Insights – Go Electric

The second conversation in the mobility series, looked at the EV ecosystem with guest speaker Kyle Weber, Chief Operating Officer at EV Lab spoke to  moderator Eleni Kitra, Global Business, Head of Automotive & Mobility, META, MENA.

Eleni Kitra: What is happening in the electric vehicles space in the region. What is the infrastructure? What will 2030 look like?

Kyle Webber: We are living in interesting times. The UAE has strong initiatives in place to promote electric vehicles and decarbonization of mobility. For the last three years, EV Labs has been working on mapping charging stations across the region. After some research and development, we have built a solar powered electric vehicle charging station, a complete electric motorcycle for deliveries and are working on a few other projects. However, there is a lot of inertia in this market and dealerships here have rigid contracts that does not allow them to work with a third party. This has been a challenge.

Eleni Kitra: How well is this region equipped to support electric vehicles. Do we have the right infrastructure in place?  

Kyle Webber: The UAE is trying to redefine itself. Is it still an oil producing country? Is it diversifying with towards renewables and sustainability initiatives? Interestingly, the first entity that pioneered the EV ecosystem here was DEWA. It has been installing hundreds of charging stations across Dubai since 2017, with about 500 stations in existence now.

Eleni Kitra: Are the charging stations compatible across all the Emirates?

Kyle Webber: On the infrastructure side, the other Emirates have been a little bit slower, than Dubai. The Ministry of Energy has a plan to install fast charging stations across all the main highways of the UAE. In Abu Dhabi, this is managed by the private sector and a company called Pulse is installing fast charging stations across the city. Regarding compatibility, the UAE follows the European standard, yet there are some different systems in place as well. There is the ‘Combined Charging Station’ and the other is a Japanese standard called CHAdeMO. However, though there aren’t any cars in the UAE that uses the latter, these plugs are available at all the charging stations. Eventually they will be obsolete and the new charging stations won’t have these strange plugs. There are two other systems – US System, which requires a converter and more recently, grey market imports from China.

Eleni Kitra: Sometimes, the market takes care of itself. For the moment, there are some disruptors that don’t need regulation but some rules on how they should operate. What are the key factors that will drive OEMs to transition to EVs quickly?

Kyle Webber: It is a complicated sector at present. With covid related restrictions in China and the war in Ukraine, it is challenging to find Lithium and Cobalt for batteries. Everyone is scrambling to figure out their supply chains. In fact, Tesla announced that they might be looking into lithium mining because they’re so worried about their own supply chain. OEMs will strategize according to their brand and needs. Ford is splitting their business in half – EV and petrol, whilst General Motors is going full electric. Gathering and monetizing data has also become part of this ecosystem now. The autonomous features are critical for OEMs because they see this a revenue source going forward addons, software, paid subscriptions, etc. It’s no longer about just making money from just selling the vehicle alone.

Eleni Kitra: What changes do you see in the business model of the electric vehicles industry?

Kyle Webber: The struggle that we’ve had over the last two years with EV lab has been in producing something relevant to a community that is looking for the latest and the greatest? Initially we planned a retail concept but were unable to get the brands onboard. Then we started to buy and rent electric vehicles, to understand if the market was turning. What we are seeing is that the next generation is less interested in ownership, and they are not loyal customers. They want convenience, right pricing and change, when needed.

Eleni Kitra: Who are the users of EVs today? Can we define them?

Kyle Webber: In the UAE, many Tesla owners are young Emirati men, and next are the Western expats. They are people who tend to be in the tech sector, invest in crypto, trade NFTs. There are fewer people who are adopting EVs with sustainability goals in mind. Besides Tesla, we have a Mercedes, BMW, Audi and Porsche who have EV versions. But you can’t find these at local dealerships; but have to put in an order and wait about a year. With Tesla, the user journey involves reserving your car, waiting for it to arrive, going to the Jebel Ali Port and taking ownership, and then going to the supercharger and plugging it in.

Eleni Kitra: Technology enthusiasts and younger generation are more interested in EVs than sustainability advocates. But it costs a lot more, so how are dealers managing this business? Tell us more about the ecosystem and customers.

Kyle Webber: It’s quite a shift for dealers, and in the USA, two-thirds of traditional dealerships are becoming obsolete. And the other one third is going to pivot into a service center model. Most of these OEMs are going into direct sales. Booking your car online, and then waiting a certain amount of time to receive your car is becoming the norm. Dealers will have a tough time if they don’t change. EVs don’t have as many moving parts, and few things that can go wrong. Accessorizing is a trend that is picking up speed. Since most of the Tesla models look similar, people spend a lot more money on accessorizing. Changing the wheels, color, wrapping, doing different things to stand out. Customers feel that since they have bought a car that already costs a lot of money, they don’t want to look like everyone else. Online purchase will become the norm, removing the bargaining aspect and preventing prices being marked up. Dealers will struggle to stay relevant in a new era of transparency. On the positive side, dealers know their market and people well. They’re better able to tailor the user experience. I do see relevance in dealers, but they’re going to have to really change their business model.

Eleni Kitra: How much of EVs operations have an impact on climate change and how we live our life? What is the reality of the sustainability rationale?

Kyle Webber: It’s quite complicated. There are so many points in the chain that can make a car sustainable or not. If the batteries are produced with solar energy, (Porsche is the market leader), then the embedded emissions are lower. It depends on where the energy is derived from – fossil fuel, coal, renewables or nuclear. About three years ago, we did our own calculations. We took a Chevy Bolt and a Chevy Traverse, and found that using the UAE power grid, the break-even point was 80,000 kilometers. If you were to drive a car beyond that, you would be more sustainable in an EV than in a petrol vehicle. In places with better and more effective solar resources and storage, there would be a shorter breakeven point. EVs are more sustainability.

Audience 1: What about hydrogen?

Kyle Webber: There are a couple challenges with hydrogen – storage and efficiency of a hydrogen fuel cell, which is around the same as a petrol vehicle. If you’re able to generate green hydrogen, as in the solar park here, that is a lot better. But if it’s blue hydrogen, from cracking natural gas, and you’re being careful about the emissions and injecting it back into the reservoir, then you’ll get a lower cost initially, and can go to market faster. However, the longer-term sustainability issues need to be investigated further, but I believe that hydrogen is the long-term solution. A good example is Riversimple, a hydrogen-powered fuel cell electric vehicle from the UK. They were able to make a compelling case for hydrogen, as long as it’s produced with solar.

Audience 2: Can you tell us about the supply chain issues and its impact on the adoption and the production of electric vehicles?

Kyle Webber: At present, manufacturers are dependent on cobalt, but we should see new battery innovations that don’t have any cobalt. Or, ideally, we go to solid-state batteries, which are supposed to have a better life cycle and temperature resilience.

Audience 3:  What challenges can you expect from a business model of mobility as a service?

Kyle Webber: There are some interesting startups looking into providing electric vehicles either on a per-minute basis and an e-car model or on a daily rental basis. We are looking at the B2B space and are trying to put EVs into fleets that will be there for the next three years. We want to see the big players start to adopt EVs.