One and a half million electric cars on the roads of the U.S. West and Midwest by 2030: this is the vision of regional power utility Xcel Energy, and part of its aim to be emissions-free by 2050. Those EVs are certainly enjoying a lot of attention on both sides of the Atlantic. In Europe, some companies are even giving them away for free to encourage people to go electric. Xcel Energy is not going this far, however. It will simply encourage people to switch to an EV.
An electrifying vision “Through new electric vehicle customer programs and charging infrastructure, we will expand our clean energy leadership to transportation, developing innovative partnerships with our communities, customers and others,” the company says in a brochure. “The vision means that 20% of all vehicles in the areas we serve would be replaced with electric vehicles by 2030.”
The approach is smart: promoting EVs by making it easier for people to install home chargers and building a network of public chargers. The utility also says it will provide financial incentives to EV drivers in the form of rebates. Mostly, however, it will be promotion work through educating people on the benefits of EVs, such as lower maintenance costs and also lower ‘fuelling” costs. Will this be enough?
It Really Is About the Price Tag
For all the hype surrounding electric cars, and for all their genuine benefits and advantages over internal combustion engines, including the lower costs and the no emissions, EVs are still way too expensive for most drivers.
Some of Excel Energy’s efforts in promoting EVs will target specifically low-income drivers and underserved communities through work with organizations that could help make EVs more widely available to these communities. But unless they give those drivers and those communities money to buy EVs, those promotion efforts will hardly go far enough for the company’s vision to materialize.
The truth is that even in Europe, where incentives for EV purchases are even more generous than in the United States, electric cars make a small portion of all cars. And yes, that is still true despite a recent increase in EV sales on the continent: in annual terms, the June EV and hybrid car sales marked a 95-percent increase on June 2019. In absolute terms, these EVs and hybrids only made up 8.2 percent of total sales. And EVs alone made up 4.4 percent of that 8.2 percent. Not really the surge many are still waiting for.
The grid that feeds the cars
Given the economic fallout of the pandemic in the United States, promoting expensive EVs is likely to become even more challenging. But it is not just the price of the vehicles that is an issue. There is also the grid that would supply these vehicles with electricity.
Related: Saudi Oil Minister: Oil Demand Could See A 97% Recovery By The End Of 2020 California this week hogged headlines with its now habitual power supply problems. Millions of people were threatened by power outages because of higher-than-normal consumption amid a devastating heatwave. The blackouts were avoided, this time, because pleas for the conservation of power worked. But worry remained that California is vulnerable to spikes in consumption.
California is the biggest EV market in the U.S. This is not to say that EVs were responsible for the spike in power consumption—ACs were—but the question remains, how reliable is the grid when you want to add a million EVs to it?
Xcel Energy is preparing for this load: the company recently announced a $1.4-billion investment in upgrading its older wind farms, again as part of its 2050 zero-emission plan. The upgrade will further reduce the cost of the electricity they produce and extend their lives, the company’s CEO. And this should benefit all those future EV drivers across the eight states the utility serves. If they ever come.
A slow grow
Plug-in vehicles (that’s EVs and plug-in hybrids) represented 5 percent of all U.S. car sales during the first half of the year. Most of these, perhaps unsurprisingly, were Teslas, the rest a variety of makes. Those tracking EV sales note there is no comprehensive report on them because “Too many automakers do not publish EV sales data to create such a report,” according to CleanTechnica’s Zachary Shannan. Unfortunately, the reason to not publish certain sales data is usually that these sales are not significant enough to make a difference in total sales.
The outlook for EV globally continues to be rosy. Wood Mackenzie recently published a report that said global EV sales could reach 45 million by 2040, with the total on roads in that year standing at 323 million. But the drivers of this sales growth will not include the United States. The drivers, at least so far, will be Europe and China. And, according to the analysts, it is businesses rather than consumers, that will drive this wider EV adoption.
“Unlike retail customers, fleet owners are well versed in the capital and operational expenses of their vehicles. They also have well-defined operating routes, as well as overnight parking locations,” Wood Mac principal analyst Ram Chandrasekaran noted in the report. In other words, fleet owners are a lot more aware about how they could benefit from going electric than consumers.
So, does this mean Xcel Energy is targeting the wrong group? In a way, maybe. Its brochure certainly leaves one with the impression its focus is if not exclusively then mostly on retail customers as the drivers of an EV transformation—retail customers who will obediently charge their new EVs during off-peak times only. Some probably will. Others, too, used to the convenience of stopping at a gas station for a quick top-up the moment you need it, will shun the benefits and advantages EVs can offer them over their gas guzzlers both in terms of costs and environmental impact.
By Irina Slav for Oilprice.com
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