Dan Welch: “Gut Check” on EVs Coming as Technology, Policies & the Market Evolve

Recently, I spoke with Dan Welch of the Center for Climate and Energy Solutions (C2ES) about the Center’s work in electric vehicles and what they think the future holds, especially under the Trump Administration. What follows are highlights from the interview. You can listen or download the podcast below or listen to it in ITunes.

On C2ES’ Work in the Transportation Sector, Especially EVs:

“C2ES is one of the top ranked environmental think tanks in the world. We are a nonprofit, nonpartisan organization. That’s important to our message, and to our research. We work with businesses, cities, and states to advance pragmatic and cost-effective climate solutions. When I said we work with businesses, that’s important because we work directly with businesses. We have an environmental leadership council of about 30 large businesses that inform us about their perspectives, and we’re able to give them some of our own feedback. My work in transportation, I think, is increasingly important, because it is now the largest sector of greenhouse gas emissions in the United States. Then you mentioned I work on plug-in electric vehicles, that is important to me, because right now, light-duty vehicles count for about two-thirds of on-road emissions in the U.S., including heavy-duty vehicles, that’s 80 percent. That is only increasing as the VMT in the United States goes up. So, EVs right now are a market-ready solution that can get rid of, or reduce, on-road greenhouse gas emissions. As the electric grid starts to improve, or continues to improve, depending on what happens in this new administration, and technology, electric vehicles can also ride that wave, and improve their own emissions.”

On the “Gut Check” Facing the Industry on EVs in the Next Few Years:

“A big development with electric vehicles is the next generation of EV’s, and that’s specifically all electric vehicles with at least 200 miles of range, and typically under 40,000 dollars. If those are going to be less affordable, then the automakers may have to decide, depending on policy, how much they want to pursue electric vehicles, or how they can make them affordable. The good news is that battery prices are falling, precipitously. There are a few different ranges. I won’t necessarily quote the ranges that are made available, but there are thoughts that, within the next few years, electric vehicles could be reaching price parity with gasoline fueled vehicles. So, Tesla, as you’re aware, has a gigafactory that is making huge batteries, but CEO Elon Musk recently referenced this idea to make up to four more gigafactories. They’re being churned out, the EV batteries.  They’re being churned out in South Korea, by LG and Panasonic. Daimler, in Germany, plans on spending a billion dollars to increase budget vehicle battery production. So, once the battery costs come down, that may end up saving the large vehicle market, in the absence of federal incentives, and that could be a big component of the gut check we just mentioned.”

On EVs, U.S. Fuel Economy Standards & the Mid-Term Review:

“A revised standard would affect EVs but it would also actually affect the broader vehicle market greatly. To your question about whether or not [the final decision] can be revoked, that’s relatively uncertain. As I said, the technical analysis reports showed that automakers were quite successful with making new technologies affordable and adoptable. The EPA used that information to settle its midterm review, which didn’t need another rule making. It confirmed a rule that already existed. They have until 2018 to make that decision, but obviously, they didn’t take that full time. That’s where the automakers concerns you mentioned are coming in, and saying that their voices weren’t heard, and they’re concerned about whether or not consumers will adopt this new technology, or what the compliance costs will be.

 

The EPA can review, reduce, or delay the standards, but it would be a lengthy process. It would require a new rule making. That would go through a number of different steps, if they’re even able to undo one of their own processes. One thing that should be taken under consideration is that the standards run through 2025, so even though it might take the EPA a little time to undo these standards, time is something that some of these organizations, the automakers, the EPA, will have, if it only takes a few years. Particularly because standards scale up over time, so some of the heaviest requirements are required in the last few years. C2ES, for its perspective, thinks that the standards that were agreed upon several years ago are still fair and they are flexible. They’re technology-forcing, so even though it seems very difficult for automakers to meet these standards, with new technologies, they may be able to do so. In the same way, that a few years ago, they might have thought they didn’t know how to make electric vehicles, now they’re able to make those. New technologies that aren’t around right now could help them in the process.”

On Autonomous Driving & Wireless Charging as the “White Walkers” for the Future of Transportation

“When we hear about electric vehicles that are being developed, the new excitement is that their ranges are well over 200 miles, often over 300 miles, whereas a few years ago is which side of 100 miles that would be. That’s a big development. Public charging investments are really scaling up. VW’s 2 million dollar EV investment program, I think it’s called, will be spending that solely on infrastructure access and education. We’ll be putting the chargers where they need to be, with public comment that helps guide their decisions. It’s not just them, though. Utilities in California have successfully lobbied to install, I think 10,000 or maybe more, public charging stations, and they’re looking to spend, now, up to a billion dollars on the next round of projects. Kansas City Power and Light has a program to install 1,000 stations, and it’s already nearing completion of that.

 

Then, many cities have their own projects to adopt EV’s. They’re too numerous to name, but I think their value is that they are working with local partners, and identifying local solutions. Infrastructure’s grown locally, across the nation, and the next steps are being taken to make a national network of localities. Lastly, I would say that there are two technologies that may change all of this, and those are autonomous vehicles  and wireless charging, and I presume you knew that would be coming. There’s just so much uncertainty about what the  transportation of the future will look like. I consider it, spoiler alert if you haven’t seen any Game of Thrones, but I consider them to be the ‘White Walkers’ that will change the course of everything, potentially.”

On Whether Other States Will Follow California’s Lead & Implement a ZEV Program:

“Well, that might be my favorite question, if only because that actually touches on something I wanted to mention before when we talked about fuel economy standards. So, as I mentioned, fuel economy standards don’t specifically require electric vehicle sales, but there is a policy that does, and that is California’s ZEV program. The California Air Resources Board might be a bit of a linchpin to fuel economy standards among states. So, CARB initially aligned its standards with the EPA, and it received a waiver under the Clean Air Act, that allowed it to create its own standards for zero emissions vehicles. The Clean Air Act requires the Administrator to provide that waiver, under a certain set of circumstances. Those circumstances have been met, and continue to be met.

 

Nevertheless, Pruitt has mentioned that he would revisit the eligibility to apply for a waiver. We haven’t run across any sort of precedent for that, so I’m not sure if he’ll be able to, but that would seem to contradict the Clean Air Act that requires the administrator to allow those waivers. If those waivers are upheld, California would be able to not only maintain its ZEV requirement, but several other states are also following the California ZEV program. Under section 177 of the Clean Air Act, nine other state are following those regulations. Not only would it be ZEVs that would be deployed in those states, but other states can follow the fuel economy regulations as well. That would mean that there might be something of a patchwork quilt of fuel economy regulations across the United States, which may be difficult for automakers to follow, as well as other administrators.

 

I think that brings me back to your question of, will other states follow? That, I think, depends on what happens with fuel economy regulations and the ability of California to maintain its own waiver requirement and authority. I think there’s still much to be seen about how that plays out. If automakers are able to improve their sales in these states with ZEVs over the next few years, that might be seen as a success, and may benefit the program. If they don’t meet those requirements, then will states provide a temporary waiver, or will states end up abandoning the program, as a whole and specifically those states that are falling under section 177. These states will actually be a bit of interesting laboratory that shows how successful, or how determined, the states are to meet those requirements.”