Electric Vehicle

Electric vehicles are not new. They exist since the 1900s, nearly 40% of vehicles sold in 1900 were electric (Hidrue, Parsons, Kempton, & Gardner, 2011). However, they lost the market to ICE vehicles in the decades following. EVs started to gain attention again since an oil crisis in the

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1970s, which made people consider alternative vehicles that do not use fossil fuel as its power.

At around that period, several countries, such as Japan and US, identified EVs as a promising solution, and have started to support the development of EV.

However, this did not translate into adoption of EV in the 1970s because of several technology barriers from the electric vehicles, such as a high price and limited driving distance because of battery capacity. Moreover, during the 1970s until 1980s, people considered cutting oil dependency was not urgent (Ahmad, 2006). Following years, as the concern for reducing oil dependency and emissions became bigger and the electric vehicle’s technology has advanced, the automotive manufacturers started to see the prospect of electric vehicle market and decided mass produce EV. The first mass-production of the hybrid electric vehicle, Toyota Prius, launched in 1997 (Chan, 2007).

Now days, there are four types of electric vehicles; those are Battery Electric Vehicle (BEV), Hybrid Electric Vehicle (HEV), Fuel Cell Electric Vehicle (FCEV) and Plug-in Hybrid Electric Vehicle (PHEV) as the fourth type. Battery Electric Vehicle (BEV) is a vehicle that gets energy for mechanical propulsion from a rechargeable electric power storage device, which is a battery (EC, 2007). This device gets energy from external energy sources, which is the electric grid; therefore, BEV is considered in the plug-in vehicle cluster. To have a fully charged battery, a BEV needs to be charged for six until eight hours with standard charging (Burke, 2007). There are several advantages of BEV compare to internal combustion engine (ICE) vehicle as general; those advantages are the ability of a BEV to generate less emission, requires less operational cost and maintenance cost (MITElectricVehicleTeam, 2017; GreenOptions, 2017; Lee, Thomas, and Brown, 2013).

Hybrid-Electric Vehicles (HEVs) combine ICE vehicle's operation system and electric motor operation system. An ICE vehicle is powered by gasoline, and the electric motor is powered by a storage battery, which is charged from the regenerative braking system. This operation system implies that, in contrast with BEVs, HEVs do not need to get energy from the electric grid or external electric energy source.

HEVs are considered to be to be less clean compared to BEVs since HEVs are still very depend on gasoline. To reduce oil dependence on HEVs, PHEVs were developed. PHEV has the main system of HEV, but PHEV can recharge its battery from an external power source, such as electric grid (Weiss, et al., 2012). This condition implies that PHEV can get energy from both gasoline and the electric grid. Therefore similar with BEV, PHEV is also considered in the plug-in vehicles (PEV) cluster.

FCEV uses hydrogen as a power source. FCEV is considered as zero pollutant technology because it does not generate emissions but water as a result of the isothermal reaction of hydrogen (Chan, 2007). Therefore, FCEV is considered as one of the good solutions for the long-term vehicle and is predicted to be the future interest of the European research in the horizon of 2020-2040 (Mierlo, Maggetto, and Lataire,2006). Nevertheless, FCEV is less accepted compared to BEV and HEV right now because the technology of FCEV is still less mature and much more expensive compared to those of BEV and HEV. For a more in -depth explanation of each electric vehicle types, the reader is recommended to explore the literature study by Sari (2016).

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1.3.1.4. Factor Affecting Electric Vehicle Adoption As A Company Vehicle

Some studies have been conducted for analysing EVs adoption by a company as a commercial vehicle. Sierzchula et al. (2014) investigated the factor that makes company willing to adopt EVs and expand this adoption further. The study was done in six public and eight private organizations from the Netherlands and United States that adopted electric vehicles. Based on the analysis, it seems that the government policy in term of subsidies and tax is an important factor for a company to adopt EVs as EVs has high capital costs. Moreover, the government also needs to educate companies and people about EVs, as there is a lack of information and confusion regarding the technology of EVs, EV market, and EV safety.

The importance of government incentive to attract the companies to adopt EVs is also mentioned by Pelletier, Jabali, and Laportie (2016). In this study, the authors explain that Electric vans and trucks for commercial distribution are still not widely accepted due to high capital cost, driving range, payload, reliability, availability, and a high cost for EV's battery that was considered to only has a short lifetime. Nevertheless, the authors argue that if the government gives enough incentives for the electric truck, the electric truck can be an attractive option for companies’

vehicle. Furthermore, another factor that needs to be considered for using electric truck is utilization. Electric truck needs to be operated in high utilization to make it profitable and can overcome high capital cost (Brian & Miguel, 2013).

Based on the studies about the factors that affect EVs’ adoption, there is a conflict between the goals of customers and the goals of governments. Although one of the main reasons EVs have gained interest from the government is because of the urgency to reduce emissions, this environmental concern is, for firms, less important compared to other factors, such as financial consideration. Hidrue et al. (2011) mention that people are more attracted to fuel cost saving opportunity compare to the reducing emissions opportunity. In addition to this finding, Rowe et al.

(2012) mention that people tend to prioritize distance range compare to the need to reduce emissions. Therefore, if EVs can not give more flexibility for distance range, it seems hard to make EVs as a substitution for internal combustion engine (ICE) vehicles.

Based on those factors that affect EVs adoption, two factors are highly related to battery technology; which are driving range and purchase price. The reason of a high upfront cost for EVs is due to the battery cost. The battery cost is calculated based on the price per kWh. To reduce the electric vehicle cost, the battery technology needs to improve. Nowadays, EVs use lithium-ion (Li-ion) battery because it has rapid technology development and considered as a good choice for EV's battery. IEA (2011) stated that among other existed battery's technology until now, lithium-ion batteries offer the best option when optimizing both energy and power density of the battery.

As there is an increased interest in electric vehicle research in the past decade, there has been an improvement in the battery technology of electric vehicle that increases the limited driving distance of electric vehicles. The BEV's range used to be only around 100 miles, but in early 2017, Tesla, a car manufacturer, has introduced a new battery option with a distance range of 335 miles, which makes Tesla has the longest distance range battery for now. The current technology of battery for an electric vehicle has a distance range from around 100 until 300 miles, for example, Chevy Bolt has 238 miles of distance range, Ford Focus Electric has 115 miles of distance range, and Nissan Leaf has 107 miles of distance range (Fortune, 2017). While for the electric truck, the limited driving distance for electric truck ranges from 100 km to 250 km (Emoss.nl, 2017).

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Figure 2. The BEV’s Battery Price, Goals, and Estimations (Based on the data from DOE (2016), GM (2017), HybridCARS (2017), Electrek (2017), and Cleantechnica (2017)

The improvement in battery technology leads to the battery price reduction. Figure 2 shows that the goals to reduce battery cost for BEVs have been set by many automotive manufacturers and governments. The US government announced a goal to reduce battery cost from $500/kWh to

$125/kWh (DOE, 2017). Automotive manufacturers, such as General Motor (GM) and Tesla, also set its goals to reduce BEV’s battery cost. GM, which had succeeded to reduce battery cost until it reached $145/kWh in 2015, declared its target to make its battery cost reach $100/kWh by 2022 (GM, 2017). Similar to GM, Tesla also sets a goal to reduce its battery cost until it reaches $ 100/kWh by 2020 (HybridCARS, 2017).

Several projections for battery cost of BEVs have been made. IEA (2012) estimates the battery cost for BEVs to reach $325/kWh or less by 2020, while McKinseyandCo (2017) has a more optimistic projection of battery cost based on the analysis of data from EU stakeholders.

McKinseyandCo (2017) predicted that battery cost would be $236 /kWh in 2020.

Figure 2 also indicates that the average battery price of BEV shows significant reduction since 2010 until 2015 (Electrek, 2017 and Cleantechnica, 2017). Several estimations seem to have pessimistic prediction compared to this reduction trends. Nevertheless, based on this trends, the goal to reach battery cost until battery cost reaches $100/kWh by early 2020 seems to be not easy, except for the leader in automotive manufacturer, such as General Motor.