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Tuesday, Dec. 1, 2009
Electric vehicle market charges up
FOURTH IN A SERIES
Keio University engineering professor Hiroshi Shimizu believes the era of the electric vehicle is near.
Shimizu established the Sim-Drive Corp. venture in August with others who believe in the cars' potential, including Soichiro Fukutake, chairman of publisher Benesse Co.
"I've been developing EVs for 30 years and have always thought they would someday become widespread," said Shimizu, who has created nine electric vehicles in that span.
"It has become a time when we can do something by establishing a company."
By using Shimizu's three decades of research, the venture firm plans to provide electric drive technologies to car manufacturers. Shimizu, for instance, has developed a system in which the motor is mounted to hubs — instead of occupying an engine compartment and requiring a mechanical drivetrain linkage — thus freeing up a lot of space above the frame.
Shimizu's company is part of a surge in ventures looking to tap the potential of the electric vehicle market.
With Prime Minister Yukio Hatoyama's ambitious pledge to slash greenhouse gas emissions by 25 percent by 2020 from 1990 levels, it has become imperative that Japan aggressively pursue green technologies.
Enter the electric vehicle, which emits no carbon dioxide, except when being charged, and looms as an alternative for gasoline-powered cars.
Tokyo-based Auto EV Japan Co., which sells the Girasole electric compact, and Tesla Motors Inc., a Silicon Valley venture founded in 2003, entered the EV market in the early days.
Newcomers face a hard time breaking into the conventional car market because the auto giants and their affiliated parts makers have well-established production infrastructure and distribution systems.
Electric vehicles, however, can offer opportunities to startups and nonautomotive battery makers because there aren't yet any leading players in the field. Also, the component infrastructure is not as demanding because EVs run on battery-powered motors.
But major carmakers are exploring the potential of electric vehicles, and thus ventures may have a tough time competing down the road.
"It is important for carmakers to produce vehicles that are comfortable and user-friendly. Existing carmakers lead in these areas, so new and venture firms are at a disadvantage. They will have to build up their experience," said researcher Masahiro Fukuda of Fourin Inc., which studies the world's car industry. Fukuda is head of the department that studies Japan's automotive market.
Major carmakers are already in the EV game.
Mitsubishi Motors Corp. is aggressively marketing its first electric car, the i-MiEV. Nissan Motor Co. is meanwhile upping the ante, preparing to debut its first electric model, the Leaf, in the latter half of fiscal 2010.
"We've positioned electric cars as one of the pillars for our business," MMC President Osamu Masuko said in June.
Toyota Corp., which leads the hybrid car market, plans to sell EVs in the U.S. by 2012.
According to a report compiled in May by Tokyo-based market researcher Fuji-Keizai Group, EV production will amount to 135,000 units in 2020, compared with 3,000 in 2010. It will take until 2025 or later for the market to reach maturity, because infrastructure, including charging stations, and battery technology won't be fully developed until then.
Despite such figures, experts doubt electric vehicles will become the mainstay mode of transportation in the foreseeable future.
"We don't know (how widely consumers will embrace EVs) because the current economy is based on the production of gasoline," said Manabu Takeoka, director of management of Takeoka Auto Craft, based in Toyama Prefecture.
Takeoka's firm began developing electric vehicles in 1995 and currently produces and sells small ones. His firm produces about 80 annually.
To expand the market, he said there needs to be more benefits and incentives to encourage consumers to switch from gasoline-fueled cars.
People will purchase EVs if, for instance, they don't have to pay for parking or are exempt from car-related taxes, Takeoka said. He points to London as a model, where drivers of gasoline-powered cars must pay an extra tax when entering the city while EV users don't.
Technology and vehicle capability still must be improved, said Fukuda of Fourin, adding that EVs generally have less range per charge than gasoline-fueled cars on a full tank.
"Carmakers are researching not only electric vehicles, but also other environmentally friendly cars, including fuel-cell vehicles," Fukuda said. "I think they are still wondering what type of car they should focus on."
Despite this kind of skepticism, Sim-Drive's Shimizu remains a true believer.
He says the key for EVs to expand is whether carmakers, big-name or not, actually start mass production. That has yet to happen.
Once electric vehicles come roaring off assembly lines, they will become price competitive with gasoline-fueled cars, and their operating costs will be less because the price of electricity is about a 10th that of gasoline, Shimizu said
"From inefficient to efficient, clumsy to handy and complex to simple, there is a flow of technology. When thinking about that, the shift will be to electric," said Shimizu. "Looking at transitions of technologies in the past, when the technology improves (in a certain field), the market becomes drastically bigger. So I think both (existing carmakers and new players) can survive, and this is based on the premise that the market will be larger."