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The EV Market Will Roll Forward, But Expect a Bumpy Ride

Charging infrastructure will be the key to unlocking EV’s future.

How can a technology that experts around the world believe will lose money for years be the future of an industry? (If you immediately thought of Amazon as the answer, you’ve found the outlier we’ve chosen to ignore.) This is the challenge facing advocates of the widespread adoption of electric vehicles (EVs) in auto markets around the world. But, while consumers and auto manufacturers focus on the vehicles that will transform an industry whose sales approached 79 million cars worldwide in 2018, widely accessible charging infrastructure will be key to speeding the pathway for vehicle original equipment manufacturers (OEMs) and customers alike.

In September 2018, the U.S. auto market surpassed one million plug-in EV sales since 2010. Full-year totals reflected a 30% increase in overall sales, signifying the transition to EVs to have reached critical mass. In the past few months, OEMs have announced the addition of dozens of new models targeting families (SUVs), performances vehicles, and more. In fact, a recent report by AlixPartners finds “US$255 billion in research and development (R&D) and capital expenditures is being spent globally on EVs, and that some 207 electric models are set to hit the market by 2022.” OEMs are signaling sometimes subtly, other times explicitly that the days of building internal combustion engine (ICE) vehicles may be numbered.

The push to scale is critical to driving down component costs and eventually allow manufacturers to generate profits on EVs that for the most part have remained elusive. For example, electric car production currently carries the heavy cost of obtaining lithium-ion batteries. But with scale, and a greater range of plug-in EV options, the oft-overlooked challenge of how to provide power to propel the next generation of vehicles comes to the fore.

An ongoing concern among EV customers remains access to charging when and where they need it. While significant investments in California and several primarily urban, coastal markets have increased the number of charging stations, access remains limited in most U.S. communities. Overcoming the access issue is complicated for charging service providers and electric utilities because the expected demand from the electrification of transportation cannot be supported by most local grids today. New EV load centers will be both distributed and concentrated, a challenge utilities haven’t faced before.

Broadly speaking, demand from passenger cars will be managed by electricity service providers through standard investments in their distribution network at the residential level, though there would remain some expectation of accelerated equipment failure in dense EV clusters. Expanding access to charging infrastructure like the 48,000 proposed stations from Southern California Edison in public spaces, places of business, and other locations will also support demand and help overcome barriers to EV ownership.

It’s important to keep in mind, however, that significant investments will be required to support the higher capacity (250-kW+) dc charging needs of transit buses, Class 4/ 6 fleet vehicles and heavy-duty Class 8 commercial trucks using centralized infrastructure. For example, early versions of electric semi-trucks feature batteries ranging from 150 kWh to 500 kWh. These vehicles require charging capacity (depending on the number of vehicles) that can necessitate new service line extensions (up to 1 MW of additional load), conversion to medium duty voltage service (over 2 MW), new feeders (over 5 MW), or new substation transformer and capacity increases (over 10 MW).

Presently, the biggest issue for potential purchasers of medium and heavy duty EVs and transit vehicles isn’t the charging stations, but instead a lack of product availability. With detailed information on routes, mileage, and the flexibility to charge overnight, fleet and transit markets are ready to embrace the EV revolution, but for the most part, they can’t get the e-trucks.

For example, Amazon has made public commitments to purchase hundreds of Class 4 and Class 6 trucks, but they aren’t yet available from suppliers. Other logistics, delivery, and package services have indicated strong operational motivations to purchase EVs, such as significantly lower maintenance costs, and lower carbon footprints that support both corporate sustainability goals and alignment with the United Nation’s (UN) Sustainable Development Goals.

Meanwhile, with more than 65,000 buses in the U.S. public transit system, pilot programs are demonstrating similarly positive operational and climate goal impacts for operators.

Perhaps this delay in medium and heavy-duty EVs should be viewed as a blessing in disguise, given the complexity of building or extending distributed energy resources (DERs) and charging infrastructure across utility networks.

The key is to start preparing the grid now for the electrification of transportation. Late 2020 is expected to see the arrival of larger volumes of buses, vans, and trucks to hit the market, with the pace of production growing exponentially from there. As recent headlines surrounding the challenges of launching EV programs on the U.S. East Coast indicate, failure by electric utilities, and increasingly, fleet operators and energy-as-a-service providers to move rapidly means the required infrastructure may arrive too late and create a speed bump for future adoption.

But if we act on the lessons learned, we can be right on time.

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