I wonder how many recall the technical evolution of the home entertainment recording medium. While I’m probably missing a step or two in its evolution, I believe home entertainment recording started in earnest with the introduction of VHS/Betamax, followed by Video 8, mini cassettes, DVDs and now, home streaming. Streaming seems to have become the favorite medium with widespread market acceptance offering technological efficiency, quality, consumer convenience and economy.
For those like me who made investments in early-stage home entertainment equipment, you too probably have a hallway closet full of obsolete recording contraptions, tapes, cassettes and video discs that can’t even be sold on eBay. The rapid technological obsolescence experienced in home recording is a haunting forewarning of where we may be heading with current forays into electric vehicles and public funding. Although the environmental benefits of electrifying the transportation sector are indisputable, a sober evaluation of where the technology is today, and where it is likely to be going, in terms of design, functionality and cost, has yet to occur.
At the risk of defiling the punchbowl, I reluctantly suggest our regulators and legislators consider a pause in the rush to promote electric vehicles, perhaps slowing down until the market has evolved to where both vehicle batteries and charging protocols have a universal standard.
At last count there were at least 17 manufacturers selling electric vehicles in the U.S., making 53 models. These vehicles have over a dozen different charge rates and over a dozen different battery sizes that accept charges from three different charger levels, which themselves have several variations within each. Even the most energetic proponent of electric vehicles would have to concede that this stage of development indicates an extremely fragmented market in need of significant evolution and consolidation before definitive conventions take hold that are universally accepted, utilized and practical while also being economically viable.
‘Early and reckless’ public investment
With electric vehicles we may be falling into a trap, being whipped into an emotional frenzy by special interests who are the only ones benefiting from early and reckless public investment in early stage EV technologies.
Current plans for EV subsidies are as regressive as anything we have seen in recent memory. As proposed, the uniform electric rates each electric customer pays will have the single mother who is struggling to feed, shelter and clothe her family, subsidizing an electric Land Rover driven by the teenage daughter of, say, a wealthy surgeon. We may want to give this more thought.
Complicating this are competing demands for public subsidy of clean and reliable energy initiatives which are at an all-time peak. Currently there are initiatives on the table (or already in practice) for solar, wind, biogas and nuclear generation, battery storage, resiliency and a long list of energy efficiency options. It’s logical to ask how much of these initiatives can ratepayers afford and what are our priorities. Do we really want to utilize scarce public resources on early-stage technology certain to be quickly supplanted with evolving developments, or is taking a deep breath and waiting a short time for a standard to emerge, a more prudent course of action?
A different vision
Here’s one vision of how the EV market is likely to evolve and mature:
- EVs, batteries and charging conventions will become standardized across all vehicle manufacturers;
- Ultra-fast charging capable of fully refueling an EV in 10 to 15 minutes will become the standard;
- Batteries will be capable of accepting higher voltage from ultra-fast chargers;
- Ultra-fast chargers will be too expensive to install at private homes but will instead become available at traditional gas stations;
- Today’s integrated fossil fuel companies will emerge to take a larger role in both recharging stations, distributed generation and battery manufacturing;
- The universal standard for batteries and charging systems used by vehicle manufacturers will also allow the vehicle to take a charge at the lower speeds of Level 1 or Level 2 chargers.
With exploration and production investment for fossil fuels becoming less attractive, companies like Exxon-Mobil, BP-Amoco, Chevron-Texaco and other multinationals which own and operate retail gas stations, will make the investment in ultra-fast charging stations at existing gas stations. Their investment alternative in ultra-fast charging technology, and perhaps even batteries and power generation, will provide a hedge to their expected loss of gasoline and diesel market share as the use of electric vehicles increases. This investment will be made on the backs of their shareholders with limited, if any, public subsidy.
While current financial justifications for EV market penetration have been based on an assumed advantage in their per-mile-cost for driving versus that of gasoline vehicles, this justification is based solely on variable cost and ignores the required cost of capital recovery for both the charging station and inevitable electric utility distribution system upgrades. Utility upgrades will be required to handle increased capacity demand resulting from growing electric vehicle charging and the higher voltages required to facilitate rapid charging.
The future value proposition of EV’s will be based on:
- Equality in refueling convenience with the current gasoline norm;
- Parity to gasoline vehicles in the full cost-per-mile-driven;
- Providing for a decidedly cleaner environment;
- Better vehicle performance, and;
- Lower vehicle maintenance costs.
With significant competitive advantages, the per-mile-cost of driving an EV needn’t be less than the comparable cost for a gas vehicle, but it shouldn’t have to be more.
What is attainable in New Jersey?
Today’s cost of gasoline for a mile driven is approximately 13 cents and at that level there is plenty of room in the pricing of EV recharging to cover the larger capacity charges in electric utility rates required to renovate the local distribution system. There is also enough headroom to provide acceptable margins for the recharging station operator after covering both their variable costs and capital recovery.
Pricing for ultra-fast charging at 13 cents per-mile-driven can accommodate a buildup to 300,000 new electric vehicles and development of 2,300 ultra-high-speed recharging stations in New Jersey over a five-year period. At that pricing level, utilities will be provided with over $300 million in new capacity payments while station owners will have enough profit to recover their investment in ultra-fast chargers in only two years.
EV owners who want to install lower voltage charging at their homes can have a separate meter installed, solely used to measure vehicle charger demand and consumption. That, in conjunction with new tariffs designed to address the load characteristics of residential EV charging, will place the burden of home charging and any required residential utility system upgrades on EV owners, eliminating the regressive nature of our current plans (although ultimately high speed charging widely available at gas stations should make the need for at-home charging less necessary).
With this approach there is no public subsidy but rather affordable bootstrap financing by users and charging station operators who will make rational economic decisions to invest in the technology. And this scenario is not decades off into the future. The technology for both ultra-fast charging and batteries that can accept the higher voltage from ultra-fast charging exists and are in use today.
If government views a transition to electric vehicles as a worthy public policy objective as most of us do, we should be capable of mounting a national effort on a scale similar to our former space program, with a goal of achieving commercial viability in the very near term. It is that important. The impediment represented by the absence of universal standards on the type of charging and batteries used by vehicle manufacturers can be easily addressed through legislation and regulation.
A deliberate and expedient effort to consolidate fragmented markets which impede market acceptance of electric vehicles should precede investment of public resources. Today’s EV equivalent of VHS technology is certain to experience rapid obsolescence and with it, our future regrets for squandering scarce public funding, an inevitable fate of our current trajectory.