Susan Kuchinskas analyses changes in products, incentives and consumer awareness that could lead to mass adoption of EVs.
"Better for the environment" is not much of a selling point – not when it comes to cars.
Last year, Nielsen's global consumer survey found that a majority of people say they are willing to pay more for products with a social responsibility factor. When you dig deeper into the research, though, the evidence is not as clear.
Four in 10 respondents in North America and Europe said they had made a sustainable purchase in the first six months of that year. That's one purchase. That could be a package of toilet paper.
When it comes to the second-largest purchase most Americans will make, price still trumps sustainability. According to InsideEVs, only 119,710 plug-in vehicles were sold in the US in 2014. And we're talking the car's sticker price, not total cost of ownership.
"If you are a typical American, you should buy a hybrid, because it will pay you back in the lifetime of the vehicle," says Jonathan Walker, senior associate at the Rocky Mountain Institute. "Market research has found that people love the idea of these alternatives, but they are willing to pay zero (extra)." Walker has done total-cost-of-ownership comparisons on the current offerings of all-electric, hybrid and gas engine vehicles, and found that some can save consumers several thousand dollars over eight years.
Nevertheless, most people, when they consider a new-car purchase, only look at the monthly payment, not the TCO.
The TCO blindness is compounded by the difficulty of providing a true figure in real-world conditions to any individual consumer, according to Mike Tinskey, Ford's director of vehicle electrification and infrastructure.
The complexity continues to grow as utilities move to variable rates for peak and off-peak hours and for different times of the year.
"We can't do an awareness campaign around that because the operating cost is too dependent on where people are," Tinskey says. To counter this problem somewhat, the OEM provides an online service called Ford Value Charging that lets people plug in their zip codes to find the cheapest times to charge.
Dave McCreadie, Ford's manager of electric vehicle infrastructure and smart grid, says, "The fastest way to get gas and electric vehicles on cost parity is that the battery cost has got to come down. [When] the sticker price becomes more on par with that of a gas vehicle, that's when you're going to see an uptake of EVs."
Automakers acknowledge that range anxiety is very real – it's maybe the biggest barrier to consumer acceptance of pure electric vehicles. Industry analyses show that most consumers should just get over this fear.
When GM was designing the Chevy Volt, says Britta Gross, director, advanced vehicle commercialization policy for GM, it analyzed the National Highway Transportation Safety Administration's database. GM found that the roundtrip commute of 70 percent of Americans is less than 40 miles.
The OEM then designed its electric hybrid to provide this range at the lowest cost.
The calculations have been proven in real-world driving over the last four years. Gross says, "Most Volt drivers are driving only electric."
Ford's experiment with providing very low-cost leases on EVs and hybrids plus on-premise charging stations for its employees at some locations bears this out. Before Ford installed charging stations, employees averaged four trips a day, three of them in electric mode. Following the availability of free charging at work, most trips were in electric mode.
Still, there's that nagging worry about a trip to the mountains or the shore. Newly announced, longer-range EVs, as well as those with gas- or electric-powered range extenders, may alleviate those concerns.
"Most people have the vision that we need to get to pure electric driving right away. I'm a big believer in range extenders," Walker says. "They are a really good stepping stone to full electrification."
Free charging at the place of work can do more to defuse range anxiety than bigger batteries can. The Workplace Charging Challenge, of which GM, VW and Ford are members, seeks to persuade America’s employers to commit to providing electric vehicle charging access to employees.
Gross says that the US Department of Energy has found that employees of companies that have installed charging stations are 20 times more likely to drive electric cars. "That shows what it takes to move this market," she says.
And, while employees may end up paying absolutely nothing to fuel their cars, the cost to their employers is on par with providing coffee. But this perk can increase employee satisfaction and retention.
Workplace charging also serves as an advertisement for electric driving. "It becomes a virtual showroom at companies all across the United States," Gross says. She also notes that charging at work can help solve the challenge of people who don't have a garage or place to charge at home.
Public charging stations
But there will be times, like that trip to the mountains, when EV drivers will need to use public charging stations.
In February, along with the announcement of the e-Golf, Volkswagen of American announced a $10 million commitment to support electric vehicle infrastructure by 2016. The initiative includes a partnership with Chargepoint to install close to 100 DC fast chargers along heavily traveled routes along the east and west coasts of the Unite States, aiming to have charging sites no more than 50 miles apart.
Exactly how many charging stations are enough is difficult to answer, but VW's rough estimate is that approximately 15,000 fast charging stations in large car parks by 2025 should do it.
"That's quite a realistic number," notes Jörg Sommer, vice president, product marketing and strategy, Volkswagen of America. "Fifty miles apart should not be the condition of the future."
But charging stations do need to be in areas of higher usage, and they should be carefully sited, he adds. Between charging at home, at work and parking lots at malls or supermarkets, Sommer doesn't foresee the need for a gas-station-like network of charging stations. "You will not go to a dedicated spot any more to charge your car, like you do for gas," he says.
Tesla Motors is paying for the installation of two electric charging stations on the New Jersey Turnpike. And the state legislature is contemplating a bill to provide charging and refueling facilities for alternative vehicles at some service areas.
Another issue is booking time at charging stations – even if they are available at work or the mall. Sommer says, "In the future, this is a convenience feature that people will expect to have available. It's critical to improve these kinds of apps and services." Volkswagen is working on further developing its own apps, and he expects crowd-sourced apps similar to Waze to offer charging lookups and reservations, as well.
Incentives to purchase EVs – at the federal, state and local level – have been shown to help boost sales. Combining the $7,500 federal tax credit with state incentives has made California and Georgia the top-selling states for EVs and hybrids.
Non-financial incentives, such as use of HOV lanes, also act as advertising for electric vehicles, Gross notes.
Volkswagen has called on federal and state organizations to invest in clean fleets, and to adopt Clean Cities and MAP-21. The barrier to these programs, Sommer thinks, is simply money. He says, "The budget was limited. Funds were exhausted and need to be renewed."
Auto manufacturers say they're doing their part by bringing reliable, clean and energy-efficient vehicles to market. Now, Sommer says, "We need to have a joint effort between all parties involved to build a smart grid of charging stations in public to help acceptance and mainstream usage."
Finally, mobility as a service may spark EV adoption, according to Walker of the Rocky Mountain Institute. While consumers may not do the math on total cost of ownership of an EV, a transportation-on-demand service like Uber will, for sure. Because shared or on-demand vehicles have much higher utilization than a personal car, the operating cost becomes a much more important factor than the purchase price.
Says Walker, "EVs dominate internal combustion engines in OPEX. As all these services start to bloom, and especially when you start to get into autonomous vehicles that may be putting on 50,000 miles a year, electric just makes sense."