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Electric Vehicle Enterprises Prospective Business Plan


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Project work developing a business plan for an electronic technology based business. …

Project work developing a business plan for an electronic technology based business.

My team and I identified a central issue in the EV market (fear of range anxiety) and then developed a potential business solution to that.

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  • 1. Electric Vehicle Enterprises “A charge a day keeps anxiety away”EVE Charging Station Prototype Design Ross Simons: Chief Innovation Officer Mike Bergeron: Chief Production Officer Amanda Chin Yee: Chief Technology Officer Emily Loufik: Chief Information Officer Tanya Soman: Chief Ethics Officer Russ Braithwaite: Chief Commerce Officer
  • 2. Introduction Electric Vehicle Enterprises (EVE) is a business that arose out of humble beginnings; ourExecutive Board of six Babson students hoping to help the proliferation of electric vehicles.Through research, we found that a concept called range anxiety was a key culprit limiting EVexpansion (CEA, 2010). Leveraging our diverse backgrounds and expertise, we looked at theweaknesses of the market in addressing this issue and created a solution – single-vehicleelectric vehicle charging stations. After hours upon hours of brainstorming sessions and marketanalysis, we came up with some key differentiators to allow us to succeed in a growingindustry. Thus, EVE was hatched.Product Overview Range anxiety simply means that consumers are afraid that they will be driving their car andrun out of battery, leaving them stranded (Almasy, 2010). This is a key problem, among other,limiting the expansion of electric vehicles. The Consumer Electronics Association performed asurvey in 2010 and they cite some of the key concerns consumers have: • 71% fear running out of battery on the road • 66% fear the lack of charging stations and/or not being able to recharge • 59% fear the limited mileage of electric vehicles The same study also reports that 51% of consumers see need to install special homecharging equipment as a disincentive to purchasing an electric vehicle. Chris Ely, CEA’s Managerof Industry Analysis said: “concerns regarding battery life, charging stations and limited mileagemay keep some consumers away until a comprehensive infrastructure is in place (CEA, 2010).Armed with this data about a clear market need, we created a solution centered about smallelectric vehicle charging stations. There are companies already operating in this space, and charging stations do exist. Afterall, electric vehicles have been around for 150+ years (Davidson, 2011). Our true innovation willlie not in creation of innovative charging technology, but in a combination of chargingtechnology, station housing design, proprietary user-interface design, secondary usages of thecharging station, location, ease of use, and a proven business model. EVE’s success as a business will take a multi-tiered approach. The keys to success for EVE(and key differentiators over competitors) will be: 1. A high-quality, well-designed charging station. 2. Location of Infrastructure
  • 3. 3. Engagement of Consumers Through Gamification 4. Proprietary User Interface 5. Differentiation of Product 6. Integration into Consumers’ Lives 7. Government Support 8. Innovative Business Model EVE will address a clear market need. As we explained before using the CEA survey, peopleare afraid that the electric engine has too many downsides for them to purchase. Most electriccars can drive about 100 miles or less, with a few that have a few outliers that have more rangesuch as the Tesla Roadster EV, Tesla Model S, and Chrysler Dodge Circuit This is what scares consumers. Insufficient range makes consumers anxious that theywill not be able to do the same things they could do with a gasoline-powered vehicle, or worse,that they become stranded. EVE is meant to quell this fear. By making EVE chargers widespreadacross America, people won’t have to ever worry about being stranded in their electric vehicle.We’ll achieve this by creating an infrastructure of level 2 (AC 240V, 40 amp power source) andlevel 3 (DC 480v,85 amp power source) charging stations that are placed at locations thatconsumers already visit.
  • 4. In addition to the simple charging technology, we will be creating a very attractive high-tech aesthetic external housing, we will outfit the stations with capacitive touchscreens, tabletfunctionality, proprietary software and user interface design. Another key reason that EVE will succeed will be the invention and implementation ofour innovative business model.TechnologyThe History of Electric Vehicles and Electric Vehicle Charging Stations Electric Vehicle technology has had an interesting journey. Several different inventorshave been given credit for inventing the electric vehicle, but the first practical electric vehiclewas invented by Thomas Davenport, an American. In 1835 he “built a small-scale electric car”and he was the “inventor of the first American-built DC motor” (Davidson, 2011). However,these vehicles were not very useful due to the lack of a rechargeable battery. This problem wasfixed in 1859 when French physicist, Gaston Planté, invented the first rechargeable battery. Itwas able to be recharged “by reversing the normal negative-to-positive flow of electrons(achieved by another outside source of electric current)” (Florida State University, 2012). Thebattery that was derived from Planté’s lead acid battery was the 12V automobile battery. In 1881 batteries became more portable and this started the turnaround for electricvehicles. In the early 1900s the electric vehicle outsold any other type of vehicle because it wasperfect for the short range drives people made in their towns and there was no need for gearshifting (Davidson, 2011). Around the 1920s, the national highway system was expanding, solonger range vehicles were needed (Davidson, 2011). Also, the price of gasoline was reducedand Henry Ford began to sell internal combustion engine vehicles for about half the price ofelectric vehicles (Davidson, 2011). This made electric vehicles obsolete around 1935. Thesimple technology of charging stations could have prevented the disappearance of the electricvehicle. Around the 1960s- 1970s, people saw the need for alternative fuel sources in order toreduce the exhaust emissions from gas vehicles, so companies started to re-vamp the electricvehicle (Davidson, 2011). One example of this was in 1975, the United States Postal Services“purchased 350 electric delivery jeeps from the American Motor Company to be used in a testprogram” (Davidson, 2011). One of the reasons the electric vehicle came back in to play in the1990s was because of the U.S. 1990 Clean Air Act Amendment and the U.S. 1992 Energy PolicyAct. The U.S. government was willing to put aside money in order to advance the technology ofthe electric vehicle and the charging stations because it would not only reduce the country’sdependence on foreign oil, but would be better for the environment and the citizen’s wallet.
  • 5. The technology of the electric vehicles’ charging stations advanced greatly in 1992 witha company that was called Park & Charge, in Switzerland. It was an initiative started by thegovernment. The concept of this company was that with a membership, “EV drivers can accesslocked charge stations at reserved parking spaces. Charge is not metered and loworganizational costs provide the user with low, flat rates” (EVs Roll, 2012). They offer a free-standing charging device and also a wall-mounted charging device in the station. According tothe website of the company the technology used was “a power outlet in the form of a simple,standardized electric power supply box, available off the shelf. It typically consists of a metalhousing containing essentially 3 - 6 sockets, fed by 230 V tension, 10 or 16 A protected, with aFI-leakage protective switch” (Park & Charge, 2012). In the start of this company, electricvehicles could only charge in their specific parking garages, but that was not very convenient forthe consumer. Now Park & Charge has over 120 locations in Switzerland, at hotels anddifferent types of parking stations. This company’s charging stations has been a provensuccess, so they began to move the stations into Germany and Austria to expand theircompany. Standing Charger and a Wall Mounted Charger from Park & Charge Since the first known big initiative was started by Park & Charge, many countries haveemulated their idea, which has caused much advancement in the electric vehicle chargingstation network. Very similar renditions of this technology can be found in Australia, China,Europe (Czech Republic, Denmark/Norway, Estonia, France, Italy, Germany, Switzerland,
  • 6. Ireland, Netherlands, Poland, Portugal, Spain, and United Kingdom), Israel, Japan, Singapore,and the United States of America. Not only has this product expanded to many differentcountries around the world, the technology has also improved since Park & Charge began in1992. The main reasons that electric vehicles were invented consist of both economic andenvironmental factors. It provided consumers an alternative to vehicles that ran on gasoline,propane, and diesel. Even though the electric vehicle usually has a higher initial price than acombustion-powered vehicle, electric vehicles “generally cost less in total to own, operate, andmaintain” (Sempra Energy, 2010) than other vehicles do. An example of this is electric vehiclesdo not need certain maintenance procedures like oil changes on a regular basis. This exampleshows how they save on cost, but also that they were made in order to be a more reliabletechnology because they have fewer moving parts which means they are far less likely to havemaintenance check-ups. Electric vehicles were invented in order to “emit no pollutant from thetailpipe, so they’re cleaner for the environment and better for everyone’s respiratory health”(Sempra Energy, 2010). Another benefit of the electric vehicles was to reduce “dumping ofengine oils into the environment and reduce U.S. reliance on foreign oil” (Sempra Energy,2010). One of the other reasons electric vehicles were originally invented was because it was avehicle that was quieter than the original combustion-powered vehicle. Despite all the benefits of electric vehicles, they too need an infrastructure like thecombustion engine needed. Without a way to consistently charge electric vehicles nationwide,it will be a long road for EVs to drive down before they can be clear replacements to gasoline-powered vehicles. This is where EVE comes into play.
  • 7. Source: EV Deployment GuideThe Basic Charging Process The above diagram (Massachusetts Department of Energy Resources, 2011) shows apretty standard setup for Level 1 (~140v) & Level 2 (~240v) charging. The Electric Vehicle SupplyEquipment (EVSE) interfaces with the public utility grid through the control device that is theactual charger. A cord comes out of the control device and on the end there is a connectorattached. The connector, the SAE J1722, is a standard connector that works with all electricvehicles in North America. This connector then attaches to the car through a part called theinlet. When they are connected together, they are referred to as a coupler. This creates anelectrical connection that allows both charging and information exchange (e.g. charge levels)(Massachusetts Department of Energy Resources, 2011). With level 1 and level 2 charging, theelectricity that flows through this connection is alternating current. Upon entering the vehicle,this electricity then enters the charger that is located within the vehicle; this is referred to as anonboard charger (Massachusetts Department of Energy Resources, 2011). The on-boardcharger is used to convert the AC current to DC current which can be used by the battery. Afterthe charger does this conversion, the battery accepts the current and regenerates its energylevels.
  • 8. The above table (Massachusetts Department of Energy Resources, 2011) shows the chargingtimes for all levels. When you look at the right of this table, you’ll find some terms we haven’texplained before. • PHEV-10: This is a plug-in hybrid electric vehicle that has an engine that can run off battery power as well as gas. The number to the right of the dash refers to the range of the vehicle (Axsen, Burke, Kurani, & University of California, 2008). The PHEV-10 can go 10 miles on battery power alone. As you can see it has a small battery, thus it has comparatively low charge times vs. some of the other types of EVs. • PHEV-20: Same as above, but with a range of 20 miles • PHEV-40: Same as above, but with a range of 40 miles. • BEV (24 kWh): This is a completely battery operated electric vehicle that cannot use gas. It has a 24 kWh battery that powers the car. • BEV (35 kWh): Same as above, but with a 35 kWh battery. • PHEV Bus: This is a bus that is operates on a mixture of battery power and gasoline.Across the top of the table, there is a variety of power levels for the EVSEs. • 120 VAC, 15 amp, 1.2 kW & 120 VAC, 20 amp, 1.6 kW: These are the power inputs for a level 1 charging station. • 240 VAC, 40 amp 6.5 kW: This is the power input for a level 2 charging station. • 480 VAC, 85 amp, 60 kW: This is the power input for a level 3 charging station.Level 3 Charging Process The level 3 charging stations, as you can see from the table, charge significantly faster.It’s easy to think that it’s because of the power supply. While the large increase in power inputcertainly plays a factor in the decreased charging times, the technology is actually quite a bitdifferent in terms of the charging process. The key difference in the level 3 charging systems is
  • 9. the presence of an off-board charger (as opposed to the on-board charger in level 1 and level 2)(Morrow, Karner, & Francfort, 2008, p. 19). This off-board charger is much more effective atconverting AC to DC. The 480 volts of AC goes through the off-board charger, is quicklyconverted into DC and pumped into the car battery through a separate inlet (that accepts DC)forming a coupler and drastically speeding up charge time.J1772 Standard The creation of the J1772 standard plug (Kissel, 2010, p. xx-xx) was a great accomplishmentfor electric vehicles. Prior to that, there were many types of connections used – from differentplug configurations to using inductive charging and conductive charging (i.e. the J1772). Beyondcreating an industry standard connection, it also helped establish a number of safety measuresto prevent electric shocks to the users (Kissel, 2010, p. xx-xx): • The plug does not have a current until plugged into the inlet • Pins are enveloped in the inlet, thus, having no exposure of metal pins while electrified • Has a feature that does not allow the car to be started while plugged in • Will automatically de-energize the plug when it is removed from the inlet SAE is providing further innovation with their J1772 standard by pushing forward with aconnection standard (Kissel, 2010). They are creating a new version of the J1722 standardcoupling system that allows for a single connector and inlet to achieve either an AC or DCcoupling (SAE International, 2011). This differs from before when there would need to be twoseparate inlets on a vehicle. This new standard is called the J1772 Combo-Coupler (SAEInternational, 2011). The approval time should come before, or coincide, with our rolloutschedule of EVE.Other Technology FeaturesWith EVE, we’re trying to create something different. Electric Vehicles have been around since1800’s. You charge them with a plug. An electric vehicle charging station runs the risk of beingseen as a commodity. We will be implementing other technology features in our stations inorder to engage consumers.Commerce Our stations will have commerce features built into the station. EVE stations will havethe ability to accept credit card and debit card payments. Thus, each station will need a creditcard swiper as well as access to the internet to authorize payments. This will provide a keypiece of differentiation. Many of the competitors currently in the industry require the usage oftheir own proprietary access cards, tags, RFID cards, barcode scanners, electronic keyfobs, and
  • 10. access keys in order to actually use the charging stations (Gordon-Bloomfield, 2012). This is, atbest, an inconvenience and a frustration for consumers. You actually need their specific card toaccess their specific network of charging station (Gordon-Bloomfield, 2012). That is justannoying for users and if they are driving around and are low on battery, they may findthemselves at risk of not being able to charge just because they don’t have the necessary cardsto access a specific infrastructure network (Gordon-Bloomfield, 2012). We think this is a failingstrategy [for Aerovironment, Coulomb Technologies, etc.], and we are adapting our owncharging stations accordingly. Remember, our key strategy is to integrate seamlessly intoconsumer’s lives, not make life more difficult.User-Interface We will also be differentiating ourselves from competitors with our user interfacedesign. Many companies focus on screens and software that is purely functional (e.g. displaycharging time, battery levels, etc.) We will be installing touch screens in the housing for ourstations. These screens will employ capacitive touchscreen technology and will be 5.9” x 3.54”for a 7” screen size. This is a screen size that many people will be comfortable with due to 7”tablets. It also is a size that is suited for our purposes for it. We will be using the screen not onlyto display battery levels and charging time, but for further interaction with our stations. Thesescreens will be especially helpful for our alternative revenue streams (such as advertising, apps,location-based games, etc.) In the early stages of production of our stations, we will bepurchasing and using Amazon Kindle Fires for our screens. This is because even though Amazonhas significant economies of scale and scope, as well as significant buying power, they take aloss on every Kindle Fire sold (Gallagher, 2011). The tablet costs approximate $202 (sells for$199) to manufacture, with $185 of that coming from cost of materials alone (Gallagher, 2011).It’s safe to assume that we will not have the buying power of Amazon, so our costs would beeven higher. It makes financial sense to purchase these high quality pre-packaged tablet devicesat significant cost savings for our stations and install proprietary software to complete our userinterface design.Proprietary Software Our software will be a key differentiator and growth opportunity for us. While othercompetitors use simple, functional screens, we will be using proprietary software meant toengage consumers. We will use an app-based approach to allow for flexibility in our software.Each station will have its own unique identifying number and location with its own tablet thatcan be controlled remotely by the EVE Software Hub®. Through the Hub, we will be able to: • Update the software using OTA updates. OTA stands for over-the-air and it’s a method to update software without complicated connections (BBGeeks, 2008). These OTA
  • 11. updates will allow us to very effectively update our software across our entire infrastructure without complicated update procedures. • Be notified when a screen is acting incorrectly and allow us to restart the software remotely. • Install and execute specific applications. We have decided to use an app-based software ecosystem due to its immense flexibility. For example, the primary EVE interface would operate through the EVE app. This app would include access to any specific features for the user (potential ideas: an opt-in “rewards” account for consumers, prior spending history, any relevant news (e.g. feature recalls, updates) to their specific make and model of car, etc.). This app will also provide access to promotions, location-based games, etc. • Will allow us to collect usage data in test markets to create a list of key locations as we begin expansions. If consumers opt-in to our EVE Rewards program or make an account, we will also be able to collect user data (e.g. driving patterns, typical location visits, etc.) This collection of user data is why we would make these programs opt-in and we would make it very clear that EVE would collect this data to better serve them. • Will allow us to record the availability of our stations and notify consumers of that availability through our mobile app.This software has a few key benefits: • Our software will be easily allow us to created “brand apps”. We want to protect the integrity and image of EVE so we are unwilling to allow brands to adapt our housing for their own needs. However, because of the app-based approach, brands can very easily create apps for their specific stations. They would create these apps through a software developer’s kit (SDK) that EVE releases to brands. This SDK is meant to maintain the functionality and core processes of the EVE software, but will allow brands to add on extra features for their apps. For example, the Whole Foods EVE app will have all of the same functionality of the core EVE app, but it could be “skinned” (i.e. it will have the same aesthetics, brand colors, and logos of Whole Foods), it could provide promotional materials (e.g. “use the phrase ‘remember the milk’ at the register for $1.00 off), store news, new products, etc. o Of course, brands will need to pay for this feature. In the initial stages, we will look for brands to pay installation costs and agree to a non-revenue sharing agreement. This is because the stations should not only draw in target consumers due to the presence of the station, but will allow them to shift portions of their marketing budget towards EVE stations.
  • 12. o Again, the Hub will help in this situation as well. If a brand releases an updated app with new functionality, it’s simply a matter of updating all of the branded stations through our OTA update system. So if Whole Foods releases an app update, it’s a simple matter for the Hub to update the Whole Foods app through their stations unique identifier through a quick OTA update. o In the future, after initial rollout and clear ROI on our stations, we can then leverage any insights we’ve gained to turn the branded stations into a future revenue stream instead of an expense-cutting feature, meaning we can start charging extra for branded stations.• Flexibility – again, the app-based system will allow for immense flexibility• Growth – this type of approach will give EVE the ability to grow with technology in a very cost-effective way. As technology increases or EVE continues to innovate and expand its software approach, it’s extremely simple to shift our charging stations without an expensive update process. This will allow EVE to maintain current with the times while limiting maintenance costs.• This will allow us to create and implement EVE Engagement Events (EVE-EE) ©. The EVE- EE strategy will provide an opportunity to run events with our infrastructure. The EVE-EE strategy will represent a great opportunity. It will allow us to provide incentives for consumers to use our infrastructure even when they are not concerned with their current battery levels. A consumer that still has 75% battery life would most likely not use our infrastructure under a normal scenario. But through the EVE-EE strategy, we will be able to create incentives for them to plug in to the EVE ecosystem. The underlying idea of these events is of one called “gamification” which simply means using game play mechanics for non-game applications (Grove, 2011). o Location-Based Events: These are events that will primarily be characterized by having a location-based component (i.e. special events for specific stations at specific locations). There are companies operating in the location-based services, the most noteworthy being Foursquare. o Foursquare grew to 10,000,000 members in ~2 years (Foursquare, 2011, p. xx-xx). The biggest feature of Foursquare are “check-ins” in which people visit locations and, through Foursquare, check-in to the location (Gunelius, 2012). These check-ins get logged into the account and the user will start being awarded badges that they display on their profile. The users who have checked in the most at a location receive “Mayorships”, meaning they are the Mayor of that specific location (Gunelius, 2012). Foursquare provides a game-based approach to everyday life in which your day-to-day activities have associated rewards. On a micro-level, groups of friends will stiffly compete with each other
  • 13. for the mayorships of locations (Lindqvist, Cranshaw, Wiese, Hong, & Zimmerman,2011). Businesses have begun to pick up on the value of Foursquare, offering incentives (such as discounts) for the mayors of their business (Lindqvist, Cranshaw, Wiese, Hong, & Zimmerman,2011). A study done by researchers at Carnegie Mellon University in 2011 revealed that badges/mayorships, social connection, and location discovery are key factors for consumer usage of Foursquare (Lindqvist, Cranshaw, Wiese, Hong, & Zimmerman,2011). o We can use Foursquare as a case study (or partner with them) to provide these same key benefits to our charging stations in order to engage consumers and increase usage of our stations, even when consumers are not concerned about running out of batter. o We can create city-wide scavenger hunts. A consumer would sign up for the scavenger hunt and be given five potential options (to have flexibility). They would choose one of these options and drive to the associated charging station. Upon arriving, they would plug-in, access their rewards account, and then the scavenger tab. They would then receive their clue for that location. An example event for Whole Foods would be “take a thumbs-up picture with a Whole Foods employee and sent it to the Whole Foods Twitter Account”. They would be given their completion code which they would input back at the charging station to receive their next set of hunt options. o This type of event will also provide a revenue stream. Whole Foods could use the EVE infrastructure as a way to market themselves. In the example above, Whole Foods would be looking to increase their online interaction with consumers as well as putting together a “picture-book” of employees and customers. They would create their scavenger hunt idea (i.e. take a picture with an employee and tweet @WholeFoods), come to EVE, and purchase their spot as a stop option on the next scavenger hunt. These ideas are just the tip-of-the-iceberg for EVE. Still in our infancy, furtherinnovations will occur that will provide very significant differentiation from other operators inthis industry. EVE will not be a commodity. We will use technology to create a hybrid product-based and service-based business that seamlessly integrates into consumer’s lives andimproves it where possible.
  • 14. Market Analysis To bring this product to market we expect it to take about one to five years; completionwithin the years 2012-2017. The technology for electrical vehicle charging is already inexistence and in current use. However, the market lacks an immediate presence of theseelectrical vehicle chargers in places that electric vehicle owners already visit. We stronglybelieve that in order to proceed we would need a prototype developed. Once the prototypehas been developed, there will be an approval process for obtaining certification for such aproduct by the National Electric Code in the US. All electrical equipment is required to passelectrical safety by an Occupational Safety and Health Administration recognized testinglaboratory (Miller, 2011, p. xx-xx) Then in order to install these chargers in certain states, theymust pass each states/city’s respective laws. Now that we are in the beginning stages, we have decided that outsourcing themanufacturing process will best benefit us financially. The engineers our team of engineers anddesigners will create the product prototypes and we will partner with a manufacturing partnerto handle the manufacturing of our stations While creating prototypes and gaining regulatory approval, we will be performingextensive market research. The information received from our market research will be used toidentify our potential customers, expected usage rates, prime locations, competitor strategies,new technologies, interface design testing, and consumer insights. One of our key company innovations will be our business model. It will be characterizedby: • Flexibility of installation: Due to EVEs small size, it will have flexibility to be installed in a multitude of different locations. • Location, location, location. We will be installing EVE in key locations that consumers regularly visit already. This means that consumers will not have to adapt their life or change their day-to-day activities to use EVE. • Installation and maintenance: EVE will handle all of the installation and maintenance • Revenue-sharing: EVE will offer revenue-sharing agreements with our business partners. • Consumer attraction: We will provide a way to further attract consumers to our business partners. These characteristics will provide a compelling reason for businesses to seek out the installation of EVE and help to increase a strong expansion rate.
  • 15. EVE Stations Rollout Plan – Level 2 & Level 3 We will be rolling out a combination of both level 2 and level 3 stations. We will use aheavier percentage of Level 2 stations in the early stages due to their significant costadvantages as well as giving level 3 technology time to develop. Nissan expressed a concernwith level 3 stations when they said that constant Level 3 charging of the Leaf would lower therange while consistent Level 2 charging would maintain maximum capacity” (“Electric CarCharging Stations”, 2012) Our goal as a company is to have consumers plug in during theirnormal every day activities. Level 2 charging stations can fully charge BEVs in 4 to 6 hours andPHEVs in 35 minutes to 2.5 hours. For the average BEV with ~100 miles, a one hour chargewhile eating at a restaurant could provide 25 miles of range, or more. Comparatively, a 10-30minute charge could provide 5-15 miles of range. The idea behind this rollout plan is thatconsumers will plug in at every location they visit that has an EVE station, thus maintaining aconsistent level of charge vs. charging a battery to full from a really low-level. This strategyshould increase utilization of our stations and provide a more consistent, stable cash flow. Our target installation market for our rollout plan consists of parking garages,replacement of parking meters, installation in commercial businesses (coffee shops,restaurants, theaters, bars, grocery stores, etc.) and airports on the East Coast of the UnitedStates. We are choosing the east coast for its population density as well as to avoid competingwith already established competitors in the western markets in the early stages. For example,the Department of Energy granted the Electric Transportation Engineering Corporation the rightto install 2,500 charging stations in markets surrounding Arizona, California, Oregon, Tennesseeand Washington (Danigelis, 2010). In the beginning, we’re going to avoid going head-to-headwith a competitor such as ETEC until we’re established on the east coast ourselves. We alsochose this area because EV infrastructure is undeveloped in these areas.
  • 16. As you can see, Massachusetts has 11-20 stations, New York has from 21-50 stations,and Pennsylvania has 10 or less stations (Hamilton). Because of the density in these areas, theEV station per 10,000 people will be extremely low. We will also be rolling out Level 3 stations as soon as a plug standard is established.Level 3 stations, due to their very fast charging, can be treated more like a gas station. Ourinitial rollout will place these stations at defined intervals (e.g. every 50 miles) along highwaysthat consumer frequently make long drives. In the Northeast (our test market), these locationswould be placed along the route from Boston to NYC, NYC to Philadelphia, etc. Our initial rollout will be 300 Level 2 stations in the Northeast, most likely centering onBoston, New York City, and Philadelphia. There are 711 EVs in Massachusetts (MassachusettsRMV, 2008) as of 2008 (the most recent data we could find) and though we could not find data,we expect a similar number in NYC and Philadelphia, if not more.
  • 17. Startup CostsStartup Costs (COGS) $514,020 COGS GM Item Cost Wages (installation) $81,600 Material (1) $ 1,318.00 Wages (2 electrical engineers)* $174,000 Production (2) $ 395.40 Wages (2 Software/Application Developers)* $190,000 COGS/station $ 1,713.40 Wages (1 Commercial/Industrial Designer)* $68,000 Note (1) Source: US Department of Energy SG&A (includes marketing) $500,000 EV Infrastructure review Expenses $1,013,600 Note (2) Production costs are Total Costs $1,527,620 equal to 30% of materials *Source: Bureau of Labor Statistics Our costs of goods sold of $514,020 reflects the purchasing of our stations from ourmanufacturing partner. As we explained before, we will be creating the design and software,but we will be using outsourcing our manufacturing to an established manufacturing partnerthat will have the competencies developed. Using material costs from the US Department ofEnergy Infrastructure Review, we found that the material costs for a level 2 charging station is$1,318 per station (Morrow, Karner, & Francfort, 2008, p. 32). We made an assumption thatmanufacturing costs would be equal to 30% of the materials cost. This gave us a cost-of-goodssold of $1,713 per station. We multiplied by 300 stations to get a total cost-of-goods sold of$514,020. Using the same report, we found labor costs for installation for all 300 stations to be$81,600 (Morrow, Karner, & Francfort, 2008, p. 32). Our initial team will be comprised of 2 electrical engineers, 2 software/applicationdesigners, and 1 commercial/industrial designer. Using Bureau of Labor Statistics data, wefound expected wage costs (Hamilton). We then factored in $500,000 for Selling, General, andAdministrative expenses which includes both marketing and selling. These costs combined withour COGS gave us a startup cost of 1,527,600.We calculated our expected revenue as well. We expect to charge a price tied to the electricitycosts per kWh in each city. We intend to charge a 50% premium over the electricity expenses.This is a price level that we will maintain and it will be tied to any electricity price changes City Cost per kWh Level 2 Consumption (kWh) Boston* $0.152 6.5 NYC** $0.186 6.5 Philadelphia*** $0.162 6.5*(Bureau of Labor Statistics, 2012, p. xx-xx) Level 2 Cost of Electricity Price Charged (50% premium)**(Bureau of Labor Statistics, 2012, p. xx-xx) $0.99 $1.48***(Bureau of Labor Statistics, 2012, p. xx-xx) $1.21 $1.81 $1.05 $1.58
  • 18. We will be installing 100 chargers in each city. In the typical 24 hour day, we would not expectto have utilization of the chargers for a 8-hour period during the night time. This limits ourselling opportunity from 24 hours to 16 hours. Of these 16 hours, we assume a utilization of50% or an overall 33% utilization of 8 hours. Price Charged (50% premium) X 100 stations X 8 hours X 365 days $1.48 $148.20 $1,185.60 $432,744.00 $1.81 $181.35 $1,450.80 $529,542.00 $1.58 $157.95 $1,263.60 $461,214.00 Total Revenue Year 1: $1,423,500.00We then multiplied the price charged by the number of stations by 8 hours a day by 365 days ayear to come up with a first year revenue amount of $1.42 million. It’s clear from the abovefinancial analysis that this business is viable if our assumptions hold true.Ethics EVE expects to receive pushback from one main source – the oil companies. The oilcompanies clearly have an incentive to insure the failure of EVE or any similar companies. Theproliferation of electric vehicles would represent a severe financial hit to the purchase of oil inthe US. We expect the oil companies, over the next decade, will attempt to force EVs and EVSEmanufacturers out of the market by lobbying congress to implement more lax environmentalstandards. Another key strategy for oil companies could be to end tax subsidies and grants forEV and EVSE manufacturers, as well as tax subsidies for consumers who purchase EVs. Whilethis represents a future risk, EVE management does not see it as a problem that cannot beovercame. Environmental standards (California is a shining example) have been on the increase.Under the Obama administration, new fuel economy standards were released that require allcars and light trucks to have a fuel economy of 54.5 MPG (Curtis, 2011).
  • 19. Also, due to years of oil subsidies, we think the oil companies are not in a position toend EV subsidies. The oil companies could also implement a misinformation campaign thatseeks to limit the perceived benefits of EVs in order to decrease their purchase rates. Tocombat this, our website would not only have company information, but extensive thoughtleadership on electric vehicles including surveys and studies.Conclusion In conclusion, we believe that EVE is a perfect mix of technology, innovation creativity,and business savvy. In a growing market, EVE should meet great success and provide theinfrastructure needed to allow for the increased proliferation of Electric Vehicles.
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