Capturing the Next Wave of EV Consumers - AgrionCapturing the Next Wave of EV Consumers “There are also three other factors that are in play: 1. The environmental statement -- which

AGRION LLC | 5 Third Street Suite 520 | San Francisco, CA 94103 | Tel: +1 415.882.4615 | www.agrion.org

Capturing the Next Wave of EV Consumers

Wednesday, November 16, 2011

Speakers:

350Green, Obrie Hostetter, Bay Area EV Infrastructure Director

Better Place, Ann Bordetsky, Head of North American Strategy

Plug In America, Jay Friedland, Legislative Director

Schneider Electric, Mike Calise, Director EV Business

Tesla, Dan Myggen, Customer Advocate

Moderator:

PricewaterhouseCoopers, Steve Sullins, Partner

Range and price will ultimately determine mass Electric Vehicle (EV) adoption. As the first 10,000 EVs trickled into the US

market, AGRION held discussions on Advanced Charging Stations, talked with fleet managers about incorporating EV's

and Hybrids vehicles into corporate fleets, discussed Software Applications for the Connected EV and emerging Smart

Cities throughout the world: Now it’s time to dive into the EV consumer’s mindset. Join AGRION as we question Ethan,

the iconic/fictional “early adopter”: an architect with 100K+ income, owner of a single family house in a suburban

setting with a primary vehicle parked in his garage.

As OEM sales teams, CMOs, and the leading media agencies take square aim at multi-billion dollar auto markets and roll

out the next wave of Electric Vehicle (EV) innovations, we’ll discuss strategies for customer acquisition, partnerships &

innovative services. The architects of the EV Lifestyle will explore a new space where consumers, live, play and work

with EVs. A look at the current typology of EV consumers and the different strategies used to approach the early

adopters will serve as a roadmap in creating this profound mutation of the automobile industry. Nissan Leaf’s “What if

Everything Ran on Gas?” and Chevy Volt’s “More Car than Electric” campaigns are attempts to engage the mainstream

consumer and sell the EV concept. In this meeting, we will be speaking with the people behind these marketing

campaigns and the players within the EV community to discuss what drives the EV consumer, and what is in the pipeline

to encourage widespread adoption.

http://www.agrion.org/sessions/agrion-int-Advanced_Charging_Stations_Wireless_Intelligent_Green_.htm

http://www.agrion.org/sessions/agrion-en-Green_Fleets_Business_Case_for_Alternative_Fuel_Vehicles.htm

http://www.agrion.org/sessions/agrion-en-Green_Fleets_Business_Case_for_Alternative_Fuel_Vehicles.htm

http://www.agrion.org/sessions/agrion-int-Software_Applications_for_the_Connected_EV.htm

http://www.agrion.org/sessions/agrion-int-Complex_and_Compact_Cities_Urban_Planning_Market_Opportunities.htm

http://www.agrion.org/sessions/agrion-int-Complex_and_Compact_Cities_Urban_Planning_Market_Opportunities.htm



Contents

MARKET TRENDS 3

Current State of the Market 3

Demographics 3

ADOPTION BARRIERS 4

Education 4

Overcoming Range Anxiety 5

INFRASTRUCTURE 6

Spreading EV Adoption 6

MARKETING AND CONSUMER EDUCATION 6

New Models 6

ECONOMICS AND FUNDING 8

Policy and Subsidies 8

Q&A 9

EV Pricing 9

Electricity Costs 10

The Better Place Bay Area Transportation Corridor 11

Better Place’s Future Plans 11



MARKET TRENDS

Current State of the Market

Moderator Steve Sullins with PricewaterhouseCoopers opened the panel by asking Jay Friedland to set the stage with

some statistics around electric vehicle adoption today and talk about where the numbers are projected to go.

Jay Friedland with Plug In America began by stating that we are in the second wave of EVs.

“The first wave happened in the late 1990's, we got almost to 10,000 cars at that point. After it got killed, it settled back

to there being only a couple of thousand cars on the road. It is now estimated that there are 20,000 EVs on the road in

the US. Going forward we are looking at the ramp rate. Based on projections auto makers, we are trying to meet the

Obama Administration goal of 1 million by vehicles 2015. Currently, there are 12 models of EVs on the market, ranging

from motorcycles to large trucks. The primary market for increasing EV numbers is in automobiles.”

Demographics

Next, Moderator Steve Sullins of PricewaterhouseCoopers asked the panel to talk about the demographics of the

people buying today and whether they see those characteristics changing in five years.

Dan Myggen with Tesla was the first to respond about demographics.

“There are over 2,000 Tesla Roadsters on the road today. It is a high end product geared towards a certain income

bracket. Early on it was a two year wait and large deposits were needed, which are not things the average consumer

would stand for. Now, they have been rolling out for 3 years and the audience has normalized to the people looking at

sports cars. Our next product is going to lower the price of the vehicle. We are seeing a higher adoption rate with the

lower price point. The interest we have seen for these vehicles shows there is a mainstream market for EVs.”

Jay Friedland from Plug In America also gave his thoughts about the market.

“Tesla is an interesting case. BMW is moving up their manufacturing on luxury cars, thus a premium vehicle makes

sense from that standpoint. For the first couple of thousand Nissan Leafs, being under $30k puts it into the realm of

middle class families. But, has the cost been driven down enough and have the expectations been met?

“People are discovering that consumers do not just buy cars for their everyday needs; they buy them for what their full

expectations will be. Just because they have never been to Lake Tahoe, does not mean that they do not want to have

the ability to do so, for example. The trick is to match the primary needs of people to the vehicle.



“There are also three other factors that are in play:

1. The environmental statement -- which is about showing you care about the environment

2. Making a statement about energy policy -- this crosses the political divide in the US

3. Practical issues -- no longer being able to take a Prius into the carpool lane is a huge incentive in California to move to

an EV. ”

ADOPTION BARRIERS

Education

In response, Moderator Steve Sullins from PricewaterhouseCoopers pointed out that the characteristics of the EV

consumer for today, and the immediate future, are different from the characteristics of the broader population. He

then asked what the barriers of adoption are and where the suasion factors are that need to be overcome in the years

ahead.

Ann Bordetsky from Better Place commented that the early adopters are having positive experiences.

“Overall consumer perception of EVs is such that they do not look at them as a car that can fully meet their needs. The

consumer surveys show that they have 3 fundamental problems with EVs - range, upfront cost, and the convenience of

driving electric. A Deloitte study found if you take into account the full expectations of the mass market consumers,

then only 2% - 4% of the population would have their needs met in any country. This is looking at the aggregate and not

the experiences companies are having. The reason for this is there is a gap between early adopters and mass market

consumers. It is up to people like us to find solutions to overcome the barriers of adoption. There is not one solution; it

is a combination of them integrated into a service that provides guaranteed mobility.”

Obrie Hostetter from 350Green had a slightly different view about overcoming some of the barriers.

“350Green believes that once people can see charging infrastructure everywhere, they will feel confident to buy electric.

Having that infrastructure on the ground is a huge aspect of building that confidence.”

Dan Myggen with Tesla commented that there are two aspects to charging and infrastructure that will give people

confidence to buy EVs.

“One aspect is the perception of charging being in common places. The other is the usability of it. After having an EV for

a couple of days, you will realize that every EV on the market will take care of you daily needs. The next hurdle is the

long distance trip and knowing that you can take that trip. Part of it is having the tools to know where to charge and

how to plan out getting there without doing any math about the ranges between charging stations.”

Mike Calise from Schneider Electric pointed out that there is the inertia effect of the status quo.



“People think they will miss the roar of the engine. The third leg of this is the experience of driving an EV. Once people

find out how fun it is, and how fast it is, it will quickly overtake the roar of the engine. There is a lot of education to be

done about the economic benefits as well. The current demographics are a minimum of $140,000 income and at least a

graduate degree level of education. Once consumers realize they will not lose the fun, that the economic benefits are

there, and the level of efficiency there is, then there will be greater adoption.”

Lastly, Jay Friedland from Plug In America shared his thoughts about demographics and adoption rates.

“Nationwide in the US, Prius adoption is around 3%, though in California the numbers are much higher. Looking at that,

you want to create a mass market trend that get you to that point and accelerates you past it. When the consumer has

had the car for a couple of days, they realize it will cover all their regular needs. I have a neighbor who has a Prius and

an EV. The Prius has been idle for the last six months at this point because they use the EV all the time.

“Therefore, the range anxiety turns into range opportunity. A UK study shows that after 3 months range anxiety goes

away. The early adopters quickly learn how to get as many trips they can on a charge. Then they tell their friends in the

neighborhood, which means the utilities, have to upgrade transformers. Transformer replacement is a pretty small cost

to ensure the neighborhood can go electric.”

Overcoming Range Anxiety

Moderator Steve Sullins of PricewaterhouseCoopers commented that the hurdles appear to be cost, education, and

getting past the range anxiety. He then asked the panel what it is going to take for the average consumer to feel that

they are not going to get stranded and what it will take to get past the 3% and into mass adoption.

Ann Bordetsky with Better Place began by commenting about the role of combined infrastructure and services.

“It is about the balance between having the available infrastructure strategically located and packaging that with a

service to allow people to feel confident in their driving. Better Place has, as a part of its service, an in car software for

locating charging infrastructure. This helps take away the anxiety for the driver. That balancing act is important because

consumers want to know that they have guaranteed mobility.”

Next, Mike Calise with Schneider Electric talked about the economic factors that will encourage adoption.

“What if we take that $2,500.00 the US consumer spends on gas and change it to roughly $250.00 - $450.00 a year,

which is the average cost for electricity. That puts a lot of money back into the consumer’s pocket. What if we then te ll

them that they can drive for free? This is very possible, because if the company you work for puts up charging stations

at the office, they could pay for the fuel instead of you. That would mean saving $500.00 on top of the initial $2,000.00.

This will make EV adoption more pervasive, but currently CEOs do not see that it is available to them.”

In response to Mike’s comments Obrie Hostetter from 350Green shared her experiences with talking to CEOs about

charging at work.

“I have talked to most of the large Silicon valley employers. About half of them are on the side of Google, where

charging is an employee benefit. The other half really do not want to give away what they perceive as fuel.”



INFRASTRUCTURE

Spreading EV Adoption

Moderator Steve Sullins from PricewaterhouseCoopers then asked about getting infrastructure beyond the workplace

to fill out the infrastructure, or create a Better Place model, outside of the traditional geographic zones in order for the

adoption to take place.

Ann Bordetsky from Better Place commented that they had to start with regions ready for mass market adoption.

“The Bay Area has a great foundation for alternative vehicles. The best thing is to take a region already receptive to

electric cars and saturate it with the right services and infrastructure to show that mass market adoption is possible.

Then, you use that as a model in other regions. The bottom line is that it is not just about infrastructure, but whether

there are enough vehicle models that people really want to buy. If the price point and thrill of the feel can be met, then

the infrastructure issue can be handled. It has to start with the cars and their price point.”

Next, Dan Myggen from Tesla picked up the tread from Ann’s comments.

“Tesla is tackling the want and comparison issue for consumers on two fronts. One is providing the longest range

possible. We are offering a choice of ranges to accommodate different lifestyles. For the Model S it is a 160, 230, or 300

mile battery. Those work for the vast majority of people without needing to find charging during the day.

“The other thing is Tesla wants to enable long distance trips by having the fastest charging possible. We have developed

a 90 KW charger, which allows 80% charge in 45 minutes. This means you can put over 200 miles into the car in less

than an hour. Building the network out from there is the other component. California is an easy pick, but the North

Eastern US and Texas are still in need infrastructure. You can start with minimum infrastructure first for long trips and

then build out where it is most popular.”

MARKETING AND CONSUMER EDUCATION

New Models

Reviewing what had been said, Moderator Steve Sullins with PricewaterhouseCoopers pointed out that it is clear we

are talking about a different purchasing model for the consumer and that there are going to be more choices than there

are in the traditional auto dealership. He then asked the panel to talk about the relatively new brand names in the

community and what some of the challenges are in educating the consumers about brands the choices they have,

especially in the rest of the US.

Obrie Hostetter from 350Green commented that her company is going into 18 select markets with their partner

companies.



“350Green is the parent company and at the Walgreens level you would see the name Charge It, which is the consumer

facing brand. It is a huge struggle at the moment. Telematics and having available Apps. is a huge part of it. We have

been partnering with retail partners and OEMs on this and it will hopefully be a strong distribution model. We are also

working through point of sale and some of the large manufacturers, who will sell memberships at the time of purchase

for us. Our biggest play has been that we decided to use retail sites as a set up for future distribution.”

Ann Bordetsky with Better Place commented that there is a trend emerging with new brands.

“You see companies re-inventing the car purchasing process by making it more enticing and more experiential. The goal

now is to educate consumers in target markets. The key thing Better Place has done is open EV Experience Centers in

our primary markets. They are a place for people to know the brand, get excited about EVs, get educated, and drive the

car. Offering a different way to experience purchasing the car is very important and very impactful for establishing the

brand.”

Dan Myggen from Tesla commented that going away from the traditional dealership model will be huge gain for the

industry.

“Car dealerships have terrible consumer ratings in terms of the showroom experience. We have people who come into

our stores and we will talk to them for up to weeks at a time about the cars. We have to get away from the experience

of the sales guy not giving the person the time of day because they do not see the sale coming. Restructuring the sales

organization is a big part of the change. One important thing is having a strong web presence. Building a presence

online is a good way to get a lot of eyeballs on the product.”

Next, Jay Friedland with Plug In America commented on the younger brands.

“The newer brands have some unique opportunities. The traditional OEMs, even in some of their web presences, still

have process issues to work out. Being internet savvy and integrating with Apps. is necessary. Technology innovation is

another thing that is a driver for EV sales. It is part of the key to unlocking this in terms of brand consciousness. The

brand that is seen as having the most technology innovation is going to do better.”

Mike Calise from Schneider Electric then spoke about his company’s overall philosophy for products.

“Schneider's strategy is to make things extremely inexpensive, easy to buy, and easy to install. Schneider has reached

everywhere in its global presence. We are allowing our home chargers to be purchased on the Home Depot website

because they are so easy to put in. It used to cost $3,500.00 to purchase and install a charger. The government helped

with that cost for awhile. Then the Bay Area Air Quality Management District stepped up and said it would be free. As

proliferation happens the subsidies may retract. At that point you can buy it on Home Depot's website and it will

become de-mystified and simple.”



ECONOMICS AND FUNDING

Policy and Subsidies

Moderator Steve Sullins with PricewaterhouseCoopers pointed out that there is a lot of government money that is

being thrown at infrastructure, the OEMs and consumers at the moment and that it is probably going to dry up as some

point. He then asked the panel how it should to come to an end and what kind of influence those subsidies will have on

the next wave of EV adopters.

Mike Calise from Schneider Electric started out by saying that it will not matter if the subsidies go away.

“There is enough momentum now with all of the companies that are banding together at this point. There are massive

organizations like Schneider and GE who are in it for shareholder value, productization, removing adoption barriers,

building big business, getting us off foreign oil, and expanding their corporations. These themes are bigger than

government subsidies. There has been great financing, public and private, up to now in the industry, but it is time for

big business to come in and cut the big deals to take this to the next step. At the moment, it is not time for government

money to go away. In fact, big companies are lobbying government bodies to have favorable policy positions at the

moment. Big business wants to get into this and expand their organizations.

“A very important thing to think about is that 5 years ago, gas was $1.80 a gallon. If you look at an 18 mpg vehicle,

which was a typical vehicle at that time, that means that it is $0.10 per gallon. Not a lot of people know what they are

paying, but it is pretty simple math. If you move to $2.50 a gallon you really need to replace that 18 mpg vehicle

immediately with a 25 mpg vehicle, otherwise some of your expendable income will simply evaporate. 60% of that goes

to OPEC nations, many of whom have oppressive regimes. Thus we are, in a sense, tethered to oppressive regimes if the

price of gas simply goes up and we are robbed of our household expendable income. Take that to $3.50 per gallon and

you need to have a 35 mpg vehicle just to break even. Of course that will not make any money back into your

household; it is just to break even.

“I try to educate people about electric vehicles and when friends buy vehicles that get 31 mpg, I think to myself that

they are just loosing less than before. The American household income over the last five years has lost between $1,500 -

$3,000 because of increase in the price of gas. Seventy percent of the economy is middle class spending, and people

wonder why they are not spending right now. We do not realize it, but when we go to work and the price of gas

continues to go up, we do not have any income left to spend in the middle class American household. EVs are exciting

to drive and are a great technology, but they are also incredibly important to the American economy.”

Following on Mike’s comments Jay Friedland from Plug In America spoke about the need for balanced energy policies.

“The most unbalanced part of energy policy at the moment is the subsidizing of petroleum. Government energy policy

could be used to offset that instead of supporting it. The most successful places in the world, like Denmark, have taxes

on petroleum or on the vehicles. They then take those taxes off the electric vehicles to support them as a policy

decision to encourage EV purchases. The current incentives in the US for EVs are not enough to offset those for oil. The

best way to change things is to remove subsidies and show the true cost of oil.”



Dan Myggen from Tesla then spoke about policies around home charging infrastructure.

“Residential charging is 98% of actual charging and the primary point of charging the car. There are things that differ

city to city and state to state that can make home charging difficult. Giving information to electricians about the

requirements for setup is not complicated, but will help reduce the cost of installation for the EV owner. Making the

permitting process as easy as possible is also needed. These changes can be made by cities so that the need to inspect a

simple electrical installation is not needed. The education of local electrical installers and the easing of regulatory

frameworks will go a long way to helping people adopt EVs.”

Lastly, Ann Bordetsky from Better Place commented that government policy in the US is essential.

“The fact that big brands and companies are coming into the market is great. It shows the maturity of the industry and

the opportunity that is present. The economics of electrification are stronger in Western Europe than in the US. In

Denmark the EVs are being sold at a significant discount to the gasoline alternative. An EV purchase is a no brainer for

the consumer in that country because it is cheaper to buy at the beginning and also to operate.

“What we need is not just funding for infrastructure, it is about having a commitment to electrification in the US, and

California in particular, and hopefully the big players can help make it happen. The policy issue is not just about oil, but

the fact that this industry is emerging globally and the US needs to step up and ensure they continue to be a global

leader. It is about capturing that global economic opportunity and capturing the jobs that come from that for the US.”

Q&A

EV Pricing

Question: Does Tesla have any long term plans to compete and bring the price of their EVs down?

In response Dan Myggen from Tesla pointed the questioner to the blog post that Tesla Chairman and CEO, Elon Musk,

wrote back in 2006.

“It is our top secret master plan, which really outlines the goals for the company. We know, as a small auto

manufacturer, that the chances of success really only lie in starting at that high end. You really cannot start a company

based on low cast vehicles. The model has failed time and time again. You can, however, adopt new technologies into

higher cost products with relative success, with the consumer electronics market being the best example of that. The

roadster is the same thing as the $10,000 big screen TV or the $100.00 calculator.

“The Model-S is the next step in that direction. We are cutting the starting cost in half, enabling a number of range

options, and driving down the cost of the power train inside of it. By ramping up the economies of scale on that we are

really driving down the cost of the vehicle. Looking beyond that, we have a few variants on the platform of the Model-S.

Once we have done a couple of those, the plan is to take the money we make from them and build the third generation

vehicle. The target for that is in the range of about $30,000.”



Electricity Costs

Question: The experience about the utilities involvement and the total cost of ownership is deplorable. You can spend

hours and hours working with the utilities to find out that they really do not know what you are going to pay. Another

pet peeve about quick charging is the demand charge for it, but which would allow you to go to Lake Tahoe or

somewhere long distance. What are you doing on the infrastructure side or on the auto side to look at these things

from the economics of the electricity costs?

Mike Calise from Schneider Electric responded that on the infrastructure side, it is a nascent market and the utilities are

trying to figure it out.

“As one example, what we are seeing is PG&E starting to work it out. I understand the issues with night charging and

the recent price changes. I will guarantee you this; you will pay a lot less for the cars fuel than you will for gas. At $0.40

- $0.50 per kilowatt hour, you start getting really tight and that margin is certainly smaller than what the increased

payment is for the car. However, we are beginning to work these things out and it is important to the early adopter to

bring this to the next level.

“I will say one thing about the infrastructure demand charges. To guarantee electricity to that quick charger, this is what

utilities are doing. There are technology strategies that can offset that like solar, wind, or batteries. Therefore, if you

find you are charging during peak, you can pull the charge off of something that was previously wind generated at night

or by solar during the day. We still have not nailed down the standards for DC quick charging. I will say that this is one

of the new key challenges that needs to be worked out. There will be some issues, but over the longer term, you will

find it to be palatable.”

Looking at it from a different point of view, Obrie Hostetter with 350Green pointed out that with her company’s model

they do not have an option on when to charge.

“However, as a price signal to the market, we will add an extra fee if it is during peak hours. The other thing that

350Green is investing in is energy storage. For us, the first part of the strategy is putting the infrastructure in place. The

second part of it is bringing the energy storage into the mix so that we can have electricity that is powered by

renewables.”

Next, Ann Bordetsky with Better Place brought up the fact that there is some good news on this in California.

“The California Public Utilities Commission (CPUC) has been dealing with this issue for two and a half years now and I

think that there have been a number of positive outcomes which will solve this problem in the next three to four years.

One of them is that the CPUC has ruled explicitly that there should be a competitive market for EV services in California.

“They are really recognizing the role of third party service providers in educating the consumer and taking that burden

on for the consumer in terms of interfacing with that utility. Therefore, if you do not want to deal with your local util ity,

you will not have to. You can subscribe to a service where it is basically done for you. When it comes to the specific

issue of rates, those rates are not going to change over the next couple of years. They are slated to be re-visited in the

2013 - 2014 timeframe. Now is kind of a study period to see how consumers respond. That response will influence the

rates that get adopted for electric vehicles 2 years down the road.”



Lastly, Dan Myggen from Tesla talked about his experience with consumer needs.

“I have had a lot of phone calls from people like you who are asking what they need to charge the vehicle. We start by

talking about the type of driving they do and from that the kind of watt hours we are looking at. But, it is not easy, it

takes a fair amount of math, and if it is your first time you could spend many evenings pouring over a utility's website

and still get nowhere close to figuring out what it will look like on your actual bill. That being said, some utilities are

launching some decent web tools. I have yet to see one that incorporates a very good calculator for an EV on top of

that. Tesla has a couple of things in the works to make things easier for our customers, but the interaction with the

utility is a huge component of that.”

The Better Place Bay Area Transportation Corridor

Question: Ann could you talk about the Bay Area project?

Ann Bordetsky from Better Place explained that the bay area project is the result of a public-private partnership

between the City of San Francisco and the City of San Jose.

“The purpose is to really demonstrate the role of battery switching in creating instant charging and a driving corridor

within the Bay area. Better Place, along with the cities was awarded a grant by the Metropolitan Transportation

Commission for a 'Greenhouse Gas Busting Project.' The idea is to work with the cities to lay down a corridor of 4

battery switch stations between San Francisco and San Jose, and demonstrate that with 60 switchable battery pack

taxis.

“It is not just about exposing the Better Place technology; it is about high exposure and being something that can touch

a lot of consumers and passengers in the bay area. Hopefully it can be a vehicle for education, so that people can get

excited into wanting to experience more electric cars here. That is something that we are working on now and will be

something that will emerge physically in 2012.”

Better Place’s Future Plans

Question: What is happening and when with the Better Place swap system?

In her response, Ann Bordetsky from Better Place spoke about the current roll out of their technology in Israel.

“As a global company we are launching our first country wide network in Israel. We have been on a four year timeframe

since we started. We have developed the technology very quickly and established a partnership with an automaker to

bring switchable battery electrics to these markets. The sequence we are looking at is Israel, Denmark, Australia, and

then other markets, with a lot of contemporaneous demonstrations in other markets.

“The nearest term milestone is that we are laying this entire infrastructure in Israel right now. We already have a large

pipeline of customers there through fleets and individual consumers, and we will be officially opening our doors and



selling the service towards the end of this year. That is been our key goal and then launching other markets after that.

We are also working with a lot of stake holders to lay a foundation for that in California.”

End.

Documents

Capturing the Next Wave of EV Consumers - AgrionCapturing the Next Wave of EV Consumers “There are also three other factors that are in play: 1. The environmental statement -- which