Sometimes, logical considerations are so simple that our natural tendency is to question them. Personal transportation is a good example. We’ve been taught to think of pumping gas and the associated fuel dollars spent as a given, as the cost of having independent mobility freedom. Right? And we accept that, because many parts of the US don’t have regional gas production facilities, it costs us even more than other places to buy gas.
Let’s step back from this norm about fueling dollars and think about it a bit more closely. Wouldn’t it make sense to focus on generating electricity locally, so consumers can shift to electric transportation and save money as they plug in? Wouldn’t EVs that source electricity locally keep transportation expenditures recirculating through local economies?
The answer to those questions is yes. When we drive our EVs in our home regions and draw upon locally-generated electricity, we’re saving a whole bunch of money. It’s time to emphasize that under-discussed benefit of EVs.
Southeastern Consumers & The Fuel Dollars They Spend
Let’s use the southeastern US as a case study.
- Southeast consumers spend approximately $94 billion on gas and diesel fuels annually.
- The region has nearly no oil production or refining operations.
- When sold to drivers, a portion of gasoline and diesel fuel sales — about $64 billion — leaks out of the region’s economy every year.
- If all of the region’s vehicle miles traveled were electric, Southeast consumers would spend only approximately $52 billion on electricity.
- An additional $5 billion would stay in the region.
Those numbers are drawn from a new Southern Alliance for Clean Energy (SACE) analysis titled, “Retained Transportation Fuel Spending in the Southeast: Electric vs. Internal Combustion Vehicles.” SACE analyzed how much consumers spend on gas and diesel, how much of that transportation fuel spending remains in a given Southeast state, and how much leaves. The analysis then looked at what happens if all on-road gas and diesel-powered cars, trucks, and buses are replaced with vehicles that drive entirely on electricity.
The executive summary describes the fine points about how electrifying transportation could provide an economic boon for Alabama, Georgia, Florida, North and South Carolina, and Tennessee.
Because the Southeast has nearly no oil production or refining operations, only about one-third of the $94 million — approximately $30 billion — is retained in the region’s economy, and the rest leaves to pay for the imported fuels. That adds up to $64 billion leaking out of the area’s economy every year.
As light, medium, and heavy-duty vehicle electrification accelerates, more efficient vehicles and cheaper in-state-generated electricity allow consumers to spend less to drive the same number of miles. If all of the region’s vehicle miles traveled were electric today, the report says that Southeast consumers would spend approximately $52 billion on electricity, reducing consumer transportation fuel spending by $42 billion annually.
Additionally, more than two-thirds of those $52 billion dollars spent in the southeast on electricity for transportation — approximately $35 billion — would stay in the region, vs. the $30 billion that is currently retained on a system that relies heavily on gas and diesel. This means an additional $5 billion annually could begin recirculating through and supporting local economies if the region switched to a fully electric transportation system.
By saving consumers $42 billion in fuel spending and keeping an extra $5 billion in-region, electrifying transportation in the Southeast would result in $47 billion in transportation fuel spending retained annually.
The Southeast clearly has a lot to gain by distancing itself from imported gas and diesel and embracing locally-generated electricity to power transportation. Such an embrace would result in even greater payback over time as the region, which basks in sunshine, ramps up utility-scale and distributed solar generation, allowing even more dollars to be retained and invested in local economies and local jobs. Collectively, Alabama, Georgia, Florida, North and South Carolina, and Tennessee make up 18% of the nation’s population. These states have secured 18% (7,785) of EV jobs, and an outsized 37% ($11.2 billion) of national EV investment.
As retained dollars recirculate through local economies, they would create a multiplying economic impact.
The Deep Dive Into Transportation Electrification
This analysis is important so that policymakers, utility regulators, and industry stakeholders can broaden their views of transportation electrification costs and benefits, engage in stimulating discussion, and seek out additional research.
Sure, electrifying America’s car, truck, and bus fleets will require federal, state government, utility, and private investment. That’s been made clear by:
- the billions of dollars earmarked in the federal infrastructure bill
- the $93 million of EV-related Volkswagen Settlement funds spent to date by Southeast states
- the over $189 million invested and proposed by Southeast utilities
- the more than $30 billion of auto industry investment in passenger EVs alone
It’s also important to look beyond direct EV jobs to supply chain jobs, including mineral mining, battery production, charging infrastructure manufacturing and installation, and industry research and development.
The authors of “Retained Transportation Fuel Spending in the Southeast: Electric vs. Internal Combustion Vehicles” plead with state policymakers and utility regulators…
“… to understand what is at stake. We need a strong EV market to retain billions of dollars in transportation fuel spending and support continued regional EV industry job growth. To foster a strong EV market, we need favorable policies and regulatory reforms.”
They point to policies like the Transportation Climate Initiative, Zero Emission Vehicle standards, the Advanced Clean Truck and Omnibus rules, and the allowance for EV manufacturers to sell their products directly to consumers as “levers that can be pulled” to enable consumers and fleet operators to access EVs, generate revenue to support state programs, improve public health, and cut carbon emissions.
Utilities and regulators are beginning to propose and approve more ambitious electric transportation investments, but the Southeast currently represents just over 4% of utility EV investment nationwide. Utilities have great capacity. They can:
- spur EV charger deployment
- support school and transit bus electrification
- educate consumers at scale
And doing so is in the utilities and ratepayers’ best interests. EVs would create new electricity demand, which, in turn, would increase utility revenue and, at the same time, put downward pressure on utility rates. Utilities are also positioned to ensure EV investments are equitable and reach traditionally marginalized and underserved communities.