Sales of electric vehicles (EVs) were up 25 percent last year, and automakers are looking to boost sales further in 2015 with new and updated models. Clearly, EVs have moved beyond their infancy. But continued growth in the EV market will require smart public and private strategies to expand charging infrastructure so motorists don’t have to worry about running out of juice.
Advancing the deployment of low-carbon vehicle technology, like EVs, is essential if we’re going to achieve meaningful emissions reductions from the transportation sector, which is responsible for 28 percent of U.S. greenhouse gases. Globally, the problem is more acute as the number of light-duty vehicles on the road is expected to double to more than 2 billion by 2050.
Automakers will begin introducing their second generation EVs beginning this month with the 2016 Chevy Volt. While sales will likely jump because of the incremental improvements from the first generation Volt, more time is likely needed for batteries to improve and charging infrastructure to be deployed.
Our work for the Washington State Legislature shows that new business models to foster private investment in charging infrastructure will be vital, but public sector policies and incentives will still be needed in the near term to keep the market growing.
Make no mistake, EVs have already come a long way. Americans have purchased more than 275,000 EVs since late 2010 – a remarkable achievement for an alternative fuel vehicle technology.
But EVs have a long way to go. They still make up less than 1 percent of new U.S. car and light truck sales.
Market share among the automakers in 2014 looked similar to 2013, with one major new entrant into the EV market — BMW. The company made a splash with its i-series vehicles. EVs made up more than 3 percent of BMW’s overall U.S. sales each of the last five months, a higher share than any other automaker (besides Tesla). EV sales at General Motors were down year-over-year, likely because of consumer anticipation for the second-generation Volt and stiffer competition from Ford in the plug-in hybrid space.
Market share in 2014 looked largely similar to 2013, with BMW being a new entrant.
Market share in 2014 looked largely similar to 2013, with BMW being a new entrant. Source: Hybridcars.com Market Dashboard.
As more EVs hit the road, including those with longer electric-only ranges, public charging infrastructure will become one of the key barriers to mainstream consumer acceptance. The challenge of developing a business model has emerged as the top issue for advancing charging in public, at workplaces, and at multi-family dwellings.
There are 8,857 public charging locations in the United States. Although this sounds like a lot, fast charging can take up to 30 minutes, so even a short line could frustrate drivers.
A strong connection exists between increased public charging infrastructure and EV sales, and automakers have shown they’re willing to invest in charging stations. Nissan, BMW, and Tesla have all made sizeable investments in public charging. In addition, many electric utilities should be willing to support charging infrastructure because of the opportunity EVs present to support their business. Our work shows that these businesses, along with major retailers and tourism-oriented businesses, could help demonstrate new business arrangements in strong EV markets. Policymakers can get more private money into the market by encouraging these new business models.
Charging is not the only place were policymakers can help. Last year provided strong evidence that public policies, especially financial incentives for all-electric vehicles, remain the key driver for EV sales. In Washington, a state with a targeted sales tax rebate, all-electrics make up 70 percent of the EV market. Georgia’s $5,000 tax credit for all-electrics has helped make it the top market for the all-electric Nissan LEAF.
Legislators in both states will evaluate whether to continue these incentives in 2015. Policymakers should proceed with caution as they review these polices. Putting an end to state financial incentives now will not only hurt EV sales in local markets, but also stunt private investment in charging infrastructure required to build a robust network.
The path to widespread use of electric vehicles involves both private investment and innovation and public sector support. Our work for the Washington State Legislature, for example, shows short-term public investments can help to build a sustainable, privately-funded charging network. Policies that encourage new business models or other market-oriented innovations in charging can act as a bridge to the second- and third-generation vehicles, bringing mass-market appeal for EVs.