
Frank Matheis, the director of corporate communications for Curtis Instruments, a New York-based supplier of EV-based instruments and controllers, said he thought the issue of battery life in EVs is what’s holding the market back.
“If this is your primary car, you can’t be worried about whether you can get home tonight,” Matheis said. “People are dissuaded from EVs as opposed to hybrids right now because with hybrids, you have a backup plan (with gas).”
None of the suppliers and distributors I spoke with blamed carmakers or the government for not doing enough to stimulate EV sales, though Romano stressed government subsidies will still be needed for several years.
But whether it’s a big part of their operation or a tiny one, the suppliers do feel that patience is the most important step in assessing EV’s future.