I am convinced that the value in continuing the Convergence conversation is to understand not only the implications of events within our industry, but to look beyond the Energy space to form unexpected connections, identify unexpected opportunities.
You have likely read about Volvo announcing to offer electric and hybrid car models only from 2019. This announcement hit the mark as brilliantly intended by Volvo, since it made headlines for a few days, with many speculating it to be an iPhone moment for EV. The reality is a bit different – only 3 of all models offered by Volvo starting in 2019 would actually be all-electric, indicating that this is not quite yet the tipping point of mass adoption of EVs. But perception is king and Volvo is now viewed as the first “large” car manufacturer committing to phasing out gasoline engine and boldly pushing EV offerings to the marketplace. Make no mistake about my previous comment, this tipping point is coming, most likely as other “large” car manufacturers are now fully prompted to follow suit and push EV platforms further.
Mass adoption of EVs will have a disruptive ripple effect on multiple industries. Coca-Cola, who is already preparing for the disruption, provides an excellent example of how we should test the readiness and adaptability of our enterprise/business model and find opportunities in ways we traditionally didn’t expected.
The gas station network in the US is quite extensive, with a whopping 150,000 locations. It’s not difficult to understand why gas stations have been a top 5 distribution point of Coca-Cola products. Yet with EV mass-adoption, drivers will more likely to be “filling up” on electric power at home, at work, i.e. in any mid-to-long term parking areas, while cars owners/drivers are busy doing something else and going on with their busy life. Nobody will be expected to wait beyond a few minutes to recharge a car battery as we do now to refill a gasoline tank.
Coca-Cola understands that gas stations will stand little chance in this transition, as BlockBuster did when online movies and video streaming came along. How are we in energy also preparing for this change? Distribution strategy is key for any retail business:
- How will EV change the daily load curve? Will workplace be the new frontier for demand or will home remain where the recharging will mostly take place?
- Will EV mass adoption shift customer thinking about the value and price of electricity (the idea of pumping gas directly from a parked car for refueling does not even cross our mind, but we don’t think twice of plugging our mobile phone for a “free” recharge while waiting for an appointment at the dentist office)?
- Will the Tesla charging model (offering your home outlet to other fellow Tesla car owners traveling long distance) become an Uber moment, challenging the incumbent business model of Retailers and Utilities?
As I’ve said before, we are smarter together than any one of us is alone. No industry sector is immune to what’s coming. It’s only through an ongoing dialogue that we find the insights needed to chart our course through the Convergence. DNV GL’s commitment is to drive the energy transition, supporting you with these pressing questions and by establishing your enterprise/business model readiness, adaptability and emerging opportunities. What are your thoughts on the impact of EV on your business? Have you already consider different scenarios and/or identify opportunities and future revenue streams? I invite you to share your thoughts on our website or contacting us directly for a tailored advisory engagement.
President, Energy Advisory