17-URBM-0031 Thought Leadership Intelligence_5-18[3]

4
Science
INTELLIGENCE BRIEF
INTRODUCING A VALUABLE
NEW RESOURCE TOOL
FOR URBAN SCIENTISTS
The Science Matters Intelligence Brief represents an important
step for all of us at Urban Science. It is a step intended to
provide our Business Scientists with a succinct overview of
industry information impacting our clients and their missioncritical
challenges.
Within every Science Matters Intelligence Brief you will find
valuable, contextual information on industry topics, trends and
disrupting technologies organized in three distinct sections:
• Hindsight: key background information on the topic
• Insight: critical observations on the current state
• Foresight: hypotheses we are investigating going forward
NOTE: Science Matters Intelligence Briefs are strictly internal communications, intended to inform and educate our Business
Scientists through a combination of industry research, articles, publications and proprietary Urban Science Analysis based on
our unique data. The information provided is meant to help you with client conversations and industry discussions. It is not to
be shared with anyone outside the company.

4
Science
INTELLIGENCE BRIEF
ELECTRIC VEHICLES

THE ELECTRIC
VEHICLE CHALLENGE
Our inaugural Science Matters Intelligence Brief delves into a topic
that virtually every OEM — along with a number of new players in the
industry — are focusing on: the Electric Vehicle Challenge. Electric
Vehicle technology is an enabler to change that promises to solve various
transportation challenges, including emissions. This brief also looks at the
ancillary services and infrastructure implications associated with:
• Service, and the infrastructure needed to accommodate electric vehicles,
both at dealerships and on roads and highways
• Alternative retail formats, beyond traditional brick and mortar dealerships,
such as pop-up stores, etc.
• Face of the dealer (dealer operations)
• And what the dealership of the future holds for both owners and customers
URBAN SCIENCE: HINDSIGHT
Just a few short years ago, the vision of emissions-free motorized transport
was considered wishful “green” thinking. Today, it’s a technology OEMs are
heavily investing in with the promise of EVs becoming a medium-term reality.
The term “Electric Vehicles” encompasses a range of technologies, including
hybrids, some of which are expected to be interim and may not survive in the
long term. For the purposes of analysis, hybrid electric vehicles (HEVs) are
often grouped with traditional gas-powered vehicles as they heavily rely on the
traditional internal combustion engine (ICE).
3
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

TYPES OF ELECTRIC VEHICLES
Hybrid Electric Vehicle (HEV)
HEVs have been available over the past few years and have been modestly
successful overall, and highly successful in some markets. In 2016, HEVs made
up approximately 2% of U.S. vehicle sales (340,153 of 17.5 million). 1
Hybrid Electric Vehicle (HEV)
Power Type
Battery Charging Source
Fuel Economy
Vehicle Example
Combination of a traditional internal
combustion engine propulsion system with
an electric powertrain
Self-charging
Better than conventional ICE
Toyota Prius
2016 Sales Share 1 2% (340,153)
Plug-in Hybrid Electric Vehicle (PHEV)
PHEVs share the characteristics of a conventional hybrid electric vehicle and
an all-electric vehicle. An example of a popular PHEV is the Chevrolet Volt. In
2016, 0.4% (76,948 of 17.5 million) U.S. vehicle sales were PHEV. 1
Plug-in Hybrid Electric Vehicle (PHEV)
Power Type
Battery Charging Source
Fuel Economy
Vehicle Example
Shares characteristics of a conventional
hybrid electric vehicle (having both an
electric motor and an internal combustion
engine) and an all-electric vehicle having
the ability to connect to the electrical grid
Rechargeable batteries that can be
recharged by plugging the vehicle into
an external source of electric power
Better than conventional ICE
Chevrolet Volt
2016 Sales Share 1 0.4% (76,948)
4
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

Battery Electric Vehicle (BEV)
BEVs are completely electric vehicles with no traditional ICE components. As
drive-range and charging opportunities are increased through the building of highspeed
charging networks, BEV sales may cause PHEV sales to decline or even
phase out. An example of a popular BEV is the Nissan Leaf. In 2016, 35,015 of the
17.5 million vehicle sales, or about 0.2%, were BEV. 1
Battery Electric Vehicle (BEV)
Power Type
Completely electric with no traditional
ICE components
Battery Charging Source
Fuel Economy
Vehicle Example
Recharged by plugging the vehicle into an
external source of electric power
Better than conventional ICE (but
drive-range and charging opportunities
are challenges)
Nissan Leaf
2016 Sales Share 0.2% (35,015)
U.S. 2016 Electric Vehicle Sales
In the U.S., Hybrid
Electric Vehicles
account for about
75% of all EV sales.
Hybrid Electric Vehicles (HEVs)
Plug-in Hybrid Electric Vehicles (PHEVs)
Battery Electric Vehicles (BEVs)
Figure 1
5
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

Plug-in Electric Vehicle (PEV)
In Europe, the European Alternative Fuel Observatory (EAFO) is a European
Commission that defines a plug-in electric vehicle (PEV) as any motor vehicle
that can be recharged from an external source of electricity, such as wall sockets,
and the electricity stored in the rechargeable battery packs drives or contributes
to drive the wheels. The PEVs are then divided into battery electric vehicle (BEV)
and plug-in hybrid electric vehicle (PHEV), explained in more detail above.
In Europe, 209,515 of new-car sales were BEVs and PHEVs (1.3% of the total) in
2016. The growth of BEV and PHEV sales can be seen in Figure 2.
In Europe, Plug-in
Electric Vehicles
(PEVs) are divided into
BEVs and PHEVs.
Figure 2
Information in Figure 3 shows the historical relationship between EV sales and
the gas price level — as gas price increased, EV sales increased; as gas price
decreased, so did sales of EVs.
Figure 3
Source: Urban Science Shared Sales (includes Auto News estimate for Tesla data); U.S. Energy Information Administration.
6
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

URBAN SCIENCE: INSIGHTS
The EV Environment
For automakers to succeed in the mobility business environment of the
future, they are adopting new strategies, including collaborating with diverse
players; from established utility companies, providing a charging infrastructure
backbone, to emerging e-mobility service providers catering to the growing
on-demand service market. Currently, EVs are still weighted toward generally
stereotypical early adopters and people passionate about addressing global
warming, air pollution, and oil dependency. 2 More frugal consumers who,
traditionally, would be drawn to the energy efficiency of EVs and/or the fuel
efficiency of hybrids, may find the premium cost of entry many OEMs add to
the price of an EV as prohibitive.
There are still significant hurdles to overcome before an emissions-free
motoring environment reaches its “tipping point” (from a luxury to a need) and
moves from niche to mainstream, but the passing of each month sees major
new developments in all the following areas.
Product Development
Most, if not all OEMs, have existing e-vehicle models within their portfolio,
and an e-vehicle development strategy with both short- and long-term
implications. Indeed, many OEMs have already begun to fundamentally realign
their design, engineering, sales and marketing departments to be ready for
the coming of the e-vehicle age. Figure 4 shows the escalating number of U.S.
electric vehicle models on the market from 2005-2016. This graphic shows
how the industry has shifted from hybrid-only models (HEVs) to a mix of
HEVs, plug-in electric hybrids (PHEVs) and battery electric hybrids (BEVs).
Tables 1 and 2 show the top 10 PHEV and BEV models in Europe by sales
volume. As mainstream vehicles become more BEV/PHEV, (i.e., Toyota RAV4),
these models’ numbers will increase. PHEV continues to thrive because it
offers optional drivetrains (plug-in or ICE).
Today, U.S.
consumers have
a choice of 70
different electric
vehicle models.
Figure 4
Count of electric vehicle models on the U.S. market.
Source: Urban Science Shared Sales (includes Auto News estimate for Tesla data). Year based on first year with 10+ sales made within that calendar year.
7
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

TOP 10 BEV EUROPEAN MODELS BY 2011–2016 SALES
Make
Model
2011
Total
2012
Total
2013
Total
2014
Total
2015
Total
2016
Total
Renault ZOE 0 68 8,833 11,029 18,566 21,338
Nissan Leaf 1,740 5,383 10,849 14,681 15,345 18,614
Tesla Model S 0 0 3,975 9,550 16,643 12,358
BMW i3 0 0 998 5,458 6,216 9,739
VW e-Golf 0 48 0 2,931 11,170 6,678
Kia Soul EV 0 0 0 598 5,812 4,440
Tesla Model X 0 0 0 0 0 3,708
VW e-Up! 0 0 940 5,838 2,976 2,576
Peugeot iOn 1,849 3,125 695 577 1,477 1,893
Hyundai Ioniq Electric 0 0 0 0 0 1,113
Others Others 6,751 9,138 6,392 6,577 9,504 8,952
Table 1
TOP PHEV EUROPEAN MODELS BY 2011–2016 SALES
Make
Model
2011
Total
2012
Total
2013
Total
2014
Total
2015
Total
2016
Total
Mitsubishi Outlander PHEV 0 0 8,193 20,035 31,275 21,333
VW Passat GTE 0 0 0 0 4,819 13,250
VW Golf GTE 0 0 0 768 17,258 11,350
Mercedes C350e 0 0 0 0 5,858 10,231
Volvo XC90 PHEV 0 0 0 0 2,859 9,589
BMW 330e 0 0 0 0 89 8,702
BMW 225xe Active Tourer 0 0 0 0 266 5,940
BMW X5 40e 0 0 0 0 1,539 5,394
BMW i3 Rex 0 0 537 3,651 5,613 5,351
Mercedes GLC350e 0 0 8,193 20,035 31,275 1,829
Others Others 367 9,758 17,715 11,510 30,999 25,137
Table 2
8
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

VW plans to build
its own battery
production facility
and make battery
technology a core
competence.
Battery Technology
The most significant challenge facing automakers is not the vehicles’ electric
drivetrains but the battery technology. Drive-range and recharging times are
things consumers expect to be on par with current, ICE technology convenience.
While lithium-ion (LiON) technology has propelled the industry far, its density is
only expected to increase at a low rate of 7% annually for the next few years and
is potentially nearing its limits. Currently, only one commercial battery contains
silicon, a material known to help prevent battery capacity loss. Silicon, however,
comes with implementation and packaging challenges, an example being the
Panasonic cylindrical cells used in Tesla vehicles.
As part of its recently announced strategic realignment, Volkswagen has declared
that battery technology will become a core competence, with plans to build its
own battery production facility.
Total Cost of Ownership
With few exceptions, the e-vehicle product is more expensive in terms of
upfront purchase price than traditional ICE vehicles, although cost reductions
are expected once OEMs gear up for mass production of batteries and recognize
scale economies. OEM vehicle-selling strategies include differences in both recharging
costs versus fuel costs and servicing traditional ICE engines with many
moving parts versus servicing lower-maintenance electric engines. In addition,
OEMs will target e-vehicle sales at higher income segments and consumers
willing to pay a premium for mobility needs to address their environmentally
friendly disposition.
Recycling and residual value of EV batteries must also be considered in the total
cost of ownership. A recent report by the Mineta National Transit Research
Consortium 3 estimates that by 2035 there will be somewhere between 1.3 million
and 6.7 million worn-out EV hybrid and plug-in vehicle batteries in the U.S. That’s
sufficient volume to justify commercial recycling and reuse programs. It cautions,
however, that recycling, driven by environmental and sustainability principles,
is not profitable in isolation, and that other variables, such as the cost per kWh,
must be factored into the equation.
9
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

Charging Infrastructure
One of the main inhibitors to e-vehicles is drive-range anxiety among consumers.
To overcome this:
• Some OEMs are offering home-charging solutions with customer electric
vehicle purchases
• Charging stations are appearing at car parks, airports, shopping centers and
private residences
• Pioneers such as Tesla provide their own charging network, with Supercharger
stations that charge more rapidly than the competition
– Tesla will double the number of Supercharger stations in 2017 and by the end
of the year, have 10,000 installed 4
– The number of Supercharger stations in North America will increase 150%,
with Tesla adding 1,000 chargers in California 4
• Recently Volkswagen Group, BMW, Daimler and Ford announced a joint venture
with the intention to build a high-speed charging network, initially including 400
locations, alongside major highways in Europe 5
• In the U.S., BMW and Nissan have partnered with EVgo (Public Charge
Network) to build fast-charging stations in 50+ metro areas across the country 6
• Consumers are also starting to crowdsource solutions to this problem through
companies like PlugShare, where drivers can find places to charge their vehicles
along their travel route 7
Figure 5
Source: U.S. Department of Energy.
U.S. CHARGING STATIONS
2016 COUNT: 14,363
PUBLIC
PRIVATE
Although ExxonMobil is largely dismissive of electric cars, believing they will only
account for 10% of the market by 2040, other major oil producers and refineries
are hedging their bets. French oil company Total is considering installing electric
car charging stations at some of its fuel stations in France, while Royal Dutch Shell
has already committed to adding charging stations at certain locations in the U.K.
and the Netherlands. 8
10
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

One main inhibitor
to e-vehicle
ownership is
drive-range anxiety
among consumers.
The U.S. Department of Energy is also invested in change. The department is
maintaining an open source database of public and private charging stations
across the U.S. and allows users to locate charging stations on its website via
postal code. 9
There is still a long way to go to address drive-range anxiety but technology is
improving, attitudes are changing, and the charge network is only just beginning.
Currently, charging stations present a number of obstacles, including long lines,
difficulty in finding charging stations and the overall impact on the power grid.
Emissions Regulations
Stringent greenhouse gas (GHG) and carbon emissions regulations are affecting
many markets across the world at both city and national level.
• In Europe, the regulation framework is established by the EU directive 2014/94.
From there, states’ members implement their own initiatives
• In response to concerns over pollution and smog, the cities of Athens, Madrid,
Mexico City and Paris have all recently announced their intention to enforce a
ban on all diesel-powered vehicles by 2025, with many other cities considering
similar legislation
• London has announced the intention to charge a £10 “T-Charge” tax to ICE
vehicles each time they enter the city 10
As pressure for cleaner air increases across the globe, this will only speed up the
adoption of e-vehicles.
Incentives
Due to previously mentioned emissions regulations, masses of money are
invested in subsidies and incentives by governments and private entities around
the world to encourage sales of electric vehicles.
• The German federal government recently announced a premium incentive for all
purchasers of e-vehicles of up to €1000 per car
• In the U.S., the federal government currently offers a $7,500 tax credit to those
purchasing EVs
• Many state governments in the U.S. and private companies, such as utilities, also
offer incentives and rebates to lower the upfront purchase price for customers
• Electric companies across the U.S. also offer off-peak electric rates, incentivizing
drivers to recharge their vehicles when electricity is in low demand
11
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

URBAN SCIENCE: FORESIGHT
Currently, less than 1% of global new car sales are electric vehicles (EV) and
forecasts by Bloomberg (Figure 6) show that by 2040, 35% of global new car
sales will be electric. 11 It is worth noting that while EV sales are projected to grow
at a rapid rate, sales of traditional ICE vehicles will also grow, but projections
show that they will grow at a slower rate. Electric vehicles are defined here as
battery electric vehicles and plug-in electric vehicles.
35%
Figure 6
Source: Bloomberg New Energy Finance
By 2040,
35% of global
new car sales
will be electric.
12
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

URBAN SCIENCE HYPOTHESES
AND CONTINUED ANALYSES
While articles within the industry and basic metrics give us an idea of
what the electric vehicle impact could be, as Urban Scientists we must
better understand the science before offering a guiding opinion.
The following three topics are ones which we believe we can utilize the
Power of 4 to bring valuable, science-driven outlooks to our clients.
1
Legislation and Incentives Help Drive the Adoption of Electric Vehicles
Where governments choose to invest their money, innovation and adoption
follow. From the research so far, we can hypothesize that legislation is driving the
adoption of electric vehicles. The U.S. government has made data infrastructure
investments to track charging station networks and both state and federal
legislation related to alternative fuels. We plan to perform additional analysis
using the data points — such as specific EV legislation, EV charging station
locations and charging capacity per location — to better understand the impact
of legislation on electric vehicle adoption.
2
3
The Increase in EV Adoption May Affect Aftersales Networks
All factors being equal, as the percentage of EV units in operation increases,
our research will explore the frequency of visits (and potentially the service
spend) for EVs compared to their ICE counterparts. Long-term maintenance
costs of EVs are yet to be known. The same can be said for the impact of
dealerships, although we expect there will be the need for specialized staff, new
and improved software, and a shift in the type of technician needed for servicing
and troubleshooting EVs. Many dealerships make their largest profits in their
aftersales business; in our continued research, we plan to put the data we have to
use to see what the potential impact could be to the service side of dealerships.
Utilizing Urban Science Network Methodology May Offer
Valuable Insights in Creating a Charging Station Network
Charging stations for electric vehicles are a critical component in electric vehicle
adoption. We believe that convenience will play a large role in the utilization of
these networks. Moving forward, we look to apply our dealer network analysis
process to provide valuable guidance regarding the creation and maintenance of
both local and national charging station networks. This will allow us to use our
wealth of network analysis knowledge to help our clients prepare for their EV
futures and achieve their goals with electric vehicles.
13
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

CITATIONS
1 Urban Science Shared Sales using Auto News estimate for Tesla and Auto News total
U.S. vehicle sales
2 https://cleantechnica.com/2016/02/02/electric-cars-what-early-adopters-firstfollowers-want/
3 transweb.sjsu.edu/PDFs/research/1137-post-vehicle-Li-Ion-recycling.pdf
4 www.cnbc.com/2017/04/24/tesla-will-double-number-of-supercharger-stationsin-2017.html
5 techcrunch.com/2016/11/29/bmw-daimler-ford-and-vw-to-build-high-powereuropean-ev-charging-network/
6 carscoops.com/2017/01/bmw-and-nissan-partner-to-expand-us.html
7 popsci.com/electric-vehicle-range-anxiety
8 plugincars.com/exxonmobil-plug-electric-cars-will-be-10-percentmarket-2040-126698.html
9 afdc.energy.gov/fuels/electricity_locations.html
10 http://www.carscoops.com/2017/02/heavily-polluting-vehicles-to-be-hit.html
11 https://about.bnef.com/blog/electric-vehicles-to-be-35-of-global-new-car-salesby-2040/
14
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.

THIS IS ONLY THE BEGINNING
We will continue to provide new information on this ever-evolving and
exciting technology as it becomes available. For additional industry
articles, insights and more information on this topic, visit
the Science Matters resource center on Focal Point.
15
Copyright © 2017 Urban Science – All Rights Reserved.
For internal use only. Not to be shared publicly or with clients.