This year’s Super Bowl featured three advertisements for new electric vehicle (EV) models, matching the total from all previous Super Bowls combined. With multiple automakers coughing up more than $5.5 million per 30-second spot during the United States’ marquee television event, EV enthusiasts hailed the milestone as a harbinger for the automotive sector in the coming decade. More skeptical industry watchers questioned whether we had actually hit a turning point.
Their concern isn’t unwarranted. After a large increase in 2018, EV sales as a share of the overall US passenger vehicle market barely grew in 2019, to 2.5 percent. A recent consumer survey from Cox Automotive found demand for EVs barely budged between 2016 and 2018. Automakers not named Tesla, whose Model 3 represented more than half of US EV sales in both 2018 and 2019, are still struggling to make inroads in the US market. Toyota’s Prius is old news, and though its sales are respectable, neither the Chevrolet Bolt nor Nissan Leaf has been a game-changing product. Offerings from Jaguar, Audi, and Porsche haven’t totally flopped, but their ultra-premium segment is a small fraction of the overall consumer vehicle market.
These automakers have all benefited from generous federal- and state-level incentives, some which have now sunset. Moreover, the COVID-19 pandemic has thrown state budgets into disarray, jeopardizing current and future incentive programs. Shutdowns across the country are devastating household finances and have sent oil prices to two-decade lows, potentially dampening EV appeal for the near future. Automakers face existential threats from the collapse in economic activity and must decide whether to double-down on emerging technologies or taper investments and retrench behind profitable business segments.
Transportation eclipsed the energy sector with the largest share of US carbon emissions production for the first time in 2016, and, justifiably, climate advocates turned their attention to vehicle electrification as an urgent concern. Automakers met those demands with a series of multi-billion-dollar investment commitments, and expectations are now sky-high that those investments will translate to rapid EV adoption domestically. Advocates are increasingly concerned we’re failing, even as both China and Europe leap ahead of the US in EV technology development and adoption.
In truth, expectations have simply outpaced tremendous progress. Despite serious challenges ahead, advocates do have cause for optimism.
No single factor completely explains the sluggishness in EV adoption we’ve seen to date. Consistently low prices at the pump certainly have played a role, and with crude oil prices hovering at levels previously unseen in this century, energy cost considerations alone are unlikely to shift demand back to light passenger EVs any time soon. The dearth of mass-market options, range-anxiety concerns, and insufficient coverage of fast-charging infrastructure have played significant roles, too.
Currently, there are fewer than 20 discrete battery electric (BEV) models available in the US market, and fewer than twice as many plug-in hybrids (PHEV). These represent a fraction of the overall vehicle market, and even with generous federal and state tax incentives, most still retail above $30,000. Models available to date have largely been at odds with growing American consumer preference for crossovers and SUVs. Dealerships rarely promote their EV offerings, knowing reduced maintenance requirements offers them less revenue potential.
Though range for BEVs is rapidly improving, car-buyers still worry that these vehicles won’t suffice for longer trips. Interstate DC fast-charger (DCFC) infrastructure remains inadequate, with some significant corridor gaps and insufficient density in higher-traffic areas. Urban environments add their own challenges. Newer multifamily developments may future-proof their garages to accommodate EV adoption, but older buildings face prohibitively expensive installation costs that leave residents reliant on workplace or public chargers. PHEVs will remain a necessary alternative to address range and infrastructure shortcomings, even as they fail to excite advocates in quite the same way as their fully electric counterparts.
The shift before our eyes
In spite of these setbacks, those hoping to see a long-awaited paradigm shift in the near future need not wait much longer. For starters, dozens of new passenger EV models will hit the US market in the next two to three years. These are finally addressing the light truck, SUV, and crossover markets in large numbers, including much-hyped offerings from Rivian, Ford, and Tesla. COVID-19 has impacted some delivery schedules, but these delays are marked in months, not years.
Rivian hasn’t reached Tesla’s media acclaim, but the nearly $3 billion it raised in 2019 was a major vote of confidence for a manufacturer from industry heavyweights. Amazon’s investment and 100,000-van order from the startup marked a seismic shift in the logistics industry, and UPS wasted little time following with its own investment in British EV startup Arrival and 10,000-van order. Both should begin delivering in 2021-2022 and will almost certainly promote accelerated development in light commercial platforms from Ford (which also invested in Rivian), Daimler, General Motors, and others.
Urban delivery was already among the fastest-growing segments of transportation demand prior to the COVID-19 pandemic, and the lockdowns in response have accelerated that trend. Rapid electrification in that market will not only serve emissions-reduction objectives but also support electric powertrain and battery technology development across multiple light- and medium-duty vehicle platforms. Don’t underestimate the importance of this cross-platform technology-sharing dynamic. As fans of motorsport are quick to illustrate, innovations for one vehicle platform often bleed into others.
Big progress with big vehicles
Though consumer EVs consistently generate the most media attention, progress on transportation electrification is occurring rapidly in heavier vehicle segments. In 2017, one-quarter of all transportation emissions in the United States came from medium- and heavy-duty vehicles. Electric transit buses, backed by steady (and growing) federal and state investment, have led the charge in both BEV and hydrogen fuel cell electric (FCEV) technologies for much of the past decade. By the end of 2020, more than 1,000 should be in service across US transit agencies, a tenfold increase from five years earlier. At least an additional 1,000 will be in the procurement pipeline.
Moreover, those technologies first developed for transit bus platforms are diffusing into other on-road vehicle segments, including commuter coaches, school buses, and medium-duty trucks. New Flyer and BYD have ported battery and electric powertrain technology first developed for their transit buses to BEV coach platforms. Proterra leveraged its transit bus technology to support joint development of a BEV school bus with Daimler subsidiary Thomas Built. Their “Jouley” joins other BEV school bus offerings from Blue Bird, IC Bus, and Lion Electric. Proterra’s collaboration with Daimler also now extends to Freightliner for development of a BEV medium-duty truck. Navistar (which owns IC Bus) and Peterbilt are expected to debut their own BEV medium-duty offerings in 2021.
This Cambrian explosion of sorts extends into heavy-duty and off-road vehicles as well, with BEV, PHEV, and FCEV variants emerging across dozens of vehicle platforms. These include big rigs, drayage trucks, terminal tractors, forklifts, and other industrial equipment. The US Departments of Energy and Transportation have been key funders of these technologies’ development over the past two decades, and in the past several years, the California Air Resources Board (CARB) and California Energy Commission (CEC) have also stepped in with hundreds of millions of dollars annually to support vehicle demonstration and deployment.
While these investments pale in comparison to what China is pumping into electric transportation through industrial policy and aren’t sufficient to keep pace with Europe in the long-term, they are non-trivial foundations for scaling EV deployment domestically.
Geopolitical and federal policy winds are shifting, likely in favor of EVs
COVID-19’s direct economic impacts and its second-order effects introduce additional uncertainty to both global energy markets and the automotive industry. With car sales tanking, automakers must decide whether to retrench around their most profitable business segments or double-down on next-generation technologies and services. Though personal vehicle sales are beginning to recover in China following the relaxing of the country’s COVID-19 shutdowns, its already-struggling EV market is likely to suffer further from a hit to personal finances.
Oil prices may rise again in the medium-term as domestic producers go bankrupt and the Saudis dial-down their assault on global competitors. A combination of low oil prices, depleted highway-financing revenues, and shifting climate politics may push Washington closer to significantly raising the federal gas tax.
The broader federal response remains a wildcard. The 2020 presidential election will likely decide the extent to which we see an ambitious infrastructure plan oriented toward decarbonizing the US transportation system. Proposals are already on the table to create large federal funding programs for EV charging and hydrogen fueling infrastructure, electric school bus deployments, and expanded incentives for vehicle purchases of varying uses and weight classes. Irrespective of the White House occupant, however, bipartisan sentiment is shifting toward embracing electrification as a matter of global economic competitiveness.
Change hasn’t met expectations in the consumer market, but even that is finally poised for a major breakthrough. Supporting infrastructure is quietly in a phase of rapid expansion, as public charging units roughly quadrupled between 2013 and 2019 to 78,000. Electrify America still has hundreds of millions of dollars it must spend on charging infrastructure over the next five years per the Volkswagen diesel emissions settlement, and competitors will invest to keep pace.
Commercial and public sector fleet operators are facing increasing economic and political pressures to accelerate electrification, and we should expect public funding will grow to support them. We should also maintain an open mind about the shape of progress. Though many industry boosters are adamant that BEVs are the only viable path forward, hydrogen fuel cells and other hybrid technologies address key technical and supply-chain shortcomings across multiple vehicle platforms.
Advocates for transportation decarbonization have plenty to celebrate from the past decade and even greater cause for optimism over the next several years. They just need to look in the right places to see green shoots.
Nathaniel Horadam is a managing consultant and automated vehicle specialist at the nonprofit Center for Transportation and the Environment (CTE) in Atlanta. Views expressed are solely his own and do not necessarily reflect those of CTE. Some of the companies named (Arrival, GM, Proterra, New Flyer, BYD, and Toyota) are members of CTE.