Electric Vehicles: Thoughts on How to Increase Adoption in the US
Last year, I went to the Verge conference in Washington, DC. It was arranged with a noble idea to get people from various industries, those who are on the different sides of the same problem, to sit in the same forum and discuss their issues. EV adoption, or rather the lack of it, was an area of interest for me and I was enthused by one of the panel discussions on that very topic. There were representations from utilities, regulators and EV companies. My question to the panel was why aren’t utility companies jumping all over this? The answers were a laundry list of all the problems utilities face. Having worked with utility companies for almost all my career, I was not surprised with the answer.
The total cost of ownership for electric vehicles in the long run is less than that of gas-powered vehicles. A quick check on Edmunds True Cost to Own® website proved that. According to the website, the 5 year cost to own a 2012 Nissan Versa is $33,863. One component of this is the cost of fuel for the 5 years, which was estimated at $10,184. In comparison, a 2013 Nissan Leaf has a 5 year cost to own of $25,830 with a cost of fuel, a whopping $2,187! Of course you will have to compromise on the driving range on a full tank /charge – 290 miles for the Versa compared to 75 miles for the Leaf. But then again, you can charge every night without going to a gas station. A study on the driving patterns in the US showed that 95% of the people drive less than 30 miles on way. And it is obviously environmentally friendly. According to the US Depart of Energy website, average emission for a gasoline compact sedan is 0.87 lb of CO2 equivalent, whereas that for an all-electric car is 0.54 lb of CO2 equivalent. And that accounts for the fact that nearly half of the electricity generated in the US is from coal.
So an electric vehicle is cheaper and better for everyone. Except maybe the petroleum companies. And you are not really compromising anything. So why is the adoption low?
Here’s my point of view, not based on research, but by hearing different people express their opinions in the last 1 year. 36% of the households who own cars own just 1 car. For them, the need of the car is for the daily commute as well as for the infrequent long-distance commutes. They would need the infrastructure and the technology to charge their vehicles along the way. What about the other 64% who have 2 or more cars? I just blame that on ignorance. Or what marketing managers would say the problem of generating adequate targeted awareness.
I do feel utilities should jump all over it. According to a McKinsey report the total energy consumption in the US is potentially going to increase by 9.4% from 2008 to 2020, but there is a potential to reduce it by 26% through energy efficiency. That’s a reduction of around 18 quads in energy consumption. In addition to this, according to Edison Electric Institute by 2017, 33% of the US retail electric market will have access to cheaper solar energy. That is a big potential loss of revenue for the utility companies. While that is good for the consumers and the environment, what about the shareholders of the utility companies? I believe they are not going to like it. While this problem is not solved with electric vehicles alone, there is still a potential. Just doing a rough calculation: 250 million vehicles in the US, if they are converted to EVs that give 3 miles per kWh, 15,000 miles a year, roughly comes to around 4 quads of electricity consumption.
There are a few technological changes that I would like to watch out for in the coming years. A lot of work is going on around battery technologies, making them lighter, hold more charge per weight and also charge quicker. Graphene supercapacitors have had a promising start in that respect. According to this video from Dr. Kaner from UCLA, an electric vehicle that uses graphene batteries could potentially charge in a minute. That’s of course a few years from now, when this technology becomes commercially available. Another less daunting technical challenge to overcome would be for the EV manufacturers to agree on an information protocol. EVs and other vehicles are becoming an important part of the overall ‘internet of things’. This protocol will help entrepreneurs solve various problems like the communication between EVs and charging stations.
If I were the utility company, I would have to do a few things to market this new source of revenue for me. First, I would like to create rate plans specifically for electric vehicles so that I can allocate costs adequately and also provide incentives for consumers not to charge during peak hours. I would work with the EV companies to be able to identify when an EV is charging. This is where the protocol would come in handy. I would then target real estate owners to set up charging stations at adequate locations. My first target would be all the commercial parking lots, where cars are normally parked for many hours at a stretch. Retail parking lots would probably not be the first locations I would pick. My charging stations would have the ability to identify the vehicle and the corresponding customer. The customer would still have to swipe a card or enter a PIN for authentication. The customer can either buy the electricity using spot prices, or could charge it to their utility account, assuming they have a better rate in that account. I would allow cars from other utilities to charge as well. I would just charge a nominal surcharge like the way ATM transactions from different banks work. Oh, by the way, if someone tries to charge a stolen vehicle, my charging stations would disable the vehicle and alert the authorities. And lastly, I will conduct marketing campaigns along with the car companies. This would not only improve the sales of the EVs thereby increasing my revenue stream, it would also help improve the battered (and fact-based) image that utility has, of being, environmentally unfriendly.
I know there are many assumptions mentioned above. But a man can dream, can’t he?
Shamik Mitra is a sustainability professional working with Infosys (www.infosys.com). Prior to being part of its sustainability business practice, Shamik worked with a number of US utility companies. Now as a sustainability professional, Shamik researches and writes about sustainability transformation strategies for companies.
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