You’re thinking about EV prices all wrong: Here’s the math
Happy Thursday. Your Protocol Climate team hopes you’re celebrating as you see fit. Us? We’re here with a helping of the day’s most important news. That includes a whole new way to think about what EVs actually cost and how to make hybrid work climate-friendly.
What EVs actually cost
Stop me if you’ve heard this before, but electric vehicles are expensive. Sticker shock, amirite?
People are definitely interested in buying EVs, but upfront cost is one of the top reasons they don’t follow through. It makes sense except for one critical fact: Most people never pay cash for new vehicles. Instead, 85% of new cars are financed. A new report takes that reality into account to make the true cost of EV ownership — for most people, at least — a little clearer. Spoiler: Electric beats internal combustion, hands down.
We really need to shift how we talk about EV costs. Many reports have shown EVs are cheaper over time. But most of those analyses look at cost spread out over years, a thing that no normal person does. (Sorry to the five people I have offended, but you know it’s true.) A new report from Energy Innovation, a climate research firm, treats car ownership like the vast majority of us: as a monthly expenditure.
- “We wanted to see what the cost difference is for someone who's going to a dealer and is looking at a comparable gas and EV car, not over the lifetime, not just the operating costs,” Robbie Orvis, its senior director of Energy Policy Design, told Protocol, “because what people actually care about is, 'OK, what's my bill going to be at the end of the month, once I leave the dealer, and I have a car?’”
- Robbie, let me just say thank you for having a normal personal brain.
- The report looks at six vehicles that come in electric and gas flavors, including the F-150, the most popular vehicle in the U.S. It assumes all are bought at MSRP — which, good luck in this economy, but whatever — and it factors in a 12% down payment for the gas-powered versions. It then applies that dollar amount to the electric models, creating a fairly conservative estimate considering EVs are more expensive upfront.
- The report also considers the cost of gas and electricity, maintenance and insurance as well as state and federal EV incentives. Divide that all over a standard six-year financing term and voila: the true cost of ownership.
The math shows EVs are cheaper in almost every state. And it’s cheaper to own the electric versions of the F-150 and Hyundai Kona in every state. Yes, even Texas. Especially Texas!
- The F-150 Lightning is $139 cheaper per month than its gas-powered counterpart in the Lone Star State. It’s $207 cheaper in New Jersey, which Orvis said “might be the best state in the country to buy an EV, which was an unexpected finding.”
- Varying costs between states are due to different factors. Jersey, for example, has expensive gas, reasonable electricity prices and good rebates, the perfect storm for EV ownership. Texas, meanwhile, has really cheap electricity (sometimes to its detriment) and decent tax breaks.
- Some states with expensive electricity, such as Alaska, make an EV that’s not the F-150 or Kona a more iffy purchase. Some, like Georgia, offer no tax incentives, which also sucks for would-be EV owners. Other states: Do not be like Georgia.
But this all rests on that federal tax credit. Uncle Sam will give you a tax credit up to $7,500 for buying an EV. That’s the secret sauce to making the cost of EV ownership work in the average person’s favor. Still, the recipe for the secret sauce is one that Orvis said should be tweaked so more people can enjoy it.
- EVs from automakers that have sold a total of more than 200,000 EVs don’t qualify. Tesla and GM are among those that have already blown by that, and Ford is among a slew of automakers likely to hit it this year. When it does, the F-150 Lightning value proposition will be turned on its head.
- Orvis said that the cap should be structured like clean energy credits, where the cap or credit comes down as EVs gain market share across the board.
- Making the credit more generous would also help. The Build Back Better Act proposed a $10,000 tax credit, with an additional $2,500 for union-made vehicles, something the report shows would “significantly improve EV ownership economics.”
- Sen. Joe Manchin, the main roadblock to any meaningful climate policy, recently called it “ludicrous” because there are waitlists for EVs.
- “Part of the reason there's a waitlist is that manufacturers have taken so damn long to build these and scale them,” Orvis said, while noting the supply chain crisis also means there’s a waitlist for everything. “That kind of tells us the tax credits are working to help stimulate the market, but now is not the time to pull back on them.”
- A 2021 memo from Evergreen Action found a $100 billion EV incentive program would help make more robust credits a reality. That’s pennies on the dollar compared to the climate damage if transportation — the biggest source of U.S. carbon pollution — continues to be gas-powered.
Ramping up tax credits would help an ever-greater segment of the population take the EV plunge. And making them instant rebates at the point of purchase would further reduce sticker shock. But if there’s one thing to take from the report, Orvis said, it’s to “stop talking about how much more expensive [EVs] are in the purchase price, because that's not how 85% of people buy cars.”
The emissions cost of our clumsy transition to hybrid work
Since the pandemic began, there’s been a great debate about whether working from home or the office is better for the climate. As we head toward a hybrid-work world, the consensus seems to be: ¯\_(ツ)_/¯. To paraphrase the immortal Avril Lavigne, why'd we have to go and make things so complicated?
But some companies are trying to figure out how to make the new status quo work for both their employees and the planet, as I and my Protocol Workplace colleague Michelle Ma learned this week.
Leaders are still stuck in limbo. Businesses haven’t figured out how much office space their employees actually want and need, and as a result, many are running their offices as if they are operating at full capacity. That means keeping the lights on and the AC blowing, even if only a handful of people are coming in one or two times a week, said Kate Lister, the president of Global Workplace Analytics. “We’ve kind of been in triage mode the last two and a half years,” said Lister.
That could mean doubling up on carbon emissions, as employees largely stay home and keep their own lights and AC on. Some tech giants, though — including Atlassian, Autodesk and Meta — seem to have figured it out. These companies have said that their pandemic move to remote and hybrid work decreased their overall emissions by at least 30%, as compared with the before times.
- Autodesk VP of Workplace and Travel Stephen Fukuhara told Protocol that employee commuting and remote work make up 4% of the software company’s total carbon footprint. Autodesk purchases corresponding amounts of renewable energy and carbon offsets, and plans to continue to do so, he said.
- Meanwhile, Google also offsets home office emissions via carbon credit purchases, the company told Reuters. That said, its goal of operating on solely carbon-free energy by 2030 does not apply to remote work.
Hybrid work makes calculating emissions a headache. Whereas office emissions are easy to calculate by doing little more than looking at a power bill, Laura Tedeschi, who heads the U.K.-based Carbon Trust’s ICT sector work, said that “everything that is outside of the company’s direct control becomes hard to measure.”
- No standard exists across companies for quantifying the emissions from working from home. The Greenhouse Gas Protocol — one of the most widespread standards for calculating emissions — has historically devoted a single line in its commuting section to suggesting that companies include teleworking.
- To minimize emissions, Tedeschi said, this can’t remain the status quo. “Moving forward, companies need to move to more efficient buildings that are structured in a way to have, for example, certain teams going on certain days, so that they can keep a certain level of utilization across the week,” she said.
- This could ultimately translate to a 15% to 20% reduction in office space needs, according to Lister.
Tech can help offices respond to shifting employee habits. These include sensors, carbon dioxide monitors and building energy management systems that self-adjust. In a decidedly sci-fi spin, some companies are using AI to better predict and respond to when employees are utilizing office space or not.
But let’s not miss the forest for the trees. Hybrid work is a hot topic right now, but maybe not the most fruitful focus for companies trying to cut emissions.
- Tedeschi pointed out that “employee commuting” — which is where telework lives — accounts for roughly 1% of a company’s emissions. “The reality is that in order to really tackle your emission reductions, you need to focus on the hotspots of your value chain,” she added.
A MESSAGE FROM TRUSTED FUTURE
Innovators across the country are unlocking new technological frontiers using AI, 5G, IoT and the cloud to create opportunities never before possible that fundamentally expand our ability to solve important problems —technologies that can improve health outcomes, cut greenhouse gasses and make factories more competitive.
Make it rain
Arcadia — a smart meter energy data startup — raised $200 million in its latest funding round. That brings it to a whopping $1.5 billion valuation. J.P. Morgan Asset Management led the round.
The carbon capture startup Carbon Clean, which focuses on heavy industry, raised $150 million in series C funding. Chevron led and was joined by other fossil fuel majors such as Saudi Aramco’s venture capital arm.
The nature-based carbon credit platform Pachama raised $55 million in its series B funding round, which was led by the venture capital firm Future Positive and counted Ellen Degeneres among its backers. Ellen loves trees, apparently.
Leo loves vegan leather. DiCaprio and a slew of VC funds kicked $46 million in series A funding to VitroLabs, which plans to grow faux leather in the lab.
Ambient Photonics, a firm that's working on developing technology to harvest energy in low light situations, raised $31 million in Series A funding, led by both Amazon and Ecosystem Integrity Fund.
Tomorrow Farms is a food tech startup focused on sustainability that promises the “revolution will be delicious.” It received $8.5 million in seed funding, led by Lowercarbon Capital, to create said tasty revolution.
Get your grid forecasts here, grid forecasts. Amperon uses AI to figure out energy demand, and it’s received $7 million in additional series A cash to help electricity markets keep up to speed.— Brian Kahn and Lisa Martine Jenkins
Rivian hops on the WAGMI bandwagon. No, the EV maker isn’t getting into crypto. But it thinks the supply chain could be untangling soon, allowing it to survive in an increasingly crowded EV market.
Do California’s net metering woes keep you up at night? Or is that just me? Well, for the nerds among us, I present the news that the state’s Air Resources Board is going back to the drawing board after its December proposal — to cut money for new solar owners who put power into the grid — faced major backlash.
Power lines are the next big climate fight. And they’re pitting environmentalists against each other.
Blowin’ in the wind is both a song by my very favorite artist and the plan for the turbines that will be built off the coast of the Carolinas in the coming years. The Biden administration sold another $315 million in offshore wind leases this week. TotalEnergies won one, and Duke Energy won the second.
Doom may be imminent. In a perverse spin on glass-half-empty, the World Meteorological Organization found that we have a 50-50 chance of hitting 1.5 degrees Celsius of warming within the next five years.
Is oat milk climate technology? Obviously yes. Which means this is a perfect segue to talk about how “Succession” actor James Cromwell glued his hand to a Starbucks counter to protest the fact that plant-based milks cost more than dairy. Come for the climate activism, stay for the rhyme of Uncle Ewan and supergluin’.— Lisa Martine Jenkins
A MESSAGE FROM TRUSTED FUTURE
The most important element for building trust in the digital ecosystem is to have producers of products and services dedicate themselves to infusing trust into the lifecycle of their products and services. Only with trust can we maintain a global information infrastructure and obtain the full benefits of technology into the future.
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