April 27, 2017 - From the April, 2017 issue

Electric Vehicles Not Exempt From Gov. Brown’s Road Repair Funding Plan

Although the number of electric vehicles on the road continues to climb and new vehicles are being deployed into the market, recent state policy decisions have placed potential stumbling blocks in front of the growing industry. As part of the major California transportation infrastructure funding package, EV owners will begin to pay a yearly fee to contribute to road maintenance. Joel Levin, Executive Director of Plug-In America, joined TPR to explain the impact of these mixed policy signals. Levin reinforced an optimistic view of EVs in California and the global market. 


Joel Levin

“It’s counterintuitive to impose an additional tax on EVs while you’re still trying to incent people to buy them.” — Joel Levin, Executive Director, Plug-In America

recent New York Times piece stated that the economic incentives that have helped electric vehicles gain a toehold in America are under attack in several states. Can you comment on the situation in states like Georgia and Indiana?

Joel Levin: For a number of years, the amount of money being collected in gasoline taxes has been going down in many states around the US. In some cases, like in California, the tax simply hasn’t been raised to reflect inflation for many years. But vehicles are also becoming much more efficient and using less gasoline, causing the amount of gas tax that can be collected to go down. States are looking for ways to make up for that.

In general, it makes sense that electric vehicle drivers should help to contribute to the cost of maintaining highways and roads and infrastructure. Obviously, electric vehicles don’t use gasoline and therefore don’t pay a gas tax. But they do pay taxes on electricity. There are taxes being collected on EVs—it’s just a different type of tax.

Additionally, right now, EVs are a tiny fraction of the cars on the road in the US. They’re less than 1 percent of all new cars sold nationally, and an even smaller portion of the fleet as a whole. Given that, the amount of gas tax that states are losing because of EVs is very small.

EVs have so many public benefits: local air pollution reduction and climate benefits, and also economic benefits, because you keep all your fuel dollars local.

In fact, there are all kinds of incentives to get people to buy EVs precisely because of these benefits. Many states, like California, offer rebates, plus carpool stickers, plus a variety of other incentives. Imposing a tax on EVs now is like giving incentives with one hand and taking them back with the other hand.

We think it would make more sense to wait until EVs reach a minimum threshold of vehicles on the road—say 3 or 5 percent. Once they get to be a more meaningful piece of the market, then the incentives will be less critical. But it’s counterintuitive to impose an additional tax while you’re still trying to incent people to buy.

California is the friendliest state to EVs; this fall, the number of plug-in vehicles in the state’s fleet surpassed a quarter of a million. Yet the recent legislative deal cut by the governor—a $52 billion transportation funding package—imposes a fee on zero-emission vehicle owners. What is the position of your organization on that fee?

We were opposed to the fee because it doesn’t have a threshold; it starts with the very first EV on the road. We think that it shows a misunderstanding of the position of EVs in the marketplace. A relatively small amount of revenue will be collected from it, and it sends the wrong message. 

Is it catastrophic for the EV market? No. It’s not a huge fee; it’s $100 a year. And it doesn’t kick in until 2020, which is a good thing. We were opposed to it, but it’s not the end of the world.

In Colorado, a proposed bill would end income tax credits for zero emission vehicles. A handful of other states, including Illinois, Pennsylvania, and Tennessee, have already let their incentives expire. Talk about this state-by-state action, even as we’re all focused on the federal administration.

Some states are definitely pulling back on EVs, but plenty of other states are doubling down. The states that are pulling back are ones where there are very few EVs being sold in the first place. It’s concerning, but I don’t think it reflects a national withdrawal from EVs. States that already have a robust EV market are still strongly supportive of EVs.

The EV market is growing outside of the United States, for instance in China, which now has the biggest market for electric vehicles, with 630,000 units on the road. Speak to this global market.

The market is growing very rapidly everywhere, including in the US. In the last six months, it’s grown 30-80 percent every month compared to the previous year. Globally, we’re close to 2 million vehicles sold. In the US, about 600,000 vehicles have been sold—up from close to zero about six years ago. If we keep up numbers like that, EVs will soon be a big chunk of the market.

It’s starting from a low level, but the pace of growth is mounting. We saw this with solar and wind: You may start from a low level, but grow at 30-40 percent annually, and pretty soon it starts to add up.

China is investing very heavily in EVs. A number of European countries are, as well. In Norway, EVs now account for more than 20 percent of new car sales. In the Netherlands they’re also pretty substantial. German automakers are investing very heavily in EVs. BMW, and VW have indicated commitments to having a wide array of EVs in the coming years; BMW expects to have a plug-in version of every vehicle they sell.

EVs are the cutting edge of automobile technology. Pretty much anyone in the industry would tell you that this is the future of cars. If the US does not start producing more EVs, we’re going to be playing catchup with Europe and China, and end up buying vehicles and technology that are produced somewhere else. This is a technology that we want to stay on top of—even aside from all the environmental reasons, simply for the competitiveness of our companies.

Speak to the technological advancements in today’s EVs.

There are a number of different advancements in terms of making EVs operate more efficiently, but the single biggest advancement is in battery technology. 

The US is in quite a good positon on battery technology, because the Obama administration invested very heavily in it with all kinds of loan programs and support programs. We’re reaping the benefits of that right now. Every year, batteries are becoming cheaper and about 10-15 percent more energy-dense.

That manifests in a rapid increase in range for electric vehicles. We’re currently in the middle of a generational shift in EVs, from a generation of cars that have a range of ±100 miles to a new generation that has a 200+ mile range. The Chevy Bolt EV was the first one of this new generation at a reasonable price; there’s also Tesla’s new Model 3, and Nissan and several other automakers are coming out with new vehicles in the next year or so.

I expect that within two years, most electric vehicles on the market will have a range of 200+ miles. That’s in large part due to battery technology getting more powerful and cheaper than anticipated.

In the spring, the California Air Resources Board unanimously voted to reaffirm the state’s clean car standards, rejecting automakers’ requests to weaken zero-emission vehicle standards. Speak to the battles within California over supporting or advancing the EV marketplace.

I was at that Board meeting, and I have to say, practically every person who spoke was supportive of their move—with the exception of some representatives from automaker trade associations. They were concerned that it would be difficult to achieve those goals. But in fact, I think the state’s goals are very modest.

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Given our existing technology and where that technology is going, I don’t think getting 1.5 million cars on the road by 2025 will be very hard at all. There’s plenty of room to ramp up that goal.

EVs are popular because they’re fundamentally better cars to drive. They’re more powerful, they’re more convenient to own, and they’re cheaper to fuel and cheaper to maintain. As a membership association of EV drivers, we survive because when people get into these cars and experience driving them, they become very passionate about them and want to tell everybody about them. 

We feel that the biggest challenge for EVs is that most people just aren’t aware of them, or don’t understand what they’re all about. But once people experience them, they get it.

Japanese automakers are moving to some extent toward hydrogen fuel-cell vehicles. What is Plug-In America’s attitude to these vehicles entering the US market?

Today, it’s pretty clear that for light-duty vehicles, electricity is a more compelling technology.

There are a few challenges with hydrogen fuel cells. One of the largest is infrastructure. Hydrogen stations cost around $1 million apiece right now to build; they’re very expensive. There are just a handful in California, and practically none anywhere else. Building out that infrastructure is really daunting—as contrasted with electricity, which is already everywhere. 

Most EV drivers plug in with a regular 110-volt plug. 110-volt plugs are pretty much everywhere. There’s one about five feet from me, and there’s probably one pretty close to you, too.

Also, EV technology already has a significant base. There are probably 600,000 EVs in the United States, and something like 1,000 or 1,500 hydrogen fuel-cell cars. 

For heavy-duty vehicles, it may turn out that hydrogen is a better fit. The state is setting up enough hydrogen infrastructure for goods movement. But, for light-duty vehicles—those owned by consumers, that park in their own garage—it’s not a compatible technology, and the market is already showing that.

Following up on infrastructure: The Volkswagen settlement is moving along. How do you expect the results to contribute to the EV marketplace in the United States and California?

We’re very excited about Volkswagen’s plans for EV infrastructure.

One challenge with the infrastructure as it exists right now is that it’s piecemeal. There are a variety of different networks of charging stations that don’t always talk to each other. Some cities and states are putting in a lot of EV infrastructure, while others are not. If you have a membership card for one, you may not be able to use a station from another.

When I pull up to any gas station and pull out any credit card, it works. But if I pull up to an EV charging station, a credit card may not be enough. There are a variety of different charging station networks, and there is not interoperability. It’s all a bit patchwork right now.

What is exciting about the VW plan is their mandate to look at the country holistically. If it’s done well—and that remains to be seen—then there will be one organization and one pot of money that is intended to systematically address our infrastructure needs for the country as a whole, and not for different parts of different networks. 

When I pull up to a station, it needs to work. And the card I have in my pocket needs to work for it. It’s like when you’re driving across the desert and there’s one gas station—that thing better work for you.

Obviously, VW’s settlement does not include enough money to address all of our needs, but it could potentially have a really beneficial impact.

In that case, what impact will the settlement have on other players in the EV infrastructure market, like EVgo and ChargePoint?

Volkswagen has $2 billion to spend, a portion of which is going toward charging infrastructure. The US as a whole represents a big pie. There’s going to be plenty of need for these networks to continue to exist.

My hope is that VW will be able to create a single structure—a de facto standard for interoperability that other companies can jump into. That doesn’t put them out of business, because there will still be a need for a lot of charging infrastructure throughout the US. But it creates an overarching framework that drives us toward interoperability of all stations.

If you were to join us for VerdeXchange 2018 in January, what do you hope your panel on EV infrastructure and markets would address?

It would be great to talk about this question of interoperability—where different vendors in the marketplace are going with that—because VW will be rolling out their new system around that time, and it’s a critical issue. 

Cost is important, but reliability and functionality are the most critical elements of infrastructure. And until we have interoperability, we don’t have that.

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© 2017 The Planning Report | David Abel, Publisher, ABL, Inc.