Strategic learnings from Share&Charge – How to deliver value beyond the hype
Electric vehicle (EV) market and blockchain technology: a good fit?
Over the last decade electric vehicles experienced a steady growth of adoption. Last year (2017) however could be considered a tipping point, as 1.2 million cars were added to the world-wide electric vehicles in use. This 60% growth led to approximately 3.2 million cars currently on the streets, which showcases that wide-spread adoption of e-mobility is just around the corner.
Closely linked to the expansion of electric vehicles is the need for sufficient publicly available charging infrastructure. This remains a crucial challenge until today as we see different charging technologies for interconnectivity trying to outdo each other in concentrating as many customers as possible to their services. This rather wild development currently leads to a highly fragmented market (e.g. in Germany exist over 400 Charging Pole Operators ) and thus to tremendous inefficiencies.
In parallel to the growth of electric mobility we see the rise of the distributed ledger technology (“blockchain”) in the last few years. A technology which is said to have the potential to disrupt value chains for its nature of enabling direct transfer of value and data between entities without a central institution. We at Share&Charge see these traits and its benefits (e.g. decentralization, “trustless” cooperation, Peer2Peer payment, etc.) as potential solution for reducing inefficiencies in the system. Especially the necessary cooperation is a major challenge in the field, as the number of different Charging Pole Operators (CPOs) remarkably displays. Charging processes are highly dependent on immediate communication, seamless exchange of user data as well as digital transfer of value. Blockchain can provide exactly that on a “trustless” basis and thereby enable urgently needed cooperation between players that due to market rivalry don’t trust each other too much.
Delivering value beyond the current hype. Or: How can we cross the chasm?
Both EV charging ICT infrastructure and blockchain are technologies that currently are not mainstream yet. For such new technologies the author Everett M. Rogers developed a suitable model to fundamentally understand how wide-spread adoption comes about: the diffusion model. Following this theory, new technology is adopted by a successive group of customers: Innovators, Early Adopters, Early Majority, Late Majority and Laggards. With his book “Crossing the Chasm” Geoffrey A. Moore added another element to this theory: the “Chasm” as a dividing cleft between the Early Adopters (also “Visionaries”) and the Early Majority (also “Pragmatists”). Even though we can see clear differences in how an emerging technology must be marketed between each successive group of customers, bridging the gap between Visionaries and Pragmatists is the decisive factor to attain mainstream adoption.
In this article we state that blockchain technology currently finds itself in the hand of innovators and visionaries. After attracting the first crowd of technology enthusiast after the release of Satoshi Nakamoto’s Bitcoin yellow-paper, the inflow of innovators to the space accelerated even more with the emergence of smart contracts and the Ethereum community in 2013. This trend continued until the year 2017 which we consider as the year of the Visionaries, the second adoption group. Even
though the community saw aspirational approaches of using blockchain technology before, this year in particular led to many projects and pilots that successfully showed clear benefits of blockchain technology for their respective sector. Following the author Geoffrey A. Moore, we consider this as a concrete sign that Visionaries with ambitious business goals are at work.
“Welcome to the real world” – Cryptoworld vs. Blockchainworld
With ICOs and crypto trading we see a massive financial success and large amounts of money within the blockchain system and valuations of companies rising tremendously. But use cases which are bridging the blockchain world to the real-life world are still very limited. Within the blockchain world things work perfectly fine, challenges arise at the interface to the real-life world comprising regulation and user experience.
For this second category of use cases the blockchain community faces a major challenge. The chasm between Early Adopters and Early Majority is just about to be entered and with this move the existence of most of these projects is at high risk. To successfully move to mainstream adoption, these projects must clearly demonstrate their value propositions, the technological robustness and the regulatory compliance as this is what Pragmatists care about. The journey to mainstream adoption is an act of precise action and it will leave those behind not having definite roadmaps.
Blockchain-based EV Charging right in the middle of the Chasm
We are experiencing the same while making use of blockchain technology for EV charging. Since the Go-Live of our S&C app based on the public Ethereum blockchain end of April 2017, we received a lot of interest by Innovators and Visionaries in the field. Intentionally we strived for a live product in order to learn as fast as possible about all the challenges to be solved. This eventually led to our Oslo2Rome pilot with six leading Charging Pole Operators in Europe with which we’ve tested the benefits of blockchain technology for public charging infrastructure. Early Adopters from each company were keen to experiment with “state-of-the-art” technology and assess its applicability to their use-case which is the sharing of public charging infrastructure as well as the direct payment of energy consumed. Within the last year we learned tremendously around technology, regulation and customer experience, some of this is described by our CTO Hector Garcia in his recent blog post. But not only our efforts drove the advancement of blockchain / distributed ledger for EV charging forward. Experiments like a charging pole based on IOTA technology by the ElaadNl or the concept “Alva Energy Consortium” by Alliander showed that there is a lot of potential for blockchain / distributed ledger technology in the field.
With joint efforts the Visionaries have indicated that the technology can help in achieving certain business goals regarding security, efficiency and data sovereignty. But as we’ve learned from the Chasm theory, successful projects and pilots don’t necessarily mean that wide-spread adoption will be obtained. Buying decisions of the Early Majority are fundamentally different from Visionaries’ success criteria and rather based on user experience, regulatory compliance and technological robustness. The quality and reliability of the service is key for them as they want to stay with the chosen technology for a long time. The whole blockchain community still needs to deliver arguments for these major key buying criteria in many tackled use-cases. We as an interface between the frontrunners in blockchain technology and the mobility business see our role to deliver these arguments in the field of EV charging together with blockchain and mobility partners around the globe. To utilize the benefits of blockchain technology for EV charging transactions we must now take the achievements of visionary to the next level and jointly with our partners shift our focus to this new customer group: The Pragmatists.
Battlefields for the “Blockchainworld”
We see three major battlefields which we jointly need to tackle to ensure mass adoption of blockchain technology in EV charging and we don´t see those to be technological but rather in other areas.
- Ecosystem, collaboration and new business model thinking
Decentralized technology makes sense in an environment of high fragmentation and the absence of trust – and this is where companies are usually very happy to collaborate. We learned from our experience that in case of EV charging this might not be enough: the players in the field of (e-)mobility are often separated in opposing camps with great market power. As indicated in our introduction of this article, this already lead to marketplace battles, highly fragmented markets and in the end to huge inefficiencies, which seemingly are not to overcome. Companies who were used to define their kingdom as the gravitation center of the industry need to understand the power of decentralized cooperation models and accepting that parts of their business may be carved out by an open source protocol they cannot solely manage. Business models who were nurtured by proprietary centralization of processes need to be challenged with a new way of thinking.
- Regulation & governance
We are fans of regulation! Regulation gives clarity and adds trust, which is key for success. In the upcoming months and years, it is about bringing the technology world and regulation together. And it is not so much about regulation adapting to blockchain but rather the other way around. Regulation mostly has a solid purpose to protect people as with data privacy regulation or for example around asking for other people’s money. Besides this we see the topic of liability, open source and the inherent governance of decentralized solutions as key for success. Decentralized governance for real life use cases with physical delivery is a challenge current legal entities may not be made for yet or at least need to be cautiously adapted as well as tax and accounting standards.
- User experience
In the end it is all about the customer who needs to have a great user experience. For mass adoption we need to jointly develop best in class solutions for people who do not want to be bothered with blockchain technology. From our experience the management of the private key is one of the fundamental questions most of the users do not want to be bothered and where we as an industry are asked to find solutions. Also, the settlement and payment needs to be connected to the daily life of end customers. For us that means solid stable coins linked to local FIAT currencies as well as integration into existing software solutions of companies around invoicing and cash management.
How to make Blockchain the new paradigm in EV charging
Geoffrey A. Moore sees the major difference between Early Adopters and Early Majority in their perception of colleagues’ experiences. While Visionaries don’t care about their peers at all, Pragmatists are only buying when respected fellows have bought before. This means that for EV charging a wide-spread adoption of blockchain technology can only be achieved if enough Pragmatists put the technology to use to create a word-of-mouth effect. Segment by segment the necessary players need to be convinced to use the new technology, which ultimately will lead to mainstream adoption. Equipped with specialized (industry) experts, enough funding and especially a precise roadmap this can be achieved, as the author throughout his book explains.
However, we consider the application of blockchain technology in this industry as a potential game changer. The underlying feature of blockchain technology and cryptocurrencies, next to already mentioned benefits like decentralization, “trustless” cooperation and Peer2Peer payment, can be seen in its incentive scheme for actors to align their efforts. In shifting to open source blockchain technology as joint infrastructure, we achieve not only technological advantages but also herald a fundamental paradigm shift. The fascinating factor of shared value increase through “tokenization” of assets ultimately leads to joint action, which is backed with non-profit organizations, democratized governance and open source code. By enabling opposing parties to share a decentralized, “trustless” and open infrastructure they take themselves to the next level and allow a new model of cooperation and competition for the sake of the mobility revolution.
This is exactly what we are planning by establishing S&C as own legal entity and collaborating in open source manner. The combination of power of technological advantages and open source collaboration with the beauty of token incentivization will ultimately lead to a joint crossing of the chasm. We are looking forward to this journey and the collaboration ahead of us. If you are interested in joining, we would love to hear from you: [email protected]
 Rogers, Everett M. (2003), Diffusion of Innovations, 5th Edition. Free press.
 Moore, Geoffrey A. (2014), Crossing the Chasm, 3rd Edition: Marketing and Selling Disruptive Products to Mainstream Customers. HarperBusiness.