December 20, 2018 - From the December, 2018 issue

CEC's Hochschild: Technology & Cost Trends Are On The Side Of EVs

2018 was a banner year for electric cars in California. As Governor-elect Gavin Newsom prepares to take office next month, regulators and industry leaders continue to push for bolder actions on electric car policy, clean technology business development, and partnerships to encourage greater private sector adoption. In an interview with The Planning Report at the recent Veloz Forum, California Energy Commissioner David Hochschild affirmed “the future is approaching faster than ever” for electric cars, a decarbonized renewable energy grid, and the transition to an integrated, zero-emission transportation network. Hochschild also highlights Veloz’s Electric For All public awareness campaign, as well as the market forces on the auto industry to release models that are as attractive and customer-friendly as the Tesla.


David Hochschild

"It's pretty clear at this point that any company that is not on a path to introduce an electric vehicle soon is going to get locked out of the market.” —David Hochschild

As a California Energy Commissioner and chair of the board of Veloz, share your perspective on how successful the state and national has been in commercializing and marketing electric vehicles.

David Hochschild: Electric vehicles are either going to succeed or fail through California. This is the market. We are about half of the US market for electric vehicles today.

The good news is that we are making a lot of progress. This was a banner year: In January, California was selling 6,000 EVs a month; in September, that increased to 21,000 a month. There are 44 models of electric vehicles on the California market. The largest vehicle manufacturing operation in the whole state is an electric vehicle factory—Tesla—which employs twice as many people at its factory as when the facility was owned by GM-Toyota just a few years ago. There is a lot of momentum here.

One thing that’s exciting to me as a policymaker is the nexus between electric vehicles and the deployment of renewable energy on the grid. California has tripled renewable energy production in the last 10 years. We are at 32 percent renewable energy today, and we are going to 100 percent by 2045. It’s now clear that we will have a clean electric grid in California.

I’m also excited that the technology and cost trends are very much on the side of EVs. Lithium-ion batteries are following a similar cost reduction trend to that of solar power, and their energy density is increasing at the same time.

I’m here in Los Angeles for the LA Auto Show. It’s clear now that most automakers now either offer an EV, or are developing one to introduce soon, or at least offer a plug-in hybrid. The trend is for more companies to do what Volvo is doing: become an automaker that does not make conventional cars, but only makes plug-in hybrids and electric. That’s very promising.

What Veloz aims to do is to fill an important missing piece of the puzzle: a public awareness campaign. We are launching the Electric for All Campaign to achieve that.

As we do this interview at the Veloz Forum, elaborate on new OEM committments to EVs.  Do any vehicles particularly jump to mind that will help scale EV sales?

One example is Mitsubishi. Yesterday, the North American CEO announced that the future for the company is electric sedans. Mitsubishi is a rising star in the auto industry—car sales overall went up 2 percent last year, while Mitsubishi sales went up 17 percent. It’s the more forward-thinking car companies that are adopting the electrification pathway.

Tesla should get a lot of credit for this. In my opinion, the single greatest impact of Tesla as a company is not their vehicles—although they’re now making almost 1,000 electric vehicles a day out of their Fremont factory. Instead, the single greatest impact of Tesla is the pressure it has put on the rest of the auto industry to come out with vehicles that are as sleek, sexy, attractive, fast, and customer-friendly as the Tesla is.

It’s only over the course of the last couple years that the trend toward EVs has happened, and it has been driven in large part by a California company. That development has been remarkable to watch.

What does it say about the EV market that carmakers like Subaru—not only sleek brands like Aston Martin and Porsche—are introducing an electric vehicle for the first time this year?

There are many niches, but ultimately, Tesla sent a message to car companies across the industry that they have to have a foot in the door. It’s pretty clear at this point that any company that is not on a path to introduce an electric vehicle soon is going to get locked out of the market.

Now, what are the barriers to people buying electric cars today? One is cost. That’s coming down significantly; for example, I drive a Chevy Bolt, which cost $35,000. Another is range. My Chevy Bolt’s range is 238 miles. Both of those things are getting better, but the availability and speed of charging are two very important points that still need to be addressed.

The state of California now has a goal and a program to get to 250,000 electric vehicle chargers by 2025. But most exciting are improvements in the speed of charging. Electrify America has developed a charger that can provide 20 miles of charge in one minute, and 200 miles in 10 minutes. That’s really not so different than going to a gas station. That’s what we need to proliferate everywhere, because that’s what is going to facilitate mass adoption. 

The California Energy Commission has been deeply involved for years investing in energy storage and battery technology projects. What results from such investments gives you confidence that such investments are meeting your expectations?

The CEC has funded about 35 energy storage demonstration projects around the state, a number of which are lithium-ion battery. The big-picture trend is that lithium is becoming to storage what silicon is to solar: the dominant technology. Moreover, the cost trends are going down as we get greater automation.

California actually has a very exciting opportunity to become a leading lithium producer: We have enough lithium in the Salton Sea to meet one-third of global demand.

Another important development is the increase in energy density. For the same form factor, you can get more miles per square foot of battery space in your vehicle. I’m very bullish on the long-term trends for these reasons.

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The Planning Report recently interviewed Sacramento Mayor Darrell Steinberg about the grant the city received to become Electrify America’s first “Green City.” What’s the significance of that grant, and is Sacramento’s experience & success with electrification is scalable for other cities in California?

What’s happening in Sacramento now is path-breaking; it’s a model for the state. And it’s not just electric vehicles; this project spans electrification of everything. For example, the city is now offering whole-home retrofits to get your home off of natural gas. My own chief of staff just got an $11,000 rebate to convert all his gas appliances to electric. Electrify America is focusing on going big in one city to show how this vision can work, and I applaud them for that.

Part of the reason this is valuable to the state is that the more we electrify everything, the better it is for the electric grid. It puts more levers at our disposal to keep the grid reliable, as well as clean.

For example, as a state, we want to get to a point where we have “electric vehicle happy hour”—a period when all our electric vehicles are plugged in to charge, using the surplus renewables we generate mid-day. At this point, we have to curtail renewable energy generation almost every day somewhere in California. As more electric vehicles get deployed, they can help suck up that surplus energy and make use of it. That’s a positive.

A number of national and global research institutions will be represented at VerdeXchange 2019 in January, including the National Renewable Energy Lab, Lawrence Berkeley Lab, Caltech, and NEDO from Japan. How has California’s incredible research capacity contributed to the acceleration of a cleantech future for the state? 

We’re fortunate to have the partnership and collaboration of a lot of research institutions around the world, and I’m grateful for it. At the end of the day, the main purpose served by all this research is to bring the cost down of clean energy technologies. After that, the technologies win on their own.

Solar energy is a classic example. Before Governor Brown to the Energy Commission appointed me, my background was in the solar industry. In 2000, it was 50 cents a kilowatt-hour for utility-scale solar. Because of a whole bunch of innovation and research, it’s now down to under 2 cents a kilowatt-hour. That is what now needs to happen with electric vehicles, energy efficiency, and energy storage.

A lot of good work is happening across all these agencies and countries, but we’ve got to step it up. California recently hosted the Global Climate Action Summit in September, with 4,000 delegates from around the world. One idea that I would love to advance in California is for our next big global summit to be about cleantech innovation and connecting entrepreneurs to investors—driving the businesses and supplying the research that is going to make the cleantech industry succeed.

If we were to talk again about EVs and electrification 12 months from now, what do you think would be different?

We’re going to have a new governor take office on January 7. I’ve been fortunate to know and work with Gavin Newsom closely for the last 20 years. He is a huge supporter of EVs, and he’s been driving one for a long time. I think he has the fire in the belly to make this vision go big, and he understands that it is an important part of California’s economic future as well as our environmental future.

In the national context, Congress and the White House have been in retreat on this key issue of building a clean energy and transportation future, and the entire challenge of climate change. With Newsom’s administration coming in, I think there will be a lot of eagerness to move forward on this.

Given the fires and the smoke we’ve seen in California recently, I think clean air is going to be our No. 1 issue moving forward. We have got to be all about clean air as a state. And I think the transportation sector is ripe—perhaps more so than any other area at this point—to make some headway there. 

Lastly, TPR carried remarks Gavin Newsom gave before the election about his vision and plans; when asked about freeways and transportation, his response was essentially: “You’re not thinking big enough; I’m already thinking about flying taxis.” How big, and how practical, is his vision?

Let me tell you a story. I’ve worked with Gavin Newsom on many environmental issues, and I wrote his energy plan when he ran for mayor of San Francisco back in 2004. When we sat down to discuss what was going to be in that plan, he told me, “I drive an electric vehicle.” Now, it was 2004; nobody drove an electric vehicle. So I said, “Do you mean a hybrid?” And he said, “Oh, no. I wouldn’t sell out like that.” In other words, he’s been a true believer for a long time—and very prescient.

The thing that I really like about Gavin Newsom is that when he has conviction about something, he really doesn’t care what the obstacles are. The best example is marriage equality. He took that issue and ran with it back when a lot of people were saying, “That’s never going to fly.” Now it’s the law of the land in all 50 states and it has the public support of almost two-thirds of the country. I think he will approach building our clean energy and transportation future through that lens.

As a businessman, Newsom also understands what cleantech businesses actually need to survive. It’s not academic for him. He really knows that when it takes our agency six months to process a grant, which can be the difference life and death for a small company. I think the Newsom administration will be mindful of those kinds of challenges as we work to build up cleantech.

 I believe that cleantech is going to be the new high tech. Look at Apple, Google, Facebook, Uber, and all these global multibillion-dollar companies that were born in California and have become dominant around the world. The next generations of those companies are going to be cleantech companies. That’s the vision that I’m excited about.

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© 2019 The Planning Report | David Abel, Publisher, ABL, Inc.