The Electric Cars in the Future of Utilities

Yogi Berra famously said that “it’s tough to make predictions, especially about the future.” Electric vehicles do not escape this wisdom. Still, recent trends and forecasts suggest a sustained growth in adoption of light-duty electric vehicles in North America. 

There are many reasons to believe that there will be many electric cars in our future. 

First, most electric vehicle drivers think that their cars are the best cars they ever had – according to a AAA survey[1], 96% of electric vehicle owners say they would buy or lease one again the next time they are in the market for a new car. Anecdotally, we can confirm this: through the ChargeHub platforms, electric vehicle drivers express their enthusiasm daily toward their cars (but also, unfortunately, their frustrations toward public charging).

Second, more and more car manufacturers are committing to an electric future: global automakers are expected to invest $225 billion on the development of battery-electric vehicles from 2019 to 2023, according to an AlixPartners study[2] — roughly equal to the massive amount that all automakers globally combined spend on capital expenditures and research and development in a year. New electric car plants are being built and internal combustion ones are being converted. There’s no turning back.

Thirdly, many states, provincial and federal governments have policies to reduce greenhouse gas emissions in order to stave off climate change. The transportation sector is the largest contributors to U.S. greenhouse gas emissions, and light-duty vehicles contribute to 59% of transportation emissions[3]. Necessarily, reducing greenhouse gas emission will require us to drive electric light-duty vehicles. 

Yet, only about 2% of 2019 new passenger car sales in North America are plug-in electric vehicles.[4]

There are a number of factors to explain the dichotomy between actual and forecast sales of electric vehicles. The first is simply availability: buying a new electric vehicle usually implies waiting months and there are few model options. If you do not happen to live in the few states or provinces that have a zero-emission mandate[5] requiring a minimum percentage of electric light-duty vehicles, you may actually be out of luck: car manufacturers may simply not offer them to you. For example, Subaru stocks the Crosstrek plug-in hybrids in California, nine other states[6] and the Canadian province of Québec[7] that have adopted zero-emission vehicle regulations. 

Even in jurisdictions with zero-emission mandates, availability is often limited to regulatory obligations: internal combustion vehicles are currently far more profitable than electric ones, and automakers don’t have enough incentive to move away from internal combustion engine vehicles, especially at current low-volume. However, analysts, like the McKinsey strategic consultancy, expect that EVs have the potential to reach initial cost parity with and become equally—or even more—profitable as internal combustion vehicles around 2025[8]. Combined with already lower operating costs for drivers, this will make building electric vehicles a compelling proposition for automakers and drivers alike. 

If investments being made in manufacturing will cure current availability and cost issues, there are still a few more obstacles that need to be removed to hasten the advent of electrical cars. A survey by KSV[9] lists top worries about batteries running out, convenient home charging and how to charge, operate, and maintain electric vehicles. These other concerns primarily point to insufficient consumer knowledge and incomplete public charging infrastructure. While home charging remains the principal means to recharge electric vehicles, charging at workplaces and public stations plays an important role for drivers who cannot charge at home or when traveling away from home. Utilities have a central role in enabling public and workplace charging, through policy-induced subsidies and tariffs. Utilities are also the second-most trusted source of information on EVs, after Consumer Reports – car dealers are last[10]. To succeed, electric utilities need to work with site owners (for public charging) and automakers (for education) – two types of stakeholders with which utilities do not have relevant business relationships. 


[1]       https://www.oregon.aaa.com/content/uploads/2020/01/True-Cost-of-EV-Ownership-Fact-Sheet-FINAL-1-9-20.pdf, accessed 2020-03-05.

[2]       https://www.alixpartners.com/media-center/press-releases/alixpartners-global-automotive-industry-outlook-2019/, accessed 2020-03-05.

[3]       https://www.epa.gov/greenvehicles/fast-facts-transportation-greenhouse-gas-emissions, accessed 2020-03-05.

[4]       https://en.wikipedia.org/wiki/Electric_car_use_by_country, accessed 2020-03-05.

[5]       https://electricautonomy.ca/2020/02/04/industry-divided-on-the-merits-of-a-national-zev-mandate-as-federal-budget-nears/, accessed 2020-03-05.

[6]       https://www.autonews.com/article/20181124/RETAIL01/181129954/subaru-goes-greener-plugs-in-the-crosstrek, accessed 2020-03-05. 

[7]       https://plus.lapresse.ca/screens/1ee08d4e-e711-4ece-ba8d-8599239ff27a__7C___0.html

[8]       https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/making-electric-vehicles-profitable, accessed 2020-03-05. 

[9]       http://blogs.ksvc.com/ksv/whitepaper/2019/electricvehicle, accessed 2020-03-05.

[10]     https://www.eei.org/issuesandpolicy/electrictransportation/FleetVehicles/Documents/EEI_UtilityFleetsLeadingTheCharge.pdf, accessed 2020-03-05. 

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