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Although new models of electric vehicles (EVs) get most of the
attention in the shift away from the internal combustion engine
(ICE), US auto and power industry members, politicians, and
industry analysts said that there's much more to the equation.
Infrastructure, product supply chains, workforce development,
consumer education, and affordability all must factor into the
mix—and it's up to industry and government to work together to
bring the future to reality, they said 3 November during the
two-day Auto Innovation Summit by the Alliance for Automotive
Innovation, the largest auto trade group in the US.
"This is an opportunity to reimagine transportation…. But we
have to get this right," said Genevieve Cullen, president, Electric
Drive Transportation Association, and moderator of a panel
discussion on 4 November at the summit.
The Biden administration gave a positive jolt to the EV industry
with the announcement in August of a goal that 40-50% of new light-duty vehicle
sales in the US in 2030 will be zero-emission. "It was almost a
transformative moment, when the president, the United Auto Workers,
leaders of three automakers [Ford, GM, and Stellantis], and enviros
all stood together with the same agreed-upon goal," said US Senator
Debbie Dingell, Democrat-Michigan.
Biden also pledged that the federal government will help to
install 500,000 EVs chargers nationwide by 2030.
Dingell said that the storms and record heat of the last two
years have focused attention on climate change like never before.
Given that vehicle transportation accounts for about 29% of annual
US GHG emissions, "autos are right back at the center of the
discussion ... on what could replace the internal combustion
engine. There's never been a more critical time to invest in the
auto industry and to explore policies to support the industry and
its workers."
General Motors has made huge commitments to EVs, particularly
battery EVs, said summit panelist Kristen Siemen, GM's chief
sustainability officer. It's on track to spend $35 billion by 2025
to introduce 30 new EV models across all segments and price points
around the world, she said. "We see a future when everybody will be
in EVs, and for GM this means battery EVs," Siemen said on 3
November.
Butts in the seats
"It's all about getting the butts in the seats," said Lincoln
Wood, electrification policy manager for utility Southern Co. "It
works every single time. You get someone in an EV and they
experience what driving one is like, and they're hooked."
Southern Co. has educational videos about EVs that it
distributes online, and it's sponsored in-person events at which
people can test-drive EVs and ask questions. One question he said
he regularly gets is the cost of home charging, which Southern has
estimated at $19-20 per month through a discount program it offers,
which is far below the cost of car fill-ups with fuel.
In fact, a new study by Morgan Stanley, released on 3 November,
said that rising gasoline prices this year has made the EV equation
even more attractive. With US gas prices averaging $3.50/gallon
nationally, and assuming an $8,000 price premium for an EV over an
identical ICE model, someone driving 10,000 miles per year would
recoup that cost in 7.3 years even without government purchasing
incentives or considering lower maintenance costs.
However, getting a buyer over that hump of a higher initial
price is a challenge, and that's why Dingell emphasized that
federal and state governments have an important role to play in
continuing to provide buyer tax credits.
The industry can solve some of that problem itself as it reduces
costs of EVs. According to Morgan Stanley, when EVs that cost less
than $20,000 are available, the market will be "substantial."
Part of the customer experience is understanding that "mobility
means different things to different communities," added Terry
Travis, a principal with industry consulting firm EVNoire. "We need
to have discussions … [that include support for] privately owned
vehicles, electric buses, shared vehicles, and so on," he said. "We
have to create an ecosystem where the customer sees himself
participating and benefiting."
And it's not just light-duty vehicles, Travis said. "You have to
think across modes of transportation, looking at e-bikes to
scooters, light-duty vehicles, to freight vehicles," he said.
Charging network
Charging stations are key to serving that broad ecosystem, so
that consumers don't fear they are losing the convenience they've
enjoyed with gasoline. As part of GM's investment in EVs, it's
already funded installation of chargers on 50,000 miles of US
highways, Siemen said, and it's making sure its dealerships have EV
charging stations.
Southern Co. has to manage the new demand on its power network,
said Wood. He gave an example of a warehouse that right now
presents a modest power draw from its lighting and a heating/air
conditioning system. "But what if [they] have 50 or 100 vehicles
that have to be charged overnight?" Wood said. "We have to be able
to provide that power."
On the home charging side, Southern provides incentives for
charging at night, in order to balance its load, which tends to
peak in the late afternoon, Wood said.
At the same time, Southern has joined the coalition of US
utilities that are coordinating efforts to build a nationwide public charging
network.
Given the challenges, IHS Markit says that EVs sales could be
25-40% of the new car market in 2050, shy of Biden's goal though
but a huge step up from the most recently monthly figures of 4.5%.
The sales level in 2030 "will be determined by whether the charging
infrastructure is there and is grid ready for it," said IHS Markit
Vice Chairman Daniel Yergin. "You have to take the supply chain
much more seriously too. And public acceptance matters."
Countries where there's a greater political will or other
factors influencing consumers' decisions are further on the path to
EVs, Yergin said. For example, EVs are 14% of China's new car sales
and have reached 20-21% in some Europe countries, he said.
Supply chains
As Yergin noted, the supply chain is a sensitive issue for
automakers today, especially EV batteries and semiconductors.
Dingell remarked that China has about 75% of the world's battery
cell manufacturing capacity, and she called this "a national
security issue" and the critical element determining how many EVs
will be built in the US in the future.
Ford announced plans in
September to build a battery research center in Michigan,
complementing its new manufacturing centers in Tennessee and
Kentucky that will produce electric F-Series trucks and the
batteries for Fords and Lincolns. Between Ford and its partner,
South Korean battery maker, SK Innovation, it's a $11.4.-billion
investment.
Dingell believes the government can help on the supply chain
end, and she's introduced a bill to make US Department of Energy
funding available to retool auto factories for EVs and batteries.
"Right now is when the critical decisions are being made about
where and how electric vehicles will be built," she said. "We want
to see them built here in America."
The government's support isn't in just the obvious area of EV
batteries, said John Neuffer, president and CEO of the
Semiconductor Industry Association. He noted that the FY2022 budget
reconciliation bill and the infrastructure bill combined have $52
billion in potential funding that would support US semiconductor
chip makers in research and development (R&D), materials
sourcing, and other needs.
Even that isn't enough, he said at the auto summit. "It's a good
first step … necessary to bring us up close to what other
governments are doing," he said on 4 November. "We are going to
need more measures in place … but at least we are finally heading
in the right direction."
Outside of funding, the government is taking steps today to try
to help address the supply chain, said Don Graves, deputy
secretary, US Department of Commerce. "This is a crisis for the
auto industry and every other industry across the country," he
said.
The Commerce Department has set up new systems to provide
early-warning information about a new outbreak of COVID-19 or a
major storm could affect supply chains, he said. With this
information, companies can speed up their reaction time to
interruptions.
Longer-term, Commerce and other agencies can help chip
manufacturers "make better investments, smarter investments," he
said. Graves observed that the US does have a strong base of
manufacturers of "legacy chips," as well as R&D on leading-edge
chips, and that improving performance of legacy chips is valuable
for the auto industry and across the economy.
At the same time, Neuffer observed that demand from the auto
industry is pushing the chip industry to design a new generation of
chips. If both legacy and new-generation chips are in production,
Neuffer said "it would make [our supply chain] more resilient."
Huge opportunities
Done right, the EV revolution will create huge opportunities. A
recent study from University of California-Berkeley cited by Travis
estimates that the drive to reach Biden's 2030 EV goal will create
2 million jobs. Additionally, as ICE vehicles are removed from the
road, the EV revolution will have positive public health
implications, Travis said.
For General Motors, those types of multiplying benefits help it
achieve the goals of its "Equitable Climate Transition,"
announced in June. This program includes a new $25-million Climate
Equity Fund to help close equity gaps in the EV transition.
Robbie Diamond, president and CEO, Securing America's Future
Energy (SAFE), a group working on the transition away from oil,
said that building a strong, environmentally friendly supply chain
is not only an opportunity for the US but an imperative. "If we do
not create a race to the top, we will create a race to the bottom,
and China will win," he said. "We need environmental standards, we
need human rights standards, and we have to have transparency on
the minerals all the way to the [Chinese] provinces."
The US missed a huge opportunity to compete with China in these
emerging technologies when the US Senate failed to ratify
participation in the Trans-Pacific Partnership (TPP) negotiated by
President Obama, said Ellen Hughes-Cromwick, senior resident fellow
at think tank Third Way. President Trump declined to revisit TPP
participation, and as a result China is seeking to join the
11-nation pact, "which would be further to our disadvantage," she
said.
When it comes to autos, batteries, and other key aspects of the
energy transition, China is clearly going to be a concern for US
industry and government, Yergin added. He contrasted the terms that
the Obama administration used about "cooperation" and "engagement"
with China, with the terms such as "rivalry" used by the Trump and
Biden administrations as trade disputes and other conflicts have
increased.
But with China's seeming lock on key materials—80% of global
lithium ion, for example—and its stranglehold on key products
too—about 80% of the world's solar panel manufacturing
capacity—this rivalry is not going away, Yergin said.
For China, rapidly shifting to EVs is an imperative Yergin said.
Leaving ICE engines behind will clean up urban air pollution and
move it towards a lower-carbon future. It will reduce the need on
imported oil, which supplies 75% of its demand. And it can
"leapfrog" the US and Europe in a key technology area. "No question
that's a very important part of their strategy," he said.
For those reasons, the US government should look at supporting
the auto industry's transition as much for competitive reasons as
for climate reasons, he said. "You have to look at this in the
context of global competition," Yergin said, comparing it to other
emerging fields. "When comes to science [and] to artificial
intelligence, that rivalry is there now."
Posted 05 November 2021 by Kevin Adler, Chief Editor