It may well be that it will take a charging crisis to bring entrepreneurs rushing in.
The Financial Times’ Brooke Masters is very happy with her electric vehicle (EV) when it comes to her daily commute. She has a garage, which helps, and has installed a rapid charger, but when it comes to going on longer journeys, well. . . .
Then we tried to take it on the road. A charging station black hole across much of the Midwest made that route impossible. Then, along the allegedly well-served highways between Boston, New York and Washington, we repeatedly encountered unresponsive touch screens, non-linking connectors and very slow charging. At one spot with eight stations, the first three we tried didn’t work. . . .
This may be teething pain: the number of EVs on US roads has septupled in 5 years to 3mn, and many of the 135,000 public charging stations are brand new. But it also raises questions about whether the focus on making and selling electric vehicles has led us to neglect the changes that will make people happy once they’ve got one. . . .
Norway’s experience is instructive. Battery EVs have jumped from 20 per cent of new cars to 80 per cent in less than five years, thanks to tax breaks. But the charging infrastructure has struggled to keep pace, despite ample government support, leading to long lines at highway charging stations on holiday weekends.
Incidentally, when it comes to Norway, that little phrase “tax breaks” is accurate but understates their importance. In Norway, taxes on new cars have long been extremely onerous, and include VAT (25 percent), a CO2 tax, a NOx tax and a weight tax, making them very expensive. Buyers of EVs were exempt from all these taxes (and enjoyed other benefits) although those advantages have recently been scaled back. What’s really interesting about Norway is not the take-up of EVs but the extent of the “bribe” it took to get it there, which is just another reminder that the true picture of underlying consumer demand for EVs is very different from the usual happy narrative.
But back to Masters:
The Biden administration has announced plans to have 500,000 public charging stations by 2030, but that’s a far cry from China, where 1.8mn are already up and running, and the government is aiming for 20mn by 2025.
America’s situation is complicated by the fact that Tesla, which has more than 60 per cent of EV market share, operates a proprietary charging network and until recently had refused to open it to other cars. But that is starting to change. Volkswagen, which operates the country’s largest network, Electrify America, has deliberately made it open access. And Ford announced a deal on Thursday that will give its vehicles access to 12,000 Tesla Superchargers.
The writer of another FT report noted:
Tesla already was planning to partly open its 45,000-charger network to all electric car models by the end of 2024, at the White House’s urging and to gain access to $7.5bn in subsidies. The EV manufacturer will open up at least 7,500 chargers to drivers of any EV model, including 3,500 along US highways.
That might make some would-be Tesla buyers pause.
Back to Masters:
Ford’s chief executive Jim Farley argues that adding chargers will reduce not only waiting times but also bring down the overall cost of EVs. That’s because customers will become more comfortable with cheaper, smaller batteries that go 200 miles, rather than the 400 that many manufacturers are striving for. “We should make the battery as small as possible,” he says.
Shrinking batteries would also help solve another budding problem. If current patterns hold, converting just the US fleet to EVs would require three to four times more lithium than the entire world produces. “You need a 1,500 times scale-up in the mining, processing, manufacture and then what you do with it at the end,” says Kevin Czinger, an early EV pioneer. “What is the impact of that on the environment?”
You will buy your golf cart, and like it (yes, yes, I know that’s an exaggeration, but. . . .)
Masters:
So far, EV charging providers have largely failed to address the problem that the process takes much longer than filling up with petrol. No one wants to get stuck in a dilapidated mall parking lot for 45 minutes, as I was last month. . . .
But the nascent charging industry has so far failed to monetise the rising demand. Shares in EVGo and Chargepoint are down 80 per cent from their 2021 peaks, and Volta sold itself to Shell at a similar loss earlier this year.
The lack of infrastructure has real consequences. Concerns about charging helped drive a quarter of early US electric car buyers back to an internal combustion engine, a US government study found. And the share of Americans who say they are “very unlikely” to buy an EV is rising. If this is the wave of the future, there are choppy seas ahead.
Masters is probably right that the opportunity to make money out of the lack of chargers will mean that the free market will kick in to help solve a problem which has essentially been caused by the top-down effort to “encourage” a switch to EVs rather than let demand for them grow organically.
It is, I suspect, telling that the charging business has not advanced further. This may either reflect uncertainty about the prospect for EVs, or anxiety about the role that government is going to play in this area. It may well be that it will take a charging crisis to bring entrepreneurs rushing in. That’s not an encouraging thought for potential EV buyers, and it increases the prospect of a real mess as the squeeze on the sale of new “traditional” cars tightens.
Choppy seas ahead, indeed.