In the second piece on this year’s CES, we look at Gogoro, a company we featured last year as it gained $150m worth of funding. There was much speculation as to what they were producing, fuelled by vague statements such as to “utilize the power of mobile connectivity and data analytics to transform energy distribution and management in the world’s cities”. Finally this week we found out. On the face of it, Gogoro launched an electric scooter, promising to revolutionise personal transportation in the world’s cities, a claim that I found strangely reminiscent of the Sinclair C5 and the Segway launches. The scooter itself looks like what HTC (where Gogoro’s founders hail from) would have produced if asked to design a Vespa and is suitably futuristic.
The main game-changer is not the scooter itself, but the swappable-battery concept it is based on. Rather than have to recharge the scooter at home or at work, whenever it is low on charge, SmartScooter users simply remove two batteries and swap them at a Gogoro charging station, a process that only takes a few seconds and requires no manual transaction handling. Of course electric vehicle battery swapping is not a new concept, as there have been a number of (unsuccessful) attempts to make this work, and Tesla’s programme has been much delayed, with initial pilots due to start shortly. There are some points to be considered to see if this will be a successful approach:
1. Subscription Model
One of the key drawbacks of electric vehicles is the high cost of the lithium-ion batteries. Gogoro plans to address this by offering an energy subscription model, where it owns the batteries, and users pay for the energy used. It is somewhat similar to the printer cartridge model, and I suspect that we could eventually see some subsidising of the vehicle cost. Indeed, Gogoro aims to protect its business model by not providing the option to charge from home, which I feel is likely yo be a significant hindrance to adoption.
2. Proprietary Batteries – Impact of Network Effects
Gogoro have emphasised the security mechanisms put in place (256-bit encryption etc) to be able to track the identity of each battery and guarantee that this is a authentic Gogoro battery. Again, this is done to protect its revenue model (and again, think of printer cartridges), but also means that their ambition is to become the de-facto supplier of swappable battery technology. Think about it – one of the beauties of the internal combustion engine is that there are essentially two global standards with which all vehicles interoperate – petrol and diesel (ignoring LPG). Every car and motorbike in the world is compatible with one of these standards, and can refill at any service station worldwide. Moving to a world where vehicle vendors have their own proprietary charging stations hardly seems like a step forward, and would mean that the service only becomes viable if a dense enough network of charging stations are rolled out across the city. One can only assume that Gogoro will aim to license their technology to other vehicle and energy manufacturers, or simply wait to be bought out by an automotive, energy or tech giant with the resources to roll out in scale across the world.
3. Storing renewable energy
One of the advantages of having banks of swappable batteries distributed around a city, and indeed in the vehicles themselves, is that they can help distribute and shape energy demand, as well as soak up electricity produced in fits and starts by renewable sources. The establishment of smart energy grids with distributed batteries to soak up excess power from micro-generation (e.g. solar cells and wind turbines installed in homes and other buildings) will allow for much more efficient use of such renewable energy. The challenge is that the capacity of the Gogoro batteries is relatively limited. For example, comparing power outputs of the SmartScooter with a Tesla suggests a battery capacity in the order of 5% of the Tesla, meaning that storage capacity may well be negligible.
4. What about cars?
This leads us to the final point. Although there are many cities in Asia and Europe where scooter usage is very high, transportation emissions in cities are dominated by cars, and it is difficult to see the model as currently conceived extending to cars. Indeed without some automated mechanical means of swapping their much-heavier batteries, this will not be a practical proposition.
In summary, I feel that Gogoro have produced a beautifully self-contained system of scooters, charging stations, cloud analytics and batteries that has captured the imagination of the tech media. However the reality is that in order to succeed in scale, such solutions need to work across energy companies and the main automotive companies. In this context, Gogoro can be considered as being the first serious move towards such an end-game.