There have been a number of stories in the news lately claiming any and all incentives for EV drivers are a foolish waste of money and are little more than giveaways to the wealthy. After all, virtually all electric cars and most plug-in hybrids cost $40,000 or more — sometimes way more. Who can afford such expensive cars? Here’s a headline from January 30 in the Dutch News: Electric car subsidies largely benefit ‘rich’ Tesla and Jaguar drivers.
“We have heard the complaint come up that the utility-funded programs for EV charging infrastructure are a subsidy to EV owners, who tend to be well off in the first place and are driving their Teslas,” Chris King, chief policy officer at Siemens Digital Grid, told a webinar conducted by Advanced Energy Economy recently. “That couldn’t be more wrong. California, which has close to half a million, is looking at net benefits already exceeding the $1 billion number. And this is to non-participating rate payers.” The webinar was covered for Forbes by contributor Jeff McMahon.
Matt Stanberry, the managing director of the advanced transportation program for the trade group Advanced Energy Economy, agrees. “These vehicles use a different kind of fuel and plug into our electricity system, and the good news about that is that there are a number of cost-benefit studies that are showing this can be really beneficial to all rate payers, not just the drivers of the vehicles. As you increase electricity sales for charging the vehicles, it has the effect of driving down rates for all ratepayers because it spreads the fixed cost of the system out across a larger volume of sales.”
Studies In Northeast And California
Recent studies in 5 Northeastern states and in California have looked at the impact of EVs, and each car provides hundreds of dollars a year in benefits for several groups of people. EV owners save fuel and maintenance costs. Utility customers benefit from lower fixed costs. And everyone benefits from reduced carbon emissions. Chris King believes each EV confers total economic benefits worth between $2,000 and $2,500 during its useful life.
“When I drive my Tesla — I wish I had one, I don’t — but when I do drive that, I’m providing the $2,500 in benefits to all the other ratepayers,” King says. “Those are not coming to me, but because of the investment I made and because I’m using the vehicle. So that investment in infrastructure is benefiting all ratepayers. It’s not a subsidy in any way to those EV drivers.”
Stanberry says the social benefits of EVs scale up dramatically the more of them there are on the road. One study by EThree finds societal benefits to California from EVs to be $720 million to $1.06 billion, but they increase to $1.6 billion with more EVs on the road. “The trick, of course, is that the benefit mounts as you get higher levels of adoption of these vehicles. The more adoption the more benefit you get — and you need to have people charge at the right time, which means charging off peak when there’s spare capacity on the electricity system.”
More Education Needed. Utilities Should Do Their Part
He says many mainstream car buyers are still largely unaware of EVs, which means they don’t consider buying one when they go shopping for a new car. Educating consumers about the benefits of electric cars could boost EV sales dramatically. Utility companies should help get the word out about electric cars, he says. Since they have only one product to sell — electricity — encouraging people to use more of it would seem to be in their best interest.
“Survey work has been done, a number of surveys, and one of the recent ones found that 60 percent of potential car buyers are unaware that electric vehicles are an option as they look for new vehicles,” Stanberry says. “At the same time there’s good data from surveys as well that as much as 84 percent of customers — when we describe the kind of benefits that EVs provide — would be interested in those kinds of vehicles. So there’s a disconnect here.”
“As utilities and utility commissions think about EVs, they should be aware that utilities are really well positioned to help in this education process, but it’s clear they’re not going to do it all themselves. But they are connected to all ratepayers and they can really help ratepayers understand the benefits of EVs and the charging that will be done on their system.”
More EVs — good for drivers, good for utility companies, good for utility customers, good for the environment. It’s time for utilities to step up their EV education efforts and provide more incentives for customers to switch to electric cars.