In the energy world, 2020 was both unsettling and exciting, a year when the coronavirus pandemic drove billions of people to change their patterns of driving, flying and public transportation use, just as an unprecedented transition away from fossil fuels was gaining speed. Oil markets cratered, but clean energy appeared to emerge unscathed, if not stronger.
For electric vehicles, the year paired a steady stream of boosterish headlines with largely stagnant growth, at least in the United States, an almost-but-not-quite year that some analysts say finally may have primed the market to take off.
“I would maybe characterize 2020 as, we were putting in place the final piece of the foundation before the really breakthrough year in 2021,” said Katherine Stainken, policy director for Plug In America, an advocacy group that calls itself the voice of electric vehicle drivers.
This year saw an acceleration in pledges by governments to ban vehicles that run on fossil fuels. In September, Gov. Gavin Newsom of California signed an executive order setting a goal to end sales of pollution-spewing light-duty vehicles by 2035. In November, the United Kingdom said it was advancing its timetable for phasing out sales of most fossil-fueled cars to 2030, from 2040. And this month, Japanese media reported that the government might ban sales of most gasoline cars by the mid-2030s.
At the same time, several major automakers ramped up their plans to shift away from the internal combustion engine. Last month, after debuting an electric Hummer, General Motors said it would spend $27 billion to offer 30 electric models globally by 2025. Also in November, Volkswagen’s chief executive, Herbert Diess, said the company was retooling factories and accelerating its move towards electric and self-driving vehicles as part of a “race with Tesla.” VW also began offering a mass-market electric SUV, the ID.4.
Smaller, all-electric automakers like Rivian and Lucid Motors raised billions of dollars and hit manufacturing milestones. And Tesla’s stock soared, catapulting its market value to $600 billion from less than $100 billion in January, and making its founder and chief executive Elon Musk one of the world’s richest people.
Last week, President-elect Joe Biden said he would nominate Jennifer Granholm, the former Michigan governor who has ties to the auto industry and has been a prominent advocate for clean energy, to be the next Energy Secretary. The position will allow her to help speed a transition to electric vehicles through the department’s loan programs and research and development budget.
Yet sales of electric vehicles—or EVs—declined over the first nine months of 2020 in the United States, part of a broader market slump tied to the pandemic, according to Atlas EV Hub. Electric cars made up only about 2 percent of new passenger vehicle sales—a figure that has remained static for several years—with Tesla accounting for two-thirds of all EV sales over the first nine months of the year.
Some experts point to Tesla’s vertiginous rise as a sign of things to come.
“This is kind of the year that Tesla really came into its own,” said Joel Levin, Plug In America’s executive director.
David Reichmuth, a senior engineer with the Clean Transportation Program at the Union of Concerned Scientists, said Tesla showed other automakers that people will buy electric vehicles, as long as they are marketed in the right way.
“I always thought about it as some of the traditional car makers trying to convince you to buy this car even though it’s an EV,” he said, “whereas Tesla was very much in the mode of, ‘You need to buy this car because it’s an EV.” Now, he said, GM, Volkswagen and other companies are playing catch-up.
And there have been signs in recent months that the EV market may be picking up. Global sales of EVs and plug-in hybrid electric cars grew by nearly 130 percent in October from a year earlier, with some of the fastest growth coming in Europe, where EVs are expected to reach nearly 10 percent of new auto sales this year, according to Raymond James, a financial services company.
“The EV boom that we’ve seen in the last five months is striking,” said Pavel Molchanov, a clean energy analyst with Raymond James. “It is phenomenally strong.”
Still, Molchanov said that growth has been slower than automakers had expected, and that the global market share remains small. The ultimate goal is to wean drivers off of oil, and by that measure, there’s a long way to go. Molchanov’s research suggests that by 2025, EVs will displace less than two percent of global oil demand.
Ed Kim, vice president of industry analysis at AutoPacific, a research firm, said we haven’t yet hit the tipping point to an electric future.
“It’s going to take more automakers jumping on it as well before we have the critical mass to say, ‘OK, this is the moment in which the industry really started shifting towards full electrification,’” he said. “I’m not sure we’re quite there yet, but with GM’s announcements this year, certainly we’ve made a huge step in that direction.”
A Case of Range Anxiety
Of the barriers to the widespread adoption of EVs, perhaps the biggest is also the most obvious: There just aren’t many for sale in the United States, and most of those that are remain expensive and limited in number, largely restricting ownership to wealthier buyers.
And although less expensive models are on the way, they’ll need somewhere to charge when they arrive. Without that, consumers may suffer from what industry analysts wearing psychoanalytic hats have dubbed “range anxiety”: The fear of being unable to take that cross-country road trip lest one find oneself stranded by the side of the road somewhere, plug in hand, without a charger in sight.
According to data compiled by the Department of Energy, there are only about 28,500 publicly available charging stations across the country, and they’re clustered in states with more electric vehicles. While that number needs to grow dramatically, experts say it’s hard to predict by exactly how much, and that the nation’s network of gas stations is a poor analogy because the vast majority of charging will be done at home.
More than 60 percent of Americans have garages or carports where they could plug in their EVs. And cross-country road trips—and even somewhat shorter, multi-state drives—represent only a tiny portion of miles driven. A national charging network would fill in the gap exposed by that small portion of long-range trips, and by the minority of people who can’t charge at home, many of whom may have lower incomes. In other words, the nation needs a network of many chargers that won’t actually get much use, said Costa Samaras, an associate professor of engineering at Carnegie Mellon University who works on energy and climate change.
“It makes it hard to be profitable,” he said. “Some companies have figured this out, but many have not.”
Most chargers are owned by a variety of businesses looking for a new revenue stream—shopping malls, garages, restaurant chains and hotels, according to data from Raymond James. Some companies, including Tesla, have built their own networks to quell range anxiety and lure buyers, but they don’t necessarily expect to make money from the chargers, Samaras said.
He added, “There’s probably going to need to be a continued investment by the government to make sure there’s enough charging stations around not just for people who can’t get home with enough charge, but for people who don’t have access to a place to charge at home. So it’s an equity issue, and it’s a range anxiety issue.”
The Zero Emission Transportation Association, a newly formed industry coalition that includes electric vehicle manufacturers, utilities, battery makers and other companies involved in the EV supply chain, plans to ask the federal government to spend $30 billion over a decade on charging infrastructure, said Joe Britton, the group’s executive director. President-elect Joe Biden’s infrastructure proposal includes a plan to help build 500,000 charging stations across the country. Britton said that’s likely to be only a start.
Levin, with Plug In America, agreed that the country needs a huge investment in chargers, but said, “I don’t think that charging is the fundamental problem right now.”
He added, “I think the biggest barrier is that a lot of people look at the vehicles they like to drive, and then they look at what’s available in EVs, and they’re like, ’Oh, the kind of car I like to drive, they don’t make it as an EV, or they may make it, but I can only get it in California, I can’t get it here.’ So the supply of vehicles at a reasonable price is a big barrier.”
Cost Still a Prohibitive Factor
A transition to electrified transport stands to provide enormous benefits to low-income communities and people of color, who are more likely to be exposed to higher levels of pollution from cars and trucks.
A report by the Union of Concerned Scientists last year found that communities of color in the Northeast breathed in 66 percent more pollution from vehicles than white communities. So progress on electric vehicles often translates into progress on environmental justice, said Leslie Aguayo, environmental equity program manager at the Greenlining Institute, a nonprofit in Oakland, California, that works for racial and economic justice.
“There’s a perception that EVs are for the rich, for the white, are mostly folks driving their Teslas,” she said.
In many ways, though, that perception reflects reality. Electric vehicles remain significantly more expensive than their conventional cousins. The federal government provides a tax credit of up to $7,500 to make up the difference in cost, but the incentive is skewed towards higher earners: Not only are buyers required to pay in full up-front, but they need to owe at least $7,500 in federal income tax in order to take full advantage of the credit. It is also limited by how many vehicles a manufacturer has sold, and has already been phased out for Tesla and GM.
California has an income-based credit program, but Aguayo said the relatively high caps mean that much of the funding has gone toward middle-class people buying expensive cars. And again, because it is structured as a rebate, she said, rather than a grant, it generally excludes people who don’t have enough money to pay the full sticker price up front. Charging also remains a significant barrier for low-income communities. People who live in apartment buildings are unlikely to have a way to charge their car at home.
“Historically, these kinds of new technologies have not thought about people of color, have not thought about low-income folks in their design processes,” Aguayo said. “What we started to notice was that there were not a lot of folks of color, not a lot of folks that were low-income in these conversations.”
The Greenlining Institute has an “equity toolkit” that highlights barriers and opportunities for policymakers to ensure that people in low-income communities can have access to EVs, including how to structure incentive programs. But Aguayo added that any set of policies to build out an equitable electric vehicle network has to go beyond credits for purchasing new cars and include programs to expand electric buses, car sharing and electric scooters and bicycles. One study, by researchers at the University of California, Davis, for example, found that electrifying the fleets of companies like Uber and Lyft can have three-times the emissions-cutting benefits of replacing the average private car, because of how many miles the ride-sharing cars drive.
The announcements by California and the United Kingdom that they will phase out new gasoline and diesel cars are in line with broader climate goals of reaching net-zero greenhouse gas emissions by mid-century. An estimate by the Union of Concerned Scientists found that California’s goal would likely push the state’s light-duty fleet to be more than 90 percent emissions-free by 2050. That would require EVs to make up a significant portion of new sales within just a few years.
China has not yet announced a plan to phase out conventional vehicles, but the country dominates the global EV market. China accounted for about half of all light-duty EV sales in each of the last several years, and 95 percent of electric bus sales, according to data collected by Raymond James; the city of Shenzhen alone has more electric buses than all other countries combined. Six of the top 20 best-selling EV models this year are Chinese.
Stainken, of Plug In America, is optimistic that federal lawmakers and the incoming Biden administration will recognize the opportunity presented by electric vehicles for economic recovery packages. New factories are ready to start churning out EVs, several of them in Republican-leaning states. New charging stations would be a natural fit for a major infrastructure bill. Stainken and Levin said the biggest difference between Europe, where sales took off this year, and the United States, where they didn’t, is policy, and that the biggest obstacle to better policy was the Trump administration.
Biden’s clean energy platform contains several proposals to speed adoption of electric vehicles, including “a major federal commitment to purchase clean vehicles for federal, state, tribal, postal, and local fleets,” rebates for people to trade-in older and less efficient vehicles, public infrastructure investments and a goal to make all new American-built buses emissions-free by 2030.
Samaras, of Carnegie Mellon, said there’s no time to waste.
“It is correct to be excited and it is correct to be optimistic,” he said, “but we also have to be real and think about how far we are from where we need to get to and what else still needs to get done to get us there,” including policies and incentives that not only encourage a switch to electric vehicles but also encourage people to get out of cars altogether by choosing to walk, bike or use public transportation.
He added, “My summary of this space is, we’re going to need everything.”
Dan Gearino contributed to this article.