Looking at EV adoption barriers with 2020 vision and what utilities can do to remove them.
January 27, 2020
January 27, 2020
In our previous article we discussed how 2019 was an exciting year for electric vehicles, with exciting announcements like Amazon ordering 100,000 Rivian-built vans and new vehicle announcements like the Ford Mustang Mach-E, Ford F-150 and Tesla Cybertruck. Overall there was an 8.8% year-over-year decrease in EV sales in the US, 329,528 which was down from 361,307 in 2018. It should be noted that US vehicle sales in general were down 1.3% year-over-year. The bigger change that should be of interest to utilities was the shift in market share by vehicle type. In 2018 long range BEVs, which include vehicles with a battery capacity of 50 kWh or greater, made up 58% of all EVs sold in the US. In 2019 this vehicle type, which poses the greatest threat to distribution infrastructure, rose to 67%. However, it’s not only what is being bought, it is also who is buying them and the reasons why.
Why are people buying EVs?
In 2017 FleetCarma reached out to a number of EV owners and asked them various questions, including what motivated them to purchase an electric vehicle. Their answers generally fell into one of three categories: environmental considerations, operational cost savings or an interest in new technology. Roughly 38% stated environmental reasons, 31% said it was an interest in technology, 19% cited it was related to operational cost saving with the remaining responding other. Earlier this year, Deloitte released their 2020 Global Automotive Consumer Study which asked a similar survey question which resulted in similar responses: lower emissions, lower vehicle operating costs, social status/keeping up with the latest technology and other. The results showed environmental reasons were still the driving factor with 47%, lower operating costs was next with 38%, only 5% replied tech/social status and the rest responded other.
So although the categories were the same, there was a significant change in the responses, and there are some likely explanations. It is no surprise that the number one response was environment related, there are more studies and news stories about climate change being released daily. As a result there is an increase in awareness and more demand for eco-friendly technology, which is the next major factor. Today’s electric vehicles are far superior to earlier models, they are becoming more affordable and there is more supportive infrastructure. These factors mean they will appeal more to the general public than “early adopters,” which would explain the different priorities from previous owners.
What is currently holding back EV adoption?
Although EV adoption is increasing, there are still hurdles that are preventing people from going electric. The first is simply the cost to purchase the vehicle, which even with rebates is typically higher than it’s internal combustion engine counterpart. However, with the continuing drop in battery technology we are getting closer to price parity. In August 2018, Reinhard Fischer, a senior exec from VW stated, “We strongly believe that the tipping point is near, and that tipping point will be price equity.”
The next most commonly voiced concern is range limitation and a lack of public charging stations. The fear of running out of electricity, or range anxiety, is a concern that most prospective EV owners have. However, if you speak to your average EV owner it is not as much as a concern as it once was. Previously a BEV like the Nissan Leaf would have a rough range of 80 miles and this would be reduced if energy were used for things like heating the cabin. Now long range BEVs, such as the Tesla Model 3 and Chevrolet Bolt, have an estimated range of over 200 miles. This is significantly larger than most people’s average daily drive, even if you take into consideration range reductions. So the question remains, is this fear still justified or is it a misconception? The Deloitte study mentioned earlier showed that even though drivers only drove 27 miles on average per day, over 60% said they expected a BEV to have a minimum range of 200-400 miles.
If their daily drive uses 10% of their range, and they can charge their vehicle at home why is there this concern? One valid reason might be they don’t have access to charging, such as if they live in an apartment or similar multi-dwelling unit building. The other most stated reason is what happens when they need to make a longer trip, whether for work or in their personal life? Although this is most likely a rare occurrence, and not the norm, it is valid as you don’t want to end up “trapped” somewhere. Luckily there continues to be an increased interest in adding more public stations across North America. In reality the odds of running out of electricity is the same as running out of gas, the only difference is breaking the habit of waiting until the light turns on before looking for a place to fill up.
Have past pain points for EV owners been addressed?
Other than cost, range and number of public charging stations, what has caused issues for EV drivers in the past and have these been addressed? During our interviews we found it wasn’t the number of public chargers that were the issue, it was also how long it took to charge and the poor experience of using the station. Charging time, even using a DCFC charging station, is significantly longer when you compare it to filling up at a gas station. However again you have to consider how often is this actually going to be an issue? If it is a longer trip than you will have to plan a longer stop, but this can be timed to coincide with stopping for a meal or stopping to stretch your legs. Of course this isn’t as ideal, but it really won’t be a regular occurrence. Another surprising discovery was the number of complaints that an EV owner had gone to a public station, and they were not working. This brings about the topic of who is responsible for this infrastructure? According to respondents to the Deloitte survey it remains unclear who should be building it, let alone be maintaining it.
The last pain point, which is still a problem today, is that most car dealerships have not fully embraced EVs. There are lots of stories where a prospective owner has gone into a dealership knowing more than their sales person and sometimes were given completely false information like, “You can’t charge a Mustang Mach E at home.” In general there needs to be a lot of EV education, but the people responsible for selling the vehicle should really want to become experts on them. If not, they risk being left out of the equation while customers purchase the EVs online like they do with Tesla.
Why should utilities care and what can they do to help?
Utility companies have a lot to gain by promoting electric vehicle adoption, both from a customer satisfaction and reliability standpoint. Many utilities provide various rebates or incentives, for both vehicles and home charging equipment, and some implement EV-specific rate programs that work in conjunction with that equipment. While these alleviate the financial concerns they don’t help with the other concerns and misconceptions prospective EV owners have, which need to be addressed through education. Some utilities are already taking this leadership role by hosting ride and drive or similar events. Another option is by utilizing innovative tools like the Chargeway Beacon. The Beacon is a turnkey solution that assists auto dealers by improving the electric car sales process while showing that their utility company wants to help. It enables customers to understand that electricity is just another type of fuel, it shows them where their new vehicle can publicly charge and it shows them what rebates are available to them.
Utilities can continue their involvement with EV owners with a program like SmartCharge Rewards, which rewards them for preferred charging behavior. This could include charging off-peak, peak avoidance or to align with times when there is an abundance of renewable energy. Not only does this make the customer happy, by saving them money for having them charge when electricity is cheaper and providing them an additional incentive, it is also valuable to the utility. By properly integrating this additional load utilities can mitigate premature infrastructural damage, which during our Charge the North study was shown to be a risk at the distribution level.
Summary
Electric Vehicles represent a significant change for everyone involved, but utility companies potentially have the most to gain. By taking a leadership role earlier on, and addressing the concerns of their customers, utilities can establish themselves as key players in the world of EVs. This isn’t easy to accomplish as the market is still evolving and EVs are very different compared to other sources of electrical load. Everyone can feel the growing pains, but we have to work together to get through them as we all depend on the grid.
