Chargers Are the Final Roadblock to America’s Electric Car Future
(Bloomberg) -- Rods and waders were already packed into the electric Jaguar I-Pace as it gorged a few more electrons from the wall of my New Jersey garage. A quick glance at a map of northeastern Pennsylvania revealed charging stations clinging to the Delaware River like so many spots on the brown trout I was hoping to catch.
A few days later, I pulled up to one of those chargers on the picturesque main street of Honesdale, only to realize it was a level 2 unit—one step above a standard outlet. It would take four hours before the car had enough juice to make the 100-mile trip home. Eleven miles down the road, it was the same story. And while that spot had a superfast Tesla charger, it was incompatible with the I-Pace. The nearest level 3 charger that would work was 58 miles away. So I gave up and settled in for a while.
Electric car-range anxiety revolves around a brutal equation: Remaining miles of battery life (as estimated by the car) minus miles to destination equals hope (or despair). Making matters worse, the answer varies from one minute to the next, depending on terrain and speed. Desperate battery-powered travelers can be easy to spot: They are often sweaty (no air conditioning), driving slowly and—when going uphill—instinctively leaning forward in their seats.
Failing to note the difference between a level 2 charger and a harder-to-find level 3 charger is often the mistake of an electric vehicle rookie. Had I realized the distinction, I would never have considered a car such as the I-Pace (it was a loaner), or any of the dozens of Tesla rivals set to debut in coming years. For the future of electric vehicles in America, that’s a really big problem.
Before the pandemic struck, the auto industry had plans to spend at least $141 billion over the next few years to retool supply chains in a historic shift from internal combustion to battery-driven machines. The financial reasoning was clear: Roughly one-third of U.S. drivers say they may go electric the next time they buy a vehicle.
Dozens of new electric models have been planned, almost all of which will have a 200-mile charging range. Getting to 200 is a big deal: for years, the question of battery capacity chained the EV market to its crib. But while range anxiety will soon be banished from the showroom, it remains very much alive on the open road. Huge swaths of the U.S. are without charging stations, a reality that consultants such as McKinsey say may be the largest barrier to mass EV adoption in America.
On average, Americans drive only 37 miles a day, a distance easily covered by almost every EV on the market. Only 15% of the miles logged by the average U.S. car come during trips that are 100 miles or longer.
Buying a vehicle in the U.S., however, has long meant purchasing the freedom to go anywhere you like. Nick Nigro, a former engineer and founder of EV research group Atlas Public Policy, said the limiting factor many see when they look at an electric vehicle is the risk of being stranded on the side of the road, even if it would rarely if ever be an issue.
“It that’s irrational, it doesn’t matter,” Nigro said. “Buying a vehicle is not rational.”
Speed is another problem: Of the 64,000 vehicle-charging plugs in the U.S., only about one in five can juice a dry machine in less than an hour, a Bloomberg News analysis of U.S. Department of Energy Alternative Fuels Data Center figures shows.
Most plugs are essentially for shoppers or commuters, not long-distance travelers. When filtered for level 3 chargers, small EV deserts become big ones: All of North Dakota and most of Mississippi, West Virginia and Wyoming are just a few examples. Alabama, Montana, Nebraska and western Kansas are pretty parched for power, too.
A range of charging startups do promise thousands of new chargers, though timelines are hazy, and even the most ambitious plans will still skip much of the country. Thus the U.S., the world’s No. 2 auto market, is stuck in a microeconomic staring contest of sorts: Without chargers, rural drivers aren’t likely to go electric. And without enough buyers, automakers aren’t likely to ramp up production.
“It is the classic chicken-and-egg problem,” said Brian Collie, senior partner at Boston Consulting Group. “And this is something that is not going to be solved in the next year or two. It’s going to take a decade-plus to get what we really need.”
Sometime in the next couple of weeks, the world’s one-millionth public electric vehicle outlet will start powering cars, according to BloombergNEF; only 8% of those cords are in the U.S. The coronavirus has likely exacerbated the charging gap, thanks to deep economic uncertainty, unprecedented layoffs, production disruptions and low gasoline prices. Global EV sales are expected to fall 18%, to about 1.7 million units this year, with an inordinate share of that swoon happening at U.S. dealerships.
In the Upper Midwest, the future of driving comes to a halt in the parking lot of Noodles and Co., in Moorhead, Minnesota.
Hard by I-94, customers can plug in while picking up gluten-free Mac & Cheese and cauliflower rigatoni. To the west, just across the Red River, is North Dakota, but for EV drivers planning a road trip it might as well be the Rocky Mountains. The closest public, fast-charging station in that direction is 759 miles away, at a Harley-Davidson dealership in Belgrade, Montana—more than one-quarter the distance across the country—and it closes at 6 p.m.
For charging networks, the calculus is unforgiving. Not only is a rural station a bet on future demand, but an expensive one at that. The hardware for a level 2 charger costs $2,500 to install. Infrastructure for a level 3 charger, however, can easily top $320,000, according to a recent study by the Rocky Mountain Institute, a nonprofit focused on energy.
Such a unit can pump up to four times more electricity per minute than a standard outlet because it’s equipped with liquid-cooled wires and a high-capacity conduit. The surrounding grid often requires stronger feeders, new meters and transformers that cost up to $173,000 apiece. Digging trenches for cables and building a structure to protect the pumps adds to the price tag.
In other words, only the busiest fast-charging stations operate in the black. Build one too far from a buzzing city or interstate corridor, and you might as well set your money on fire. “The math just doesn’t work,” Bloomberg Intelligence analyst Kevin Tynan said.
As for consumers, charging rates vary widely by region, based predominantly on rates set by the state utility regulator. On average, commercial electricity in the U.S. trades at about 10 cents per kilowatt hour. At that rate, it costs about $6.60 to fill up a Chevrolet Bolt, roughly 2.5 cents per mile. But it’s seldom that cheap because EV stations typically charge by the minute, rather than by the amount of electricity used, and they often add service or membership fees.
EVgo, a 10-year-old charging company based in Los Angeles, said it operates 815 fast-charging stations in the U.S. At least 115 million Americans live within a 15-minute drive of an EVgo plug, which equates to roughly half of all licensed drivers. Ideally, each customer has a few plugs to hit regularly—say, one at a grocery store, one at a gym and a third near the local school.
The company prefers to position chargers in clusters around higher traffic regions, as opposed to long strands of plugs that would help shrink charging deserts but get less use. In some parts of the country, EVgo said it can’t build chargers fast enough. “We’re barely skating ahead of the puck,” said Julie Blunden, EVgo’s executive vice president of business development.
The companies use rate is high because it has skipped over much of the country. “What we won’t do is build willy-nilly and then wait three years for demand to show up,” Blunden said. Population density, the number of nearby EV owners and traffic at existing EVgo stations dictate where new chargers will go.
ChargePoint, another big name in charging infrastructure, has about 715 fast-plug stations and thousands of slower charging stations and is squarely focused on regions where EVs already live. Apartment buildings and urban parking garages are low-hanging fruit. according to CEO Pasquale Romano. Lately, the company’s fastest growing business has been company parking lots whose electric output is often subsidized by the employer.
“Would I say that it’s perfect? No,” Romano said of the business model. “Is it close enough for where the market is right now? Yeah.”
Even EV owners in major cities need plan carefully. Traveling from Raleigh-Durham, North Carolina, to the Outer Banks, for example, is dicey; there are just two public, fast-charging outlets on the entire strip of barrier islands. From Austin, Texas, the Hill Country to the Northwest is ill advised. And a ski trip from Albuquerque, New Mexico, to Taos is still a nail-biter in a Chevy Bolt.
Automakers, however, are largely staying on the sidelines, waiting for EVgo, ChargePoint and others to fill the gaps. General Motors has said it’s focused on a “zero-emission” future, yet it’s neither building charging stations nor buying any. Rather, it’s teamed up with Bechtel Group, a Virginia-based engineering company, to pitch outside investors to bankroll thousands of new chargers.
Ford, meanwhile, has cobbled together a network of sorts—dubbed FordPass—that will help its EV buyers find and use plugs operated by EVgo, Chargepoint and others. The network will be “the Pokemon Go of charging,” said Ted Cannis, Ford’s head of electrification. “‘Look, they’re all around you; here’s how you find them.’”
Ironically, it took a pollution scandal to get Big Auto into the charging game. Volkswagen, as part of its “Dieselgate” settlement, is spending $2 billion to install new chargers across the U.S. via a company dubbed Electrify America. At the moment, 428 of those sites are on line, and the network will expand to 800 by 2022. Its “convenience-store” model is focused on building out regional networks of chargers, ideally at retail sites, said Brendan Jones, the company’s chief operating officer until he left in March.
An additional $2.7 billion is being funneled by VW to individual states, up to 15% of which can be used to build charging infrastructure. Slowly, that money is trickling into new chargers. Maine, for example, intends to use $3 million to subsidize up to 80% of the cost of new fast-charging stations along a number of predetermined travel corridors.
While charging tendrils creep, the small convoy of new, battery-powered vehicles has been struggling to gain traction. From its debut in October 2018 through the end of last year, Jaguar has sold fewer than 3,000 I-Pace SUVs in the U.S., the machine that I sputtered around the Delaware River; (Tesla has been selling more of its Model 3 machines of late). Audi’s E-Tron has been slightly more successful since it hit the road in spring 2019, but it has yet to sell more than 2,000 in a quarter.
Meanwhile, last year saw huge declines in demand for older, more established EVs, including BMW’s i3 (-21%), the Chevrolet Bolt (-9%) and Nissan’s Leaf (-16%). Given the high cost of massive batteries, profit margins are still far fatter on gas-burning machines, which relegates these EVs to a niche business at best.
Of course, the anemic sales figures may have something to do with how few of these machines are being made. “I applaud all the announcements,” said ChargePoint’s Romano. “But I’m very frustrated … the initial production capacity for a lot of these vehicles is not aggressive enough.”
There is, of course, a helpful proxy for figuring out what EV demand might look like in a more robust charging landscape. It’s a scrappy young company you may have heard of: Tesla.
The long-held narrative of mainstream auto executives (“We would make more electric vehicles if people actually wanted them”) has been flattened under a parade of Teslas, from the Model S and Model X to the popular Model 3. The automaker decided early on to build its own charger network, realizing there would be little financial incentive for the private sector to take a capital-intensive risk on a new market—one essentially created by a single company.
Shrewdly, Tesla made its charging club exclusive. The company’s fast outlets are proprietary and can’t be used by another brand’s vehicles (Adapters are available, so Teslas can use other charging systems.) In the U.S., there are slightly more Tesla charging outlets than there are on all other fast-charging networks combined.
Because Tesla CEO Elon Musk is more interested in selling vehicles than electricity at charging stations, his plugs are scattered more widely around the country. For example, Wyoming has 10 Tesla charging stations but only one fast-charging plug suitable for a Jaguar I-Pace. West Virginia is a little more balanced; it has eight Tesla stations and two fast-charging spots for other EVs.
Wood’s High Mountain Distillery bubbles up whiskey and gin in Salida, Colorado, about 140 miles southwest of Denver. When a regular customer asked for an EV charger so he could top off his vehicle on long trips, founder P.T. Wood installed one.
Wood, who is also mayor of the small town, was motivated by a trickle of EVs that regularly passed through. He applied for state grant money and installed six level 2 chargers at a cost of about $30,000 apiece. Virtually overnight, he said, Salida and the nearby Monarch Mountain ski resort were on the map for every Denver resident with a long-range EV.
“They have nothing better to do but walk around and spend money,” Wood explained. “So you can see the economic benefit.”
Small clusters of plugs such as those in Salida are popping up all over the country. In the past two years, the city of Healdsburg, California, 70 miles north of San Francisco, installed 12 level 2 chargers that are free to use after business hours.
“At 5 o’clock, it’s like EV sharks in the parking lot,” said Felicia Smith, the city’s utility conservation analyst. “They’re swarming, trying to get a spot.” The stations emboldened Rhea Borja, Healdsburg’s public information officer, to finally buy a Chevrolet Bolt. “Every time I drive by a gas station, I flip it the bird,” she said. “It’s extremely liberating.”
At some point in the next 10 years, convenience stores and infrastructure investment funds will likely rush into the charging space. Utilities meanwhile have asked for permission to build an additional 245,000 plugs, some $3.3 billion in infrastructure that they can offset by raising rates on the electricity being piped in to homes and businesses.
“You know Silicon Valley is fond of quips, and one of them is, ‘It goes slow until it goes fast,’” Romano said. “In this case, there is a lot of truth to that. It’s all going to flip very quickly.”
©2020 Bloomberg L.P.