PRESIDENT’S POST (Guest Post)
July 10, 2020
Electric Vehicles, Transportation, Powerley
This blog is a guest post from Paul Wezner, Vice President, Product Management at Powerley, and a current member of SECC’s Board of Directors.
Electric vehicles (EVs) – their widespread adoption has seemed almost inevitable, but adoption has been slower than many anticipated. Now, utilities are laying the groundwork to expedite that adoption. On their own, EVs are driving the creation of a more sustainable future with new technology that is exciting car buyers. However, sales of EVs actually decreased by more than 25,000 in 2019 from the prior year, even though the number of EV models more than doubled.
Why are EV sales not matching the hype that is accompanying them? There isn’t a single answer, but rather four key contributing factors complicating the matter:
- Added Cost – A recent study from Navigant that surveyed 20,000 people found that the increased cost of an EV was the biggest factor in people’s hesitancy to buy an EV, not range like previously assumed. Small EVs, while relatively lower cost, still can be much more than their gas equivalent. For instance, the 2021 Kia Soul starts at $18,000, while the Kia Soul EV starts at $35,000.
- Range Anxiety – While the range of EVs has improved, many models are still limited in range to under 200 miles on a single charge, and potential buyers still associate the limited range some EVs have with limited mobility.
- Gas Prices – With gas prices steadily below $3 per gallon, one of the biggest cost savings benefits of switching is limited. In addition, the dollar savings is still unclear to many potential customers who struggle to equate a gallon of gasoline to a kilowatt-hour.
- Alignment with Point-of-Purchase Sale – Salespeople at car dealerships have not yet bought into the vision of an electric future that the auto manufacturers are investing in.
Tesla sales were the lone bright spot for EV sales growth in 2019, with Model 3 sales growing 14 percent annually over 2018. You can count me as a part of that growth, as after months of searching and consideration, I purchased a Tesla Model 3. But why did I and many others buy Tesla and not another EV? Tesla didn’t just push an EV out into the market – they created the infrastructure to support it.
Buying an EV Should Be an Easy Choice
Before jumping straight into electric, I transitioned to driving a hybrid Chevy Volt. After experiencing the cost savings of rarely having to fill up at the tank and the positive environmental impact I was having, I wanted to make the switch and go fully electric. But with a family of four at home, space was not a concession I could make, and my preference for a four-door sedan left limited options – even fewer when you remove the high-end models that approach $100,000. With those requirements, the only car that fit my needs was the Tesla Model 3.
As I went through this research process and started shopping around for an EV, the experience demonstrated another one of the barriers to adoption. Even with production of EVs rising, many salespeople remain uninformed about the EVs they are supposed to be selling. While many salespeople ask questions to better understand what the customer is looking for, I found traditional OEM sales associates peppered me with questions about my interest in EVs not out of curiosity, but rather looking for the opportunity to sell me on a different gas-powered car, mentioning common barriers like range anxiety.
However, this isn’t the fault of the individual salesperson. The likelihood of a salesperson’s commission coming from an EV as opposed to one of the many gas cars on the lot is slim. Tesla dealerships are the exception as they only sell EVs. Tesla also didn’t just deploy a car and educate their sales team; they deployed a new lifestyle – high-tech and environmentally-conscious – and built the infrastructure to support it.
Tesla has a comprehensive charging network across the country, ensuring that no matter where you go you’ll still be in range of one of their 1,500 Superchargers nationwide. It is this type of infrastructure investment that will drive adoption. And now automakers are working to do the same, partnering with utilities to take steps to enable a seamless EV ownership experience.
Greater Peace of Mind and a Smarter Way to Charge EVs
To reach mainstream buyers, EVs are going to need mainstream costs and easily accessible charging options. Already, EV credit programs are reducing the purchase price. But beyond vehicle credits there are other benefits that the market, and more specifically utilities, are supporting to help encourage adoption.
Right now, DTE Energy has invested $20.5 million to expand EV infrastructure across Michigan. As part of this program, called Charging Forward, DTE is incentivizing new home and business charger installations to expand both the private and public charging infrastructure. AEP Ohio is another utility that has implemented a $10 million charger installation incentive program meant to expand Columbus’s public charging infrastructure.
And on top of this, new opportunities for partnership are developing with organizations like the Fuels Institute. The Fuels Institute is working to determine policies and investments that will accelerate a national EV charging infrastructure.
In addition, many utilities are implementing time-of-use (TOU) rates to reduce the cost to charge EVs. TOU rates lower the cost of energy by increasing the availability of lower-cost energy while keeping usage down during peak-times. I signed up for DTE’s Time-Of-Day Electric Rate, which offers a much lower rate on electricity used after 7 p.m. on weekdays. Through the use of a home energy management system, I can see my energy rates in real-time and automate my vehicle charging for off-peak times. This has helped me save more than 10 percent on electricity costs.
Overall, EVs are delivering an improved customer driving experience and helping reduce our carbon footprint. But the factors impacting adoption are still present for most potential buyers. Utilities are now looking to help overcome this by incentivizing the development of charging infrastructure and offering special rate programs to decrease cost for car owners. And on top this, they can do what no one else in the market can – offer visibility into the impact of switching to an EV through new home energy management technologies.
EVs are still the future of transportation. And despite some bumps in the road with customer adoption, the benefits are becoming clearer. With utility assistance, ownership is becoming more cost-effective, charging is becoming easier to manage, and adoption will increase – it’s just a matter of time.
About SECC Board Member
Powerley's Vice President, Product Management
Paul joined Powerley as the company’s first full-time employee and currently leads its product management discipline, directing the company’s product roadmap, strategy, and analysis. Paul has over a decade of experience in the digital space, with work spanning research, strategy, analytics and development. Paul holds a BA in Economics and an MBA from the University of Michigan’s Stephen M. Ross School of Business.