How Much (and How Long) Can COVID-19 Impact the Push for Transportation Electrification? Part 2 of 2

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In Part 1 of this series, we looked at the short- and medium-term impacts of the COVID-19 health crisis on utility programs supporting Transportation Electrification across the country. In this second installment, we look into some of the longer-lasting outcomes of the pandemic.

The first generation of Electric Vehicles (EVs) developed by automakers in the mid-90s quietly faded into obscurity without much attention beyond the environmental community. The second generation, launched a decade ago with widely available EVs from Tesla, Nissan, and General Motors, appears poised to finally break into the mass market. Or at least it did until the coronavirus sent the American economy into disarray.

In discussions with EV experts at utilities with leading transportation electrification programs, the view on the horizon is still optimistic, given the progress EV markets have made over the last 10 years of economic growth and the cornerstones of clean transportation policy that remain.

 

Looking for help in the long-term

Scanning the major automakers and a number of EV startups, the commitments for product development from Detroit (and Silicon Valley) have held solid, even if a few new model releases have understandably been delayed slightly. And the underlying policy around the world is still pushing carmakers to introduce more zero-emission models. It’s worth noting that countries like China and several in Europe, which have largely controlled the pandemic’s spread, also have more aggressive clean-vehicle regulations than the U.S., and they will continue to drive the global auto market toward zero-emission vehicles regardless of fluctuations in U.S. demand.

U.S. policymakers potentially have a strong role to play in further speeding the market’s shift toward clean vehicles. Plans for a green stimulus could develop next year, should the political winds shift in Washington. In reshaping budgets, some states may look to further support clean energy and transportation. However, as one utility program manager noted, it is key that public resources be targeted specifically to clean vehicle technologies. If resources are spent more generally, as they were for the auto bailouts of 2008, we may miss an opportunity and put millions of new gas-powered cars on the road for another decade or more.

One important factor to watch for the long-term, which will ultimately impact utilities’ program strategy and planning, is the pandemic’s impact on the price curve for batteries. The expected reductions in lithium-ion battery prices would bring cost parity between EVs and incumbent gas cars – an inflection point at which many think the EV market will start to take off. One program manager pointed out that, if a prolonged, global economic recession puts a damper on the development and scaling of battery technology, the timeline for affordable, mass-market EVs will fall behind as well. Now that cars often last 100,000 miles or more – staying on the road for a decade – the consequences of prolonging the shift to clean transportation are amplified. Modeling by the California Energy Commission found that to meet the state’s greenhouse gas reduction goals through electrification would require more than 60 % of new passenger vehicles sales to be zero-emission by 2030, or about five times the market-share today. And meeting the state’s 2050 goals through electrification requires 40% of emissions reductions come from the transportation sector over the next thirty years – more than the reductions required from electricity generation and the industrial sector combined. Each year the transition to cleaner vehicles might be delayed puts that milestone further and further out of reach.

For utilities supporting charging infrastructure development – even the long view looks positive; current saturations of public and workplace charging are drastically below the anticipated need. So even if a slowdown delays EV market growth, the chargers being planned today will be sorely needed for some time.

But it’s not just that there is a fairly certain future for TE programs; those programs actually have the opportunity to perform better and serve utility customers more effectively because of the present volatile situation. Utility transportation electrification programs operating today may see interruptions, certainly, as customer priorities and budgets are upended, but those are valuable learnings utilities can collect and build upon. As utility customers go through unprecedented turmoil and change, program managers can spend time now to better understand the needs of their customers—leave it to a crisis to separate out what is truly a necessity—so that, as the economic outlook improves, future program designs meet and exceed customer expectations.

Utilities, and especially their leadership, should maintain the long-term view in continuing to build on early investments in transportation electrification and continue to advance the TE strategies they’ve spent the last decade defining. The current pandemic and economic climate only reinforce the need for thoughtful, bold, yet patient support to accelerate transportation electrification in the long run. The transition toward cleaner transportation will last into the second half of this century; allowing current conditions to make a drastic shift away from the course already begun by many utilities and municipalities would deny the U.S. the societal and environmental dividends from those investments.

 

Click here to read about the short- and mid-term impacts of the pandemic on TE initiatives.

And to learn how EMI Consulting is helping utility clients pave the way for successful clean transportation programs, check out our Case Study.