IndustryWeek spoke recently with Craig Knight to get his views on the electric car market, prospects for his company's technology and the changes coming to the world automotive industry.
Why isn't there an electric car in every garage?
The first thing is obviously cost -- electric vehicles are going to cost more. Technologies being used in them are expensive, particularly batteries. Second, the infrastructure to support them is virtually non-existent. The third reason is there are a lot of concerns about the use of electric vehicles. Also, there are issues of overall cost of ownership, and issues with performance, size, range.
Is it also that there are just a lot of unfamiliar aspects of buying an electric car compared to a gasoline-powered car?
Think about the context. If someone comes to me and says we want to own an electric car, I am probably thinking about a golf cart. I may not have been in an electric vehicle. If I have been in a golf cart or I have taken a tour of a movie studio, I have been in a small electric vehicle. There are always those issues of how big can they be made, how comfortable will they be, how much performance will I get out of it, how far can I drive it. There are a lot of unknowns in the consumer's mind that have to be addressed. That doesn't mean it's all negative for him. It's quiet, he doesn't see any pollution coming out of the tailpipe and there seem to be a lot of other benefits. but I am sure he is weighing that in his mind. When I first started working at this company, there was the question, 'Are you building golf carts?' No, I'm not building golf carts.
What is your assessment of the market opportunity for electric vehicles, in say the next 5 years or so?
There are a couple of drivers here for market opportunity. A government regulatory environment that is concerned about our dependence on oil. Every time gas prices go up, there is a consumer outcry -- what are we doing about this so we are not so dependent on oil? There is regulatory environment that will encourage the use of electric vehicles -- whether hybrids or pure electrics -- vehicles that reduce our dependency on oil are clearly going to be in people's minds. New changes in mpg requirements that are definitely going to force [Chevy] Volts to be available in order to meet overall fleet mileage requirements. Certainly there is a lot of attention on it now with battery technology, stimulus money going out, the Volt being introduced. Vehicles like Mitsubishi iMev vehicle and the Nissan Leaf. Lot of things happening in the market.
Will people buy them? That becomes a question of costs and the incentives you can get to buy the vehicle. Right now, they are very expensive to own. There may be more incentives in the European market than the American market because of the cost of fuel. I work in England. Our gasoline is $7-8 a gallon. For example, if I bought a Mitsubishi iMev, the car is being advertised for $42,000 and it is half the size of Chevy Malibu and twice the cost. What is my payback on gasoline alone? It is 3-4 years. Sure. Then there are certain incentives that come along. I get tax incentive, battery incentive, maybe sales tax incentive, over the road incentives and as government catches on to that and brings more of those incentives in, there will be more encouragement for us to buy those vehicles. It is good for the environment and good for reducing our dependency on oil.
We're dealing with a car that seems to offer less and cost more. You believe that the in-wheel electric drive system is a potential game changer. Is that what we need now, some kind of technology breakthrough to change that situation?
OEMs have tremendous fixed costs. They're sitting on [internal combustion engine] technology that has been developed over the last 100 years. It's very cost-effective to make. Consumers want to pay less and have more features.That technology has always been the answer to that.
Current situation being faced by electric vehicles is OEMs are trying to take a conventional electric propulsion technology - a three-phase electric motor that has been around a long time - and shoehorn it into a vehicle that was never designed for it. They want to make electric vehicle using a basic platform that already exists because they have invested so much money in developing that platform. They're trying to do it in a cost-effective way and what they are finding out is if they want to make a pure electric vehicle, they still have to deal with emissions, differential, braking, a lot of systems in the car that are costly . Those systems have never worked with electric vehicles before.
Then they say, 'Let's make a hybrid out of it.' That's great but now they are adding two systems to a car. Some hybrids like the Prius have been very successful. You have some new hybrids coming out -- the Volt, for example, which is a series hybrid vehicle. You come up against the fact that you have an electric motor that will only power a certain size vehicle economically. The electric motor is only capable of powering a smaller vehicle. If you look at electric cars out there right now like iMEV, Leaf, Volt -- they are subcompact vehicles. Conventional electric motors are not powerful enough to go through a gear system and propel the vehicle.
Other side of that is -- we'll just build a bigger motor. But a bigger electric motor doesn't scale very well. They are very large and you also have to have a very large box of power electronics to handle all that power. They are very expensive and those larger electric motors haven't been designed to power larger vehicles and be made economically. Most of those motors now are made by hand. Against that background, the OEM says I have to get vehicles out quickly. I am left with what I can get out now, which is a smaller motor, and that limits me to smaller vehicles. It also increases complexity and cost and reduces my profitability. That is the dilemma being faced by the OEMs.
That is just the drive system. Now add on this battery technology. Billions of dollars being invested in batteries, which I am so excited about. Right now battery technology is expensive but it will come down over time. But initially, battery technology is clearly the most expensive part of electric vehicles being made. As volumes increase and technology improves, you will see that come down dramatically. And as competition increases, you will see it come down really dramatically.
Why in-wheel technology? By placing the motor inside the wheel, by designing a motor that incorporates the power electronics inside the motor, you occupy the most unobstrusive part of the real estate of the car. We're not under the bonnet, we're not in the trunk. Once you have done that, you have a direct drive system -- you don't need transmissions or axles. In that environment, it is a new platform.
When you put that in front of the OEM, he can ask, 'What should this vehicle look like?' If you want to make it an extended hybrid, I have plenty of room to put a little motor in. I can change the passenger configuration. I can provide a step change from a hardware focus to a software focus. That is critical. By giving the OEM a new platform to develop on, he can use a direct drive system in the wheels. It can be either 2-wheel drive or 4-wheel drive. It eliminates parts. Cost of parts has to do with 20-year part availability. What you have done is given them the opportunity to say, 'OK, how do I make this direct drive system that is right at the wheel perform?' That is all software. There are other systems out there. If I put direct drive system that is based on electromagnets sitting in your wheel, the way I control it is all software. Now I have an infinitely adjustable, limited slip differential in each wheel. I can react to road conditions. I don't have to go through a mechanical system anymore -- it is not just a brake.
When our wheel brakes, it becomes a generator. It sends tremendous amounts of energy back to the battery and recharges the battery through regenerative braking. That has another very important consequence. It will either extend the range of an existing battery or reduce cost by reducing the size of the battery you need. It addresses the two main issues facing OEMs. How are you going to develop electric vehicle and reduce my costs going forward? How can you address this battery issue for me today? It call it the iCar. It will dramatically affect the way vehicles are designed and will give them performance characteristics equal to or better than conventional vehicles. It will dramatically impact in a disruptive way the car business the same way the iPhone disrupted telephony.
Is the pursuit of the electric car providing entrepreneurs and even students a platform for energizing automotive development and manufacturing?
We have almost 100 employees now. There is tremendous excitement about what we are doing because we all believe we are going to make a real impact on our lives and our children's lives. When I was looking at this job a couple years back, one of my closest friends said, 'Craig, this is an incredible opportunity. You are going to make a direct impact on my life.' When you talk to people and tell them you get to work on battery technology or propulsion technology or vehicle design and it is all going to happen in your lifetime, it is a driver for the job market and people in the jobs to work harder and enjoy the fruits of their labor -- actually see it.
I'm a 2 ½-year start-up company. We're all very entrepreneurial, all highly motivated. I don't know what impact it is having in larger companies. I know that these groups have expanded very rapidly and the people in them are very happy to be there. One of the biggest problems that larger OEMs have -- and that is why Tesla, Fiskar, Think and other electric car companies spring up and move forward -- is the cultures are as old as the cars that they make. It is very difficult to change cultural perspectives.
What stage is your technology in?
It is in the prototype phase now where our wheels are being used in vehicles. There is a concept car for Volvo called the ReCharge -- it is a C30. This is a series hybrid vehicle -- it uses five of our wheels, one each at the wheel and a fifth one as a generator or range extender. We're trying to cut costs and reduce parts. Our wheels work very well as propulsion but they also work as generators. You can use exact same technology for two different things. That car is running here. It's in England right now. Volvo is moving forward and creating another concept car around in-wheel platform.
We have a Ford 150 truck in Detroit. We converted it into an all-electric truck with four of our wheels on it. You don't have to be small to be green. We can power with our wheel a 6500-pound vehicle. It could be a medium-sized vehicle like C30 or a very large vehicle like a pickup truck. The sweet spot would be SUVs or full-size family vehicles. The OEMs see it as an advantage because it puts them in a spot where they are delivering vehicles that people want to buy, especially in America -- the large cars, SUVs. It puts them in the profitability sweet spot because OEMs make more when they can put more in it, make a luxury vehicle out of it.
We're working with several major auto manufacturers looking at a couple applications of our motors. We're taking a light commercial vehicle that is front wheel drive and putting on the rear two of our motors. This is called a through-the-road hybrid. The drive goes directly to the road, not through a transmission or an assist. The idea is to develop a commercial vehicle that has three modes of operation -- full electric, combined and conventional. When you leave the depot in the morning and you have highway driving or a lot of extra weight and some miles to go, you go conventional. You get to city, you want to avoid city tax for driving a conventional vehicle, or at a certain time of day noise is a consideration or you face stop and go traffic, you switch to electric and drive 40-50 miles on electric. You can have your cake and eat it too. Quick way to get your technology into the market because you are adding a propulsion system to front-wheel drive vehicle. That is advantage we have because we are in the wheel, we don't have to tear apart the whole vehicle.
Is electric car development intrinsically tied to oil prices?
There has to be a business case for any kind of change. It can be oil prices or climate change and concern for our environment. Some of us are doing it because we are concerned about the environment and climate change. Some are doing it just for sheer economic reasons. It would be nice if you had both.
I think eventually people will want to drive electric cars because of performance. My Volvo C30 can do 0 to 6 in under 5 seconds. Gearheads are going to love electric vehicles. It is instant torque, especially if it is in the wheel. You can take this C30, originally debuted as Volvo ReCharge. We haven't done any suspension changes whatsoever. This is a front-wheel drive vehicle. It has our motors on it, battery and a small control box. You take this vehicle out, you do some turns on it, you get into torque venturing a little bit and some of the abilities you can do with slowing down or speeding up the wheels as you go into a turn, it is a very exciting thing . I think we are about to enter a whole new era of performance. I wish auto makers would tout it more. If you have an in-wheel motor, you don't have to go through a gear. It is fast and fun. It's safe and clean. Why wouldn't you want to do that?