Whither the LSV, Part III: Evolving Battery Technology and Broadening the Small Task-Oriented Vehicle Market

Whither the LSV, Part III: Evolving Battery Technology and Broadening the Small Task-Oriented Vehicle Market

By Stephen Metzger, PhD, Senior Editorial Advisor

The focus of battery technology is directed to applications in on-road vehicles, as well it should be in the context of  a broad-based energy policy which aims at cleaner running vehicles and independence from foreign suppliers.  In the wake of developments in enhanced battery performance, however, a wide range of applications are either opening up or broadening in the arena of low-speed vehicles.  LSV-qualified vehicles can be either utility vehicles (turf maintenance, factory, warehouse, campus applications), personnel transport vehicles (multi-passenger resort transporters), or personal transportation vehicles (NEVs).  In other words, LSVs are now participating in a very wide range of market sectors, although, of course, not all small vehicles in these markets are LSV-qualified.

Why the particular interest in LSVs?  The answer lies in the added versatility that street legality gives to the vehicle, enabling the access (via the road network) to more points of  interest.  Improved batteries are a natural complement to greater access, enhancing the range and power capabilities of the NEV or utility vehicle. 

Can LSV development ride the coattails of electric energy solutions for on-road, mainstream vehicles?  A corollary to this would be the question, “Can we expect a broadening of the market for small task-oriented vehicles that are LSV-qualified?”

With regard to the first question, I speculated on it in the previous issue, indicating that a capital cost of $0.20-$0.30 per kWh, batteries (of whatever technology) capable of providing a 100 mile range at 40 m.p.h. could cost  about $14,000.  A somewhat lesser, though improved range, would cut that cost.  Assuming a linear relationship with regard to range, an improved 70 mile range would run just under $10,000 in battery costs.  Small, task-oriented vehicles are now reaching the range of $12,000-$15,000 at the upper end, so the price barrier that might be suggested by such an expensive battery may not materialize, providing performance sufficiently improves the cost-benefit trade-off.  My strong gut feel is that we can answer the above questions in the affirmative.

Broadening the Small Task-Oriented Vehicle Market

How can the market, in fact, be “broadened”?  Without waiting for promising new green technology in the form of significantly upgraded batteries, the key issue comes down to breaking out of traditional sales channels and embracing a more strategic integration of the market.  As is well known, the manufacturers of small, task-oriented vehicles market the vast majority of their products through traditional distribution channels, keyed to a set of target markets or demographics.  Thus, golf car manufacturers sell into the golf fleet market and leverage these channels in marketing their utility vehicles.  Factory, construction, and warehouse utility vehicles are a target market for large number of manufacturers, whose dealers actively develop and maintain sales and service accounts with these users.  John Deere, with a significant historical presence in agriculture, markets its Gator line through its rural-oriented dealer network.  ATVs and UTVs, even though they have a major role as utility vehicles, are mainly marketed through dealerships that cater to recreation-oriented consumer base.

Now, of course, there are many overlaps in products of the manufacturers that sell into these traditional channels.  It can be safely said, however, that most product still moves through these historical routes to a targeted customer segment. 

So, how can the market be broadened?  It perhaps goes without saying that the first prerequisite is to have non-traditional products available.  Evolving battery technology will continue to increase the opportunities for improved products offering greater power and versatility, and the same time embrace the “greening” of transportation/utility market.  (“Traditional”, by the way, is, for purposes of this article, defined by the product offerings that have been appealing to historically targeted consumers or users.)    When non-traditional products are announced, it can be exciting news, especially if the companies are major market players.  Two such instances come to mind:

Breakaway Introductions

In July, Polaris, arguably king of the recreational vehicle trade, introduced a neighborhood electric vehicle, the Breeze™.  The NEV/LSV will go on sale in September and will be targeting end use applications such as golfing, transportation and light portage. Master planned communities are expected to be a primary market. The vehicle is the first product from the companies recently formed On-Road Vehicle Division and will be available in select markets. The MSRP is shy of $8,000.  The Breeze is a 48 volt golf car with on off-board charger—certainly a conservative approach to what is a new market for the company, but a traditional one for such heavyweights as Club Car and E-Z-GO.  Perhaps more encouraging is the Ranger EV, equipped as it is with an 48 volt AC induction motor and touting 30 h.p.  The base price is a bit more but may well emerge as the more popular of the two because of better power and versatility.

The second introduction of note (originally introduced in 2007) is the John Deere XUV620i, a full-blooded side-by-side off roader.  Carrying the Gator branded trademark, the vehicle put John Deere in competition with Polaris, Yamaha, Kawasaki, and others in the area of “work-play” vehicles, and was a significant departure for JD.  The company is now building on the XUV line in streamlining the customization process.  (See Kevin Lund’s informative article in the September/October issue of IUV Magazine.  He is group product marketing manager for John Deere utility vehicles.)

Effective Use of the Internet

The second step in broadening market is, in my  view,  effective use of the internet.  The principle is the same whether it’s auctioning off great, great grandma’s homespun quilt on e-Bay, or locating a nearby dealer via a manufacturer’s list of retailers/dealers.  In both instances buyer and seller are brought together rapidly and efficiently through an electronic exchange of information.  Often they are at considerable distance apart and without the internet would not know of each others’ existence.  Already the internet has been an influence in the paring of dealerships in the mainline vehicle market and in STOVs as well, although in the latter case there is a ways to go in bringing the full power of the internet to bear in increasing the market.

About the Author:

Stephen Metzger, PhD, is Managing Director of International Market Solutions, LLC, an internationally-based market research firm. He is also Principal of International Competitive Assessments, the market research arm of IMS. ICA has produced four major studies of the small, task-oriented vehicle market since 2000. Mr. Metzger is Senior Editorial Advisor for Industrial Utility Vehicle Magazine.