2023 is supposed to be the year of the electric vehicle. Now is the time to invest.
We've been on the precipice of an electric-vehicle revolution. Here's what's different this time.
Electric vehicles have always been just around the corner. As the automobile first started to take hold in the U.S., electric models were very much part of the conversation. The Baker Motor Vehicle Company's Victoria was even used by three presidential administrations. But eventually, the price of internal combustion engine vehicles started to tumble, kicking off a century of gas-powered personal transit.
Recently, electric vehicles have started to emerge from the fringes as practical commuter vehicles, thanks primarily to the work of Tesla and a few other automakers. The growing climate crisis led to countries trying to wean consumers and companies off of gasoline. By 2030, Germany is planning for up to 10 million EVs to be on its roads, and California is aiming for 5 million. Canada is shooting for 100% of new car sales to be zero-emission vehicles by 2040.
To hit these goals, there actually needs to be vehicles that consumers and companies can buy. In the U.S. today, there are a handful of all-electric vehicles on the market, primarily targeted at the luxury end of consumers, and often only for sale in metro areas of more liberal-leaning states. But that's expected to change in the next few years. Established carmakers and a handful of upstarts are expected to unveil a plethora of new vehicles over the next two years, with McKinsey predicting them to produce up to 400 new models by 2023.
Between now and then, investment around the electric vehicle needs to happen in a range of areas, from charging infrastructure to energy storage and transmission, and it will require a combination of government, utility and private firms to invest if this potential EV boom is actually going to come to pass. "If 2023 is the date, let's do everything now," said Megha Lakhchaura, director of policy and utility programs in North America for EVBox. "Let's not wait until we have all these cars, and then we stress our distribution grid because we haven't thought about it."
The vehicles are coming
For many consumers in 2020, the economics of electric cars doesn't work out. "Right now we're still very early on in adoption of EVs," said Sam Abuelsamid, principal analyst at Guidehouse Insights. And a large part of that problem is price: "EVs are still substantially more expensive for a comparable vehicle to an internal combustion," Abuelsamid added, highlighting the cost difference between Kia's Niro crossover models. The base LX model starts at around $25,000, whereas the full EV version starts at $39,000.
But the price of batteries continues to fall, as countries like China ramp up their production, and there are several high-profile EVs slated for release over the next few years that could change the equation. The first models from startups like Lucid Motors and the Ford and Amazon-backed Rivian are expected to drop next year, and Lordstown Motors is planning to go public and put its first vehicle into production in late 2021. Major brands like Ford, Volkswagen and GM are all expected to release electric vehicles in 2021, leaning on brand heritage like the Ford Mustang and the Hummer. GM will also introduce an SUV version of its Bolt EV next year.
Our fleet is Electrifying! Thrilled to announce the order of 100,000 electric delivery vehicles – the largest order of electric delivery vehicles ever. Look out for the new vans starting in 2021. pic.twitter.com/y5qYpuy2WP
— Dave Clark (@davehclark) September 19, 2019
On the commercial vehicle front, the next few years are also likely to be busy. The first of the 1,000 electric vans that Amazon ordered from Rivian are expected to hit the road in 2021, with the rest rolling out over the following three years. And Proterra, maker of electric buses and drivetrains for other commercial vehicles, has seen its business expand over the last decade from managing small trials of a few electric vehicles for customers to entire fleets. "I think there's some really big business opportunities for people to be able to get into this," Alan Westenskow, Proterra's business development director, told Protocol.
"We're seeing people saying, 'We're comfortable with electric vehicle technology,'" Westenskow said. "Five years ago, that was like,'is this going to be a thing or not?'" And the change has been rapid; Westenskow said that all North American bus manufacturers now provide EV models. "We're seeing RFPs that represent just about every transit agency in the country, and it's not just a pilot — now it's large fleets," Westenskow said. "Their question is now, how do we structure for large fleets?"
Where investment needs to be made
Investors have poured money in private and public markets into all sorts of electric vehicle companies. To date, Rivian has raised $6 billion according to PitchBook, with Lucid Motors pulling in $1.15 billion and Nikola Motor raising around $560 million. And then there's Tesla. Earlier this summer, it became the most valuable car company in the world by market capitalization, which is currently closing in on $290 billion.
"With growing consumer environmental awareness, global emissions regulations and the future needs of autonomous vehicles, now is certainly the right time to be investing in EVs," said Chet Babla, chipmaker Arm's vice president of automotive, a company that is looking to be the backbone underneath the digital systems EVs are built upon. "A recent Strategy Analytics report we commissioned predicts that by 2027, electrified vehicles of all types will make up approaching 40% of global light-vehicle output."
Beyond the vehicles themselves, there is still a lot of work that needs to be done if EVs are going to take hold with consumers or fleet operators. Battery technology, for example, still likely needs to evolve beyond the lithium-ion models used today. If you were to mine all the available lithium in the world, put it in the most efficient batteries on the planet and charged them up, you'd have enough power to meet the world's needs for about 10 minutes, according to Jay Rogers, CEO and co-founder of the autonomous electric vehicle company Local Motors. New methods, like solid-state sodium batteries, may hold the key to more efficient, longer-lasting charges, but that's likely a decade out, Rodgers said. But now is the time to invest in the companies looking to solve that problem — and all the other parts of the electric puzzle.
A charging solution built by Proterra that it offers for its customers.Photo: Courtesy of Proterra
Welcome to The Grid
There's perhaps no greater area that needs investment than the electrical grid. Nearly 30% of greenhouse gas emissions in the U.S. come from transportation. Beyond the environmental impacts of removing that much carbon from the emissions equation, that's a massive amount of additional energy that the electrical grid needs to be able to support.
In some cases, the best way to handle companies and transit agencies moving to fleets of electric vehicles could well be just managing when the trucks and buses charge. Proterra's Westenskow said that prospective clients have gone to their local utility to analyze the amount of power they'd need to be able to charge all their buses and found that it would be unfeasibly expensive and time-consuming to switch. One client, he said, thought it would need 16 megawatts per connection to be able to pull this off. Proterra's data-analysis team looked at all the times the agency's buses are in operation and found that by staggering when and for how long each bus is charged, the drawdown would be closer to 4 megawatts.
"The thing that's cool with fleets, especially with transit buses, is they're highly predictable," Westenskow said, adding that building a charging system that capitalizes on charging when energy is cheaper is a simple enough challenge — it's just educating people on what is currently possible. "Most of it is just a lack of understanding, this is a new thing," Westenskow said. "So what happens is when you don't know something, especially if you're kind of a risk averse customer anyway, like most transit agencies are, they kind of go conservative."
But overall, there is still likely to be a significant drain on the grid if millions of new EVs are plugged in each day in the coming years. "I usually like to compare it to a plasma TV," Michael CW Kintner-Meyer of the Pacific Northwest National Laboratory, told Protocol. "When the plasma TVs came, utility companies had to accommodate, saying, 'These suck a lot of electricity, how do we forecast this additional energy requirement?'" But unlike TVs, which are relatively easy to forecast for when people are going to be using them, Kintner-Meyer suggested the addition of EVs will be far more complicated, especially for people who don't have access to chargers at home overnight. "On the planning side, we need to develop the right tools to accommodate the growth assumptions in electric vehicles," Kintner-Meyer said.
A report recently released by Kintner-Meyer's team found that one fast-charging EV station can draw as much load as up to 50 homes. "We were quite surprised that except for California, nobody actually had in their 10-year plan electric vehicles in their load scenarios," he said. Some local utilities are starting to think about the impact, Kintner-Meyer added, saying that Portland General Electric near his lab has staff on hand just for addressing the impact major EV additions would have on its grid, and it's rolling the cost of adding to its infrastructure into the rates it's charging fleets or other large EV chargers.
But charging stations need to be all over if they're going to be able to service more distributed fleets of EVs, as well as consumer vehicles. Lyft pledged earlier this year to require all vehicles on its platform to be electric by 2020, and Kintner-Meyer brought up the roughly 13,000 cabs in Manhattan and where they will charge in a way to still be able to make any money during the day. "They don't want to sit there for four hours, they would like to have it charged in the minimum amount of time," Kintner-Meyer said.
In the absence of any holistic federal plans, it's been up to states to determine how they want to invest in EV infrastructure to encourage people to buy EVs and inspire others to invest in the industry. New York state, for example, recently approved a $700 million program to build more than 55,000 EV chargers in the state. Gov. Andrew Cuomo has a goal of having 10,000 chargers in place by next year, according to POLITICO. (Last year, New York joined California and several other states in suing the Trump administration to be able to set their own, more-stringent emissions standards for the vehicles in their states than the federal standard.)
"Infrastructure is going to be an enormous area of growth, and it needs to be, over the coming decade or two," Guidehouse Insights' Abuelsamid said. "If you think about where we are today in the United States, there's 168,000 gas stations. For EVs, currently there are fewer than 30,000 public chargers."
The solution may well come from local businesses. While many of the early EVs have added in larger and larger batteries to combat perceived "range anxiety" — how many miles the car can go before needing to recharge — the bigger problem for many potential EV owners is that they can't charge at home, let alone worry about the "Great American Road Trip."
Some companies are stepping up to create the gas station networks correlatives for EVs, like Volta Charging and EVGo, which recently partnered with GM to build out an additional 2,700 chargers in 40 cities across the U.S. over the next five years. But that likely still won't be enough to support the millions of additional vehicles expected on the roads in the next few years. The answer, according to EVBox's Lakhchaura, could be to make it financially attractive — and easy — for landlords and businesses to add chargers to their buildings.
"As an industry, we need to [incentivize] landlords to put chargers in," Lakhchaura said, suggesting rebates for the hardware and "make-ready infrastructure" from utilities, or even having the utilities own the chargers themselves. "So the landlord has nothing to worry about except an amenity to his customers."
Chargers could also become competitive advantages for businesses that have them, especially for people who can't charge at home. Lakhchaura argues that in the near future, it's possible that people will choose to shop at one business over another, or live in one building over another because they offer EV charging, in much the way that people look for free wifi at cafes or a gym in their apartment complex.
"Private investments in all of these sectors are just easy, low-hanging fruit," Lakhchaura said. "It's happening, it's going to happen, and continue to happen."
- Your Tesla is not a driverless car - Protocol ›
- Self-driving cars: Is California falling behind? - Protocol ›
- Coronavirus layoffs: Shift CEO warns founders to act fast - Protocol ›
- Digital Motors wants to be the Shopify of cars - Protocol ›
- Tech shuttles now travel as far as out as the Central Valley - Protocol ›
- The havoc of Trump's 'Clean Network' - Protocol ›