An ambitious plan. Are you ready for what happens next?
“By providing a more densely packed charging infrastructure, the Biden plan addresses head-on the consumer range anxiety concerns, but automakers have a role to play in this regard too and they will also need to address consumer awareness issues and the perceived pricing disparity between EVs and the ICE alternative.”
The new Biden administration will spend $2 trillion on America’s infrastructure in its first term. Much of that will go to the automotive and transportation sectors where a focus on electric vehicles will support Biden’s goal of making America’s power sector carbon emission free by 2035.
The Biden plan prioritizes internet connected electric and autonomous vehicles, “smart” highways, and “smart” cities, all of which depend on a specialist infrastructure to match. Currently there are only 26,000 EV charging stations in operation so there is plainly much work to be done if Biden’s goal of 500,000 charging stations by 2030 is to be met.
For context, Electrify America, a Volkswagen of America subsidiary launched in 2017, will invest $2billion over 10 years but still anticipates having only 3,500 operational direct chargers by the end of 2021.
Electrify America’s efforts are worthy, but they mainly serve to illustrate the importance of Biden’s commitment; the job of electrifying America cannot be left to private enterprise alone - the scale of the task is too large and the speed with which change must happen is too short for any business or consortium to effectively deliver on.
Let us be clear, building the infrastructure quickly is essential if reduced vehicle emission targets are to be met and EV sales are to grow significantly beyond their current modest levels - despite the hype surrounding TESLA’S record market cap, EVs accounted for less than 2% of US new car sales in 2020!
Unlocking consumer demand
Many believe that Tesla’s Elon Musk invented the electric car but in fact that distinction belongs to William Morrison of Des Moines, Iowa who created the first electric car in 1889.
Being easy to drive and with no smelly pollutants, EVs quickly became popular with urban residents, so much so that by the turn of the century EVs were all the rage and had captured the imaginations of inventors and big business as well as consumers; Thomas Edison was inspired and worked feverishly to create better car batteries and in 1901 Ferdinand Porsche produced the first Hybrid electric car, the Lohner-Porsche Mixte.
So it was that in 1900 the future for EVs looked bright, but then came Ford’s mass produced, widely available low-cost Model T and by 1935 with better roads and the discovery of cheap Texas oil, EVs had all but disappeared from America’s roads. And that’s the way it stayed until the 1990s when Federal and State emission regulations forced vehicle makers to take a second look at EVs.
A small cult EV following slowly developed and over time more automakers added hybrids and then EVs to their vehicle ranges, but EVs never again captured the public’s imagination in the way they did when Morrison brought the first EV to market.
A 2020 Consumer Reports study provides a few insights into the reasons why:
Ignorance – only 30% of Americans claim at least some knowledge about EVs.
Sticker shock – EV sticker prices are $19,000 more than the average gasoline powered vehicle. That statistic is misleading because most current EVs are produced for the luxury end of the market but even so the impression that EVs are unaffordable is widely held.
Range Anxiety – the number one factor deterring consideration; consumers believe that the country’s EV charging infrastructure is too sparse and vehicle battery technology is too limited, and that as a result the chances are too great that they will find themselves stranded between charging points with a dead battery and an idle car.
“Being easy to drive and with no smelly pollutants, EVs quickly became popular with urban residents.”
The Automakers have a major role to play
By providing a more densely packed charging infrastructure, the Biden plan addresses head-on the consumer range anxiety concerns, but automakers have a role to play in this regard too and they will also need to address consumer awareness issues and the perceived pricing disparity between EVs and the ICE alternative (although Federal and State tax breaks and ICE trade-in incentives are likely and will help). Advances in vehicle technology are central to the automakers approach to all three issues:
Range and Price Point - Batteries are the major cost component in building current EVs and in consequence they have a significant impact on price, but with the norm of Lithium-Ion batteries under challenge from innovative, cheaper solid-state batteries with excellent performance, two benefits will follow – reduced per vehicle production costs and increased between-charge mileage.
Every auto maker is currently either collaborating with a solid-state battery maker like Samsung, who have a prototype battery with a 500-mile range, or doing it themselves like Toyota, who have a prototype battery with a 300-mile range and a staggering 10-minute charge time.
Cheaper to make than Lithium-Ion batteries and invulnerable to rare materials shortages, solid state batteries are likely to become the EV norm. And with greater volume will come the economies of scale delivered by larger battery factories which will further enable automakers to address pricing disparities. Net, net, new battery technologies will simultaneously help address the pricing barrier while further reducing consumer range anxiety, a real win-win for EV adoption.
Increasing consumer awareness - Generating increased consumer awareness and demand for EVs is also part of every auto makers strategy; spurred on by emissions legislation, auto makers have ambitious EV product development plans which they will support in sales and marketing.
For example, Ford intend to bring 40 EV models to market by 2022, by 2030 Honda expects that two-thirds of their worldwide sales will be electric, and over the next five years Volkswagen will spend $85 billion on vehicle electrification. And all these vehicles will be communicated to the market which means that we can expect EV ads to flood our screens, large and small, as the industry’s $15 billion per annum ad spend swings behind Electric Vehicles - EV ignorance will quickly become a thing of the past.
Back to the future
The Biden administration’s infrastructure investment, continued legislative pressure on emissions, new vehicle technologies and automaker investments in new, better, and cheaper electric vehicles has the potential to galvanize the US car market, and simultaneously turn the clock back to the very first days of EV history.
At the dawn of the 20th century, when William Morrison gave us the first electric car, EVs were in high demand – if all goes to plan, EVs will once again be all the rage.