As Auto Industry Goes Electric, Michigan Startup Wants to Dot Nation with PEP Stations

1/11/11

As if to place an exclamation point on the electrification of the auto industry, the Chevy Volt was named the North American Car of the Year yesterday at the 2011 North American International Auto Show. But many here in Detroit are wondering when the missing pieces to this fast-approaching Auto Industry 2.0 are going to be added. Where, in a word, is the “infrastructure” that will zap some energy into hungry automotive batteries?

About a year-and-a-half ago, Livonia, MI-based architect and landlord James Blain asked the same question, when a tenant wanted to know if he could charge a Chevy Volt somewhere in his apartment parking lot. Turns out, the answer was, no, not really. So, that set Blain thinking about what kind of battery-charging infrastructure is needed. A year and a half later, here at Cobo Center in downtown Detroit, Blain’s company PEP Stations (PEP is for Plug-In Electric Power) is proudly displaying its electric vehicle charging stations. PEP pictures these stations being placed in front of movie theaters, hospitals, apartment complexes, golf courses, and other places where people tend to park for several hours.

So far, the startup has sold hundreds and it’s getting ready to install them all across the country, the company says.

I talked to three of the PEP boys, standing in front of the power pump on display yesterday at the auto show and asked what I thought was the most-obvious question. Aren’t people going to be charging their Volts and other electric vehicles in their own garages?

“People will be charging their Volts at home. Absolutely,” says Ryan McCaffrey, PEP Stations’ director of operations. “But there’s going to need to be a commercial charging infrastructure, too, for the acceptance of electric vehicles to really take off.”

Automobiles are supposed to be about freedom of movement—and it is difficult to feel free if you also feel tethered to the charging station in your garage. So, that’s where PEP sees an opportunity—for charging stations that are also destinations where the car is likely to be parked for hours, anyway.

The founder’s son, PEP Vice President Brady Blain, emphasizes that the much-celebrated state and federal tax incentives for these power stations will go to PEP’s customers, and not to PEP. The competition—like San Francisco-based Ecotality or the ChargePoint America program sponsored by Campbell, CA-based Coulomb Technologies and introduced recently by Detroit’s NextEnergy—all benefited from tax incentives. Blain says incentives like the 50 percent federal tax credit for EV charging stations will go to the businesses buying the PEP stations.  And while PEP Stations is self-funded so far, it is seeking out investors and strategic partners—but not federal funding, says Blain.

“Right now, we’re competing against a couple of federally funded industry leaders, and it’s tough to compete against free,”  Brady Blain says.

Another potential challenge will be convincing enough landlords and business owners that the stations are worth the $5000 price tag. Each unit comes with two chargers and a screen that can be personalized to feature local advertisements. Plus, all data is recorded so the company can access information like how long a vehicle took to charge. Each station has a credit card reader embedded in it as well, though the main draw is not revenue, says McCaffrey, but the ability to attract more customers.

“By providing this amenity for your customers, they’re going to be more inclined to come to your theater if they drive an electric vehicle,” McCaffrey says. Michael DiSalvo, PEP Stations’ chief operating officer, agrees that right now the charging units are primarily amenities that businesses can offer, like water fountains, even though unit owners have the ability to charge per charge.

The bigger profit will come, he says, if a building owner gets one tenant in a 20,000-square-foot office because it has a PEP Station in front of his building. Then, it’s paid for 50 times over, DiSalvo says. Meanwhile, here at the auto show, more and more automakers are unveiling new ways to drink juice. PEP is one of the few companies actually offering a juice bar.

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