Review: Review: Solar powered mobility at zero costs and zero emissions
by Anya WahalView the associated event for this review
As electric vehicle (EV) adoption continues to grow across Europe, understanding how the energy and automotive sectors can converge to create opportunities for business model innovation becomes more and more important. In a compelling talk on solar powered mobility, Professor Moritz Loock, a senior lecturer of Energy and Sustainability Management at the University of St. Gallen in Switzerland, addressed that very topic. In his seminar, Loock highlighted two research projects: one, which looked at the efficiency of the EV sales process at car dealerships, and the other, which investigated how large e-mobility fleets influence optimisation strategies in electric power and energy reserve trading.
For most of the 20th century, Loock observes that energy and mobility were two unique industries, operating in parallel universes. It was only recently when the rise of electric vehicles disrupted this arrangement, which led to a convergence of sectors that created immense opportunities for business model innovation. With this shift in the industries as his backdrop, Loock describes just how intertwined the industries have become, with new product bundles emerging such as with Polestar and Octopus. Critically, Loock emphasises, these offerings exhibit variance in their underlying business models; a variance which is especially important given that business models define not only who customers are, but also how value propositions are offered, how value is delivered, and how monetisation works. As the commercial success of these offerings hinges upon the success of their business models, key questions emerge, such as “is electricity generated or self-purchased?” and “where does charging take place?”
In response to these questions, Loock identifies a few business models, such as the “Early Electrifier” business model and the “Charging at the Filling Station” business model. The “Early Electrifier” business model is often expected to lower energy costs and enable self-consumption, whereas the “Charging at the Filling Station” business model can minimise stop time by employing fast charging. Importantly, Loock explained that many companies are beginning to move away from these business models and innovate. For instance, improved revenue models, such as monthly subscriptions plans, can offer significantly lower costs than pay-per-use models. Likewise, some new models can incentivise self-consumption with third-party owned cars, such as company cars, that are used privately whereby employers offer employees particular home charging tariffs.
The emerging business models resulting from this key industry shift can make it difficult to provide such comprehensive information at point-of-scale. With so many business models, individuals within car dealerships can be overwhelmed and training sales personnel can also be challenging. The need for more effective, heuristic alternatives is of the utmost importance, a point which led Loock into his first research question: “How can prosumer-based in-store design promote diffusion of electric vehicles?” Loock finds that a novel, explanation-based presentation, or a “prosumer display” can help customers to better understand the role of EVs for home energy systems compared to a regular EV presentation. Not just that; Loock also finds that customers exposed to the “prosumer display” generally regard EVs as more important for the energy system at home. This finding, and Loock’s research more broadly, underscores how important the right business model can be for a business and for its customers. Key to that point is a model’s impact on car dealerships themselves. Loock discovered that car dealerships actually profit from having more informed customers, because, for example, customers are more likely to choose a car dealership for the purchase of an EV when they have a better understanding of the relevance of EVs for home energy systems. Ultimately, this means that the prosumer display can help promote the sale of EVs in a real store environment.
The growing relevance of EVs in the market led Loock to his second research project, which focuses on the specifics of large e-mobility fleets and electric power and energy reserve trading. An e-mobility fleet, or a collection of EVs owned or leased by businesses or other organisations of operational use, might be able to offer flexibility in services; however, unlike large battery packs, which offer similar flexibility, they constitute specific technologies and behaviours (such as vehicles and driving patterns, respectively) which add additional layers of complexity to implementation. Using a unique, large-scale database of an e-mobility fleet in Switzerland of 1,500 vehicles, Loock employed an optimisation model and tested how different features of the fleet affected that model. From this ongoing study, Loock and his research associates aim to further understand the energy economic fundamentals of pooling electric vehicles.
After Professor Loock’s talk ended, a brief Q&A followed, whereby questions relating to the life cycle of an EV compared to a traditional car, the climate solutions task force at St. Gallen, the meaning of responsible innovation, how business models can play out within the current energy landscape, how to shift current incentive structures, and how to replace service incomes lost from EVs commenced. While few clear answers emerged to these questions, a lively discussion resulted, leading, perhaps, to new possible research questions incited by audience members. Ultimately, Loock’s research agenda responds to precisely the changes currently being demanded by the energy and automotive industries. The urgency of climate change necessitates not just technological solutions but business model innovations as well. By centering business model innovations as an analytical focus, Loock’s work bridges technical possibilities and commercial viability in ways that could be beneficial for both researchers and industry practitioners in the future.