Welcome to our video program. I'm Deuk-Kyu BOK from the Technology and Industry Department.
What comes to mind when you think of roads in the early 19th century? You would probably imagine horses and vehicles. Between these two means of transportation which existed for decades, the car survived. There were also two groups of people in the transportation industry. The first worked on making durable tires and powerful engines while the other focused on making long-lasting hoofs. And between them, only the first group survived. This is the result of different opinions on an old paradigm and a new paradigm.
With the introduction of electric vehicles, today's transportation is again in the transitional stage. Currently, car companies have taken on the challenge of developing electric vehicles for the fourth time. Renault-Nissan, Mitsubishi, Subaru, and Hyundai have already released or are planning to release a new version of electric cars. Now, not only conventional car makers but also new businesses are participating in the electric car market. Prime examples are Tesla Motors, Norway's Think Global, Korea's CT&T and China's BYD.
Tesla Motors produced the world's first-ever highway-capable electric vehicle called Roadster in 2008. The Roadster can reach up to 100 kilometers per hour in just 3.9 seconds, and can go 390 kilometers on one charge. BYD, which became popular with the news of Warren Buffet's 30 million dollar investment in the company, released an electric car called F3DM at the end of 2008. It can drive for as much as 100 kilometers on electric mode and has price competitiveness, selling at about US$21,000. It is expected to be sold in the US and Europe from 2011.
Would it be possible for the electric vehicle to become the major means of transportation this time round? If it resolves its limits, there is a chance that it can. Above all, technology innovation in secondary cells raises the possibility of success. Lithium-ion batteries which have been used in cell phones and laptops are now loaded onto electric cars, opening a new era for electric vehicles. Developing a light and large-storage rechargeable battery has become the core technology of electric vehicles.
Even though technological power has improved with the development of the secondary cell, there are still some obstacles to resolve. First obstacle is the high price. Tesla's Roadster costs as much as US$ 110,000. Electric vehicles currently available on the market are two to five times more expensive than gasoline-powered vehicles. Price competitiveness is important to appeal to customers. It would be a good idea to provide cells on lease, and reduce the cost of cells by mass production.
The second obstacle is the short driving distance. Electric cars in today's market can drive up to 100 to 160 kilometers on one charge. It is just one fifths of that of gasoline-powered vehicles. Electric car makers argue that there is no problem in using electric vehicles in our daily lives as most drivers drive less than 80 kilometers a day on average. However, Honda Motor raised issue with the short driving distance of electric vehicles, saying that cars that cannot drive for over 500 kilometers cannot be called cars. Short-driving distance of electric vehicles is a big weakness when long-distance driving is necessary.
The third task to solve is the shortage of electric car charging infrastructures. It is necessary to build charging stations to commercialize electric cars. However, there are obstacles to resolve. Fast charging machines cost as much as US$90,000 a unit, and it takes about 30 minutes to fully recharge vehicles. Moreover, feasibility of operating charging stations is questioned as the price of electricity is cheaper than that of gasoline.
If the high price of electric cars and shortage of infrastructure are resolved, there is a high possibility that a new market will open for electric vehicles. In particular, there is a need to pay attention to additional service markets related to electric vehicles. There is a high chance that these additional service markets will boom. Just like software service operators like Google and MS who are making high profits in the personal computer industry, it is expected that providers of additional services like cell lease, traffic information systems, and vehicle management systems will earn a high profit.
Cars and horses existed from the 1990s, but horses disappeared while cars enjoyed the renaissance era for centuries. As the emergence of electric vehicles is likely to shift the paradigm in the car industry, and changes the business domain in related business, the future will be in the hands of companies who make the necessary preparations.
Thank you for watching. I'm Deuk-kyu BOK.
Copyright © 2009 Samsung Economic Research Institute. All rights reserved.
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