The Next Generation of EVs

In this episode of Point B, our host Steve Schwinke is joined by electric vehicle expert Peter Savagian to talk about EVs: where they started, where they stand now, and what to expect in the next five years.

1:20 Biggest challenges in EV development

4:47 The barrier to entry in the EV sector

7:30 The role of connectivity in design and maintenance 

11:09 Software defined vehicles and the code required to run them 

13:10 Outlook for EVs over the next five years

Announcer: 

Welcome back to another episode of Point B, a Sibros podcast where we interview industry experts about the latest innovations and trends in automotive technology in the connected vehicle industry. Tune in to learn about topics ranging from the next generation of electric vehicles to advances in connectivity and micro-mobility.

Steve Schwinke:

Hi, my name's Steve Schwinke. I'm Vice President of Customer Engagement at Sibros. And today, I have the honor of speaking with the Principal and Founder of Electrified Future. Prior to Electrified Future, this individual was a lecturer at the University of Wisconsin, he was also the Chief Technology Officer at Canoo, as well as the Senior Vice President of Engineering at Ampaire. Prior to that, he spent 18 years at General Motors helping General Motors electrify their fleet of vehicles. I'm talking about none other than, Pete Savagian. So Pete, welcome to our podcast.

Peter Savagian:

Steve, thanks so much for having me there. And I appreciate all that background. And I guess, if you live long enough you get to do all kinds of cool things. So I'm so happy to be able to help and really glad to be able to support Sibros.

Steve Schwinke:

What do you see are some of the biggest challenges today? Just let's focus on EV for a little bit. Is it the battery itself or are there other things that this industry is focusing on that they can take a leadership position when developing EV technologies, let's just say, for retail vehicles?

Peter Savagian:

Yeah, I think there are two real key items that are ultimately rate-limiting and the rate of EV adoption. And I think there's almost no debate that in the light-duty segments, the vehicles that we drive, cars and pickup trucks, that they are electrifying at a pretty healthy rate. Over the last couple of years, it's become fairly obvious in the product offerings. But that rate of adoption is rate-limited. And it's rate-limited by the economics of the vehicles that they compete in. 

And so, if you look at the total life cycle cost of a vehicle, I think the electric vehicle competes really well with the gasoline-powered vehicle in almost every segment, however, an electric power vehicle has more upfront costs. That car costs more upfront, roughly, and equally doing the same thing, but it has a lower operating cost because it's far less a cost to refuel it. You refuel an electric vehicle, it's maybe the equivalent of driving around on gasoline that costs, maybe a buck and a half a gallon. It's the balance of price which is far lower, of course, than gas prices. Even in good times, even when gas prices are low, electric vehicles have a lower operating cost, but upfront the reason it costs more is this battery pack, which has seen just tremendous reductions over the years. But the economics, getting over that hurdle and making the vehicles affordable for acquisition for full purchase, has been a limiting case. 

Now in the future, we'll probably see battery prices improve even more, but it's starting to stiffen up and maybe there are some issues. And those issues are really the raw materials. There are new raw materials now at use in electric vehicles. There is certainly additional copper, but maybe more important than that is the additional and new amounts of lithium, of nickel, of cobalt. And the rate that those can be extracted, the mining actually works a little against a sustainability ethos, or value proposition, that an electric vehicle presents, but it also takes a long time to develop those minds at the rate at which they need to to support this tremendous rate of growth. So I think these are the two things that really slow down, ultimately, the rate of adoption of electric vehicles throughout the product lines. The economics and then just simply the ability to get the right materials to make a really good electric vehicle.

Steve Schwinke:

Pete, that's very interesting, and some of the things that we can think about in terms of leapfrog technology. I want to go back to this item around, between the EV1, but then in the last decade or so there's been, you were Chief Technology Officer at Canoo, but there's also a lot of startups in this area. I would say new entrants into this space. My simple explanation for this is the barrier to entry, that the propulsion system is much simpler. And so it gives the opportunity for new entrants into this field, which has traditionally been dominated by the mega OEMs. Is that really the case, or are there other things that are driving new entrants? Because I think new entrants are really pushing the traditional automotive OEMs to go faster, which we all want for a more sustainable future.

Peter Savagian:

Yeah, you're 100% spot on. Barrier to entry is down, and it's just down for a limited period of time. And the barrier has been, the size of the development teams, the amount of engineering capital, test capital to work on a really competitive combustion engine that's inexpensive to make. But is also compliant with all the regulations for all the emissions, and the amount of certification work to prove it, to every major government, according to their laws. That this kind of power plant is efficient enough, but also clean enough, to be legally sold in their country. And they all have different methods of proof. And it's not just the engine. It's also this transmission that has to make the engine suitable to drive the vehicle both in the city and the highway and places in between and has to do it smoothly. And so this great, big, beautiful product development challenge there are only a few companies in the world that could actually do that and manage to make a little bit of a profit. 

So, right now though, if you make an electric vehicle, it's much easier. I mean, as proud as I am about electric machines and propulsion systems and things that are really close to my heart, they're not as hard and they're not as expensive and they don't take as much time. And therefore, other companies with enough focus, enough of the right people, right mindset, the right capital, they could succeed at that. And so, those barriers are down for a period of time where new entrants can come in and make competitive propulsion systems for vehicles. They just happen to be electric.

Steve Schwinke:

That's good to hear. And so, we're seeing a lot of momentum at Sibros, right? Working with some of the, I'll call them the new age OEMs, right? That are coming in being a little disruptive. And then we see how they're using connectivity around understanding vehicle performance, not just better customer experiences, but really using connectivity to get deeper insights into the product performance of their vehicles. I mean, can you talk a little bit about that and how are they using connectivity to understand the design of these vehicles? And is it a useful tool?

Peter Savagian:

Oh my goodness, yeah. So I would say the company Tesla, really the foremost among the new entrants and disruptors in the space, not only came with an electric vehicle that, with the barriers down, they came through, but they also challenge a lot of the conventional paradigms, with the idea that the product, the automotive product, should be as easy to keep fresh as your phone. 

And so, the idea of being able to keep the product fresh, to represent the latest in what could be available in how each of the subsystems works and how the vehicle might be used to better transact business, purchase of entertainment, or other types of transactions. Tesla sought out deeper connectivity also as part of their service mitigation plan, to stay connected with customers, to more cost-effectively keep the product safe and up-to-date, and even fresh, and maintain even a stronger customer relationship. So if someone's driving a 6 or 7-year-old Tesla they're probably still creating a fair bit of cash flow for Tesla just by the things they might purchase through the vehicle and around the vehicle. And that connectivity made that happen. And everybody else has taken notice of that. 

And if you were in a big OEM, you'd say my goodness, we don't really get much of a piece of the action other than when somebody brings their unfortunate situation into a dealership repair center and pays the dealer rates. And there's a big drop off and when you're on warranty and that repair is free to where you actually now have to start paying the dealer rates to get things officially repaired by an affiliate of the OEM. So you stop thinking in terms of being a Toyota customer or a Chevrolet customer because you're looking for maybe more economic solutions.

And so, being connected is more than just keeping the product fresh. It also is a way to maintain a relationship with these customers, and outside of their house, is probably the biggest purchase they're going to make. So connectivity is hugely important, and part of the new complexion for new entrants, of course, but also all the big companies need to do that. It's a point of competition, I think.

Steve Schwinke:

Yeah, I mean, I see, as you know, we are able to now service vehicles remotely with over the air software updates. It's one of the things that Sibros does is that you still want to maintain that deep relationship and build trust with the customer and build trust through data, right? And give them a better insight as to if the vehicle does need to come in for repair you can show them why right with data. And I think that it always helps customers feel better about spending the money if they have to spend to repair something mechanical on the vehicle.

Peter Savagian:

So I was going to say that electric vehicles, maybe the situation's now more acute, like everything, there's more and more embedded code within the vehicle. And because, for instance, the propulsion system's electrified well now so is the air conditioning system and even the heating system and elements of the suspension are electrified. And therefore, all of these can be more software-defined. And in fact, they are. Makes it easier to develop, easier to validate, but it also puts a lot more code in the car. 

So, the extent to which there might be a need to regularly update is, if they keep the product fresh, keep it up-to-date, there's just a lot more of it. So it's a better offense, service and warranty management. And if you can think of it that way, being connected, that those tools give a better offense, gives the idea to stay more connected and generate cash flow in the future with after-the-sales services and a direct relationship with the customer. Whether that's a retail customer, an individual like you and I, and our personal cars or fleets of vehicles which are increasingly more important now, as we transact over the internet and we get deliveries to our home that’ve come through fleets of vehicles. And that connectivity with the fleet, as we all know, as part of that experience. Super-important to know where your package is. And if you're in the business of delivering vehicles you want to know where your drivers are and et cetera. So all that connectivity has really come to the forefront.

Steve Schwinke:

We certainly appreciate your guidance and support in this area. So let me ask you one kind of final question and it's really about the future. What would you like the future to look like in five years? How would you describe, in our area of trying to improve sustainability, trying to improve mobility products, what would you like to see? What the future looks like five years from now?

Peter Savagian:

Well, I think the product experience of driving a really nice electric vehicle, I'd like to have many more folks understand that and experience the positive aspects. When I get in a conventional car and the engine comes on and I get that buzz and then when I drive and I get all the latencies in the driveline, they're just not as good of cars. They're not as smooth, they're not as quiet, and they're certainly not as efficient. And it would be great if everyone could experience that. But that means that many manufacturers need to have good uptake on these vehicles and the dominant EV manufacturer in the U.S. and the world I think, Tesla, has some quality issues.

I'd sure like to see them up their physical quality, again that the interior fit and finish and the field and the latent vibrations and squeaks and rattles, all that stuff is subpar and they got to upgrade that. So people have a great experience. The big automakers kind of go the other way. They're not really as efficient as they could be, as vehicles on the road, to get the range numbers up, and so on. I think the larger companies also have the burden of having a charging network that's kind of in the commons, it's shared, which is great. That means no one really feels accountable for the numbers and locations and just the physical quality of these chargers, which is lacking and maybe ultimately limiting the sale. 

So I'd like to see just an upgrade of the best of what's already there today Steve. Just the best, get the fit and finish off of a one kind of vehicle with the efficiency of another, with the charging network of another, and just get that integrated experience. So that everyday folks who weren't necessarily going to look at an electric vehicle are going to do that. Now they'll have the opportunity to drive them to hear about them, and they'll have a variety of vehicles to pick from. So I think five years is a good place to put that kind of goal.

Steve Schwinke:

So Pete, we wanted to thank you today for your time, very deep insights. We absolutely appreciate you on our board and your vision, your wisdom, and also, congratulate you on a career that really helped jumpstart an industry. And now you're taking that industry, that has now grown up, and taking that mainstream. So we do appreciate it. And we're going to invite you back to be on another Point B podcast. So thank you.

Peter Savagian:

Well, thanks so much. It's been my pleasure and privilege.

Announcer:

Thank you for tuning in to Point B. Join us next time for more Autotech innovations and trends. Point B is brought to you by Sibros.