Shifting gear: how can the US Federal Government succeed in accelerating EV uptake?
PHC's Senior US Partner Jonathan Elton reflects optimistically on Biden's chances....
President Biden has wasted no time in pledging two significant electric vehicle initiatives aimed at accelerating hitherto sluggish public uptake. Currently the 128 million American households run an eye-watering 287 million vehicles - yet only a fraction of those are electric, and they make up less than 3% of 2020 registrations.
The Biden administration aspires to jump start growth by:
1 – Showing the way by converting the government’s own 645,000 vehicle fleet to EVs (all made in America). This comes with the not inconsiderable promise to create "a million autoworker jobs." Of the 225,000 vehicles belonging to the U.S. Postal Service, and the further 170,000 vehicles run by military agencies, a mere 4,500 are electric. This may be a drop in the ocean as a percentage of the total US vehicle parc, and it certainly see the US lag way behind Europe - but it is a clear statement of intent and one way to quickly increase the visibility and perceived viability of EV’s to the wider American audience.
2 – Committing to build half a million new electric charging points across the US to kick-start rapid expansion. This investment aims to tackle one of the principal objections drivers cite when considering a new vehicle purchase: perceived difficulties with EV range and a fear of poor EV-charging infrastructure, density and availability.
Today, with almost two million battery-powered cars on the roads, there are only 100,000 charging locations. Compare this to the Netherlands, which boasts 65,000 charging points to service its “fleet” of 150,000 EVs, and you get a sense of the scale of Biden’s ambition. By adding 500,000 more, the automotive industry hopes to grow the US EV parc to more than twenty million by 2030.
For all that, the US federal government is not known for its ability to quickly plan and roll out high quality projects. With governments across Europe already supporting well-advanced initiatives, and with renewed commitments to electric- and hydrogen-powered transport schemes now coming from the UK’s Boris Johnson, how can the president close the gap and meet his ambitious and transformational targets?
Perhaps a combination of the following:
- Build a federal network. The government owns 640 million acres of land, 28% of the country. Some of the land will be attractive for charging points without the need for purchase.
- Incentivize federal agencies. With those 650,000 vehicles being converted, there will be an amplified need for many, many charging stations. Making these – or at least a healthy subset of them - available for public use would seem an efficient use of taxpayer funds. As an example, charging points at US post offices would be ideal for clients as they wait in line.
- Partner with other branches of government. States, counties, parishes, cities, and towns may not have federal clout, but they all own plenty of land and facilities and are always happy to receive funds for network development. Fire departments, police stations and libraries are obvious choices.
- Maximize central purchasing power. US government agencies wield vast purchasing power and could influence behavior. If companies bid for contracts a contribution to the scoring and criteria for deciding the winner could be on how many publicly available charging points the company has available and plans to open up. $600 billion in contracts awarded could see significant return in new locations.
- Incentivize private companies. Whether through grants or rebates from the Departments of Transportation and/or Energy, hopefully working in unison, private companies could and should be incentivized to build out EV charging networks. The struggle will be to minimize the administration and time taken for decisions whilst guarding against the type of fraud experienced in recent pandemic relief programs.
- Go directly to the consumer. There is huge potential to harness the US public’s insatiable desire for financial incentives. Such initiatives have proved highly effective at state level, offering drivers a choice of charging provider, and injecting healthy competition into the process.
Learning from Europe and past government initiatives there are some clear “do’s and don’ts” to consider in the rollout.
- Avoid trying to pick single company winners. Recall that as part of the 2009 Recovery Act, the Department of Energy allocated $135 million in grants to a company named Ecotality to construct more than 15,000 charging stations. Four years later, Ecotality filed for bankruptcy. The government got 12,000 chargers but also technology problems and operating losses as demand for vehicles had failed to meet anticipated levels, and the majority of Ecotality’s commercial charging stations had suffered from low usage.
- Have someone co-ordinate network planning so that sensible and higher demand locations are chosen and not just the easiest locations to build, in areas where no one wants to go.
- Pace the roll out. Overbuilding can destroy the economics of the charging business. Too many stations too quickly and many will be under-utilized and unprofitable.
- Optimize technology choices. Government should be deliberate about where chargers go and what sort of technology is used. Fast chargers, for instance, are not necessary on urban and suburban streets where people tend to park for hours at a time. However, slower Level 2 plugs are not suited to rural areas or highway rest stops where people intend spending only a short time (the consumer’s time is precious).
- Build in equity. Minority communities bear a disproportionally significant amount of the wider nation’s carbon emissions. Planning to ensure a fair distribution of investment into the most polluted areas is a must.
- Consult local communities before infrastructure goes in. Charging points should not be imposed and public input and opinion should be sought on how charging points will meet their needs.
The federal government, whether directly or in partnership with other players, sits on a tremendous opportunity to add momentum to electric vehicle transition. It will not be straightforward - and it will require effective strategy, planning, and implementation - but it can be done.
Bold ambitions require high quality people to make it happen, so let’s see how the strategy turns into action: the only true test for a public still not buying electric vehicles in any sort of numbers.