New business models for electric cars

Abstract

Why does the commercialization of plug-in cars remain sluggish when they are ascribed the potential to contribute significantly to the development of a sustainable society? The risk- and cost transfer that comes with the purchase of a car under the current dominating business model is not well suited for technologies that are novel to customers, like plug-in cars. Therefore, the commercialization of plug-in cars can benefit from alternative business models. The purpose of this paper is to present four alternative business models that are better suited for plug-in cars. They are based on already existing business models that have proven themselves in other industries and they have been chosen in regards to their suitability to address important hindrances for a rapid plug-in car adoption like perceived risk, high purchase price and limited range. The four models are: All-electric car leasing chain, where the operational lease company keeps ownership of the car through a sequence of lease cycles until its end-of-life; All-electric car subscription, where the carsharing company uses suburban commuters to extend their carsharing market by moving vehicles to where people are; Free floating all-electric city cars which can be picked up at one place and left at another without requiring booking in advance; Fringe benefit plug-in cars which utilizes that the lower fringe benefit tax on cars with low CO <sub xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">2</sub> tailpipe emissions makes the plug-in car economically competitive as fringe benefit car. Each of these business models are judged as potentially viable but fragile and dependent of contextual factors like the price tag gap difference between plug-in and ICE cars, battery warranty limitations of the plug-in car, the technology improvement speed, and the energy cost gap for plug-in cars versus ICE cars. Governments and car manufacturers can mainly influence these factors.