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Subscription Charging Plans for Electric Cars?

May 27th, 2011

Th!nk City electric cars at a test drive event, Washington DCOn Monday, The Wall Street Journal ran a special section about transportation in the future.  The thing that caught my eye, though, wasn’t the predictions about futuristic high-speed rail networks or the fact that new fuels would replace oil-based products.  What I found interesting was that as charging networks are built-out across the country for electric cars there is a high-likelihood that a subscription-based model will take hold.  Similar to mobile phones or health-clubs, the price someone pays will be the same each month regardless of how much they use the service. In the context of what we’ve been talking about with regard to variable and fixed costs this is an important idea.  To be sure, it is a huge investment to install the equipment at very high fixed cost before many people need the equipment, but companies that do so are hoping for a payoff in the future.  Signing up customers at fixed prices (via a subscription model) will allow them to lock-in revenues rather than be subject to changing volumes over time.  I guess we’ll have to wait and see if the subscription model is really the one that comes to be, but it is interesting that it is the leading candidate right now.

Tomorrow’s Transport (A Special Report) — Charge It!: If electric cars take off,they will need a network of charging stations; but how will people pay? Mike Ramsey. Wall Street Journal. (Eastern edition). New York, N.Y.: May 23, 2011. pg. R.7

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