Last month’s failure of the Texas electric grid, coming just weeks after General Motors’ pledge to make only electric vehicles by 2035, highlights the daunting task the United States faces as it takes the first steps toward weaning its economy off fossil fuels. While GM’s announcement is striking from a historical vantage point—the nation’s largest automaker choosing to jettison the internal combustion engine—the collapse of the Texas grid underscores how far the country has to go as it attempts to “electrify everything.”
Despite these challenges, the United States finds itself at a promising turning point, with new economic, social, and political forces driving a key aspect of the decarbonization of the economy—the electrification of cars and, eventually, trucks. The United States lags behind China and the European Union in the transition to electric vehicles, or EVs. But if the private sector and federal and state governments make a commitment to electric vehicles—something that has already begun with the Biden administration and US automakers—we think that within two decades a majority of new automobiles sold in the United States will be electric.
The road to that goal is strewn with obstacles, most notably establishing an extensive nationwide network of charging stations and improving batteries to the point where any EV can go as far on a rapid charge as an internal combustion car can on a tank of gas. And consumer attitudes will need to change, with individuals no longer viewing gasoline as the only reliable way to power a vehicle. But as technology steadily advances, with consumers installing solar panels on their roofs and batteries in their garages, the EV transition will hold tremendous appeal as a decentralized, empowering system where individuals can rely on self-generated electricity for their homes and cars, while also selling surplus power back to the grid.
This system will require substantial changes in how we regulate and operate the grid, including metering, pricing, and funding key modernization projects such as expanded grid-scale electricity storage. It will rely on close public-private cooperation on everything from advances in battery design to ensuring that fast-charging stations one day become ubiquitous. And this vision will face tremendous inertia and resistance because it is fundamentally at odds with the regulated monopoly mindset, giant power plants, and fossil fuel reliance of current grid operators.
Still, the events of the past couple of months show that this fossil-fuel dependent system is beginning to give way. The key now is to nurture a transformation.
The late-January announcement by Mary Barra, the CEO of General Motors, was a milestone in EV development. While GM describes its goals as “aspirational,” their specificity and ambition are noteworthy. And the fact that they were formulated in consultation with the Environmental Defense Fund, which has demonstrated success in working with major firms on improving environmental performance, is a first for the auto industry.
GM is by no means the sole company launching bold initiatives on EVs. Ford, which has had an electrification program for longer than GM, is offering electric versions of iconic brands such as the Mustang and F-150 truck. Volkswagen says it will invest €30 billion ($35.8 billion) in e-mobility by 2023, and by 2028 vows to offer 70 new fully electric VW models, with projected EV sales of 22 million for the VW Group. Startups also are increasingly active, with e-truck innovator Rivian signing a big deal with Amazon to purchase Rivian’s all-electric delivery vans, and new Chinese EV firms emerging seemingly each month.
Tesla, of course, jump-started all the excitement about EVs, and new Tesla plants are planned for Austin and Berlin. Its Shanghai plant is steadily boosting output of Model 3s. Meanwhile, new sources of private sector investment are pouring into EV and battery firms.
With batteries critical to growth in EV sales, the technology faces the familiar challenges of cost, range, and recharging time. The first truth of battery development is that unlike the exponential growth in the power and speed of computer chips, known as “Moore’s Law,” there’s no reason to expect exponential (rather than linear) improvements in key battery performance metrics. Any so-called battery “breakthrough” you read about will provide only incremental gains, in relative terms, compared to the silicon chip advances that fueled the IT/digital innovation of the past few decades.
New materials are continually being explored, as are new designs. For example, solid state batteries that replace the liquid electrolytes found in lithium-ion batteries are promising, though years away from cost effectiveness. And gains will also come from innovative tweaks on current design, such as combining cells of different sizes in battery packs for vehicles of different sizes, and better battery management software.
Battery range already has reached the point that it can easily cover the daily commuting-plus-errand needs of most consumers, but drivers will still need to recharge on long trips. Faster recharging times are, therefore, now coming into sharper focus. (Toyota, notably slow in providing battery EVs due to its earlier strategic bets on hybrid drive trains (i.e. Prius) and fuel cell EVs, is now promising a solid-state battery EV—with a range of 300-plus miles and a 10-minute recharging time—in prototype this year.)
Global competition is a key factor in battery development, and China is the most important force affecting EVs today on all fronts: supply, demand, batteries, infrastructure, and establishing cultural momentum. China’s dominance is due, in part, to its deliberate industrial policies that fostered battery R&D and a battery supply chain in parallel with its push for EV design and production by domestic automakers. This encouraged firms like BYD, which started as battery experts, to become auto companies, a development not seen elsewhere.
China also has ample supplies of lithium and rare earths needed for battery production, although far from a monopoly; other global sources are coming on stream as the economics become more favorable. And China requires that the foreign automakers producing vehicles within the country for domestic sales follow many rules, including operating as a joint venture with a Chinese automaker (to facilitate the transfer of technical and production expertise), dedicating a certain percentage of production to EVs, and using Chinese-made batteries in those vehicles.
The European Union is close behind China in coordinating regional and national policies to support electric vehicles. EV sales in the EU surged ahead of China in 2020 to reach 1.4 million vehicles, 137 percent more than in 2019, despite overall vehicle sales being down 20 percent. This is the result, observers say, of green incentives, the arrival of many new models, and intensifying promotion. Norway famously leads the world in rate of EV ownership per capita, with more than half of all new vehicle sales in 2020 being EVs. Cheap hydropower-produced electricity for near-free charging is one reason, but so are Norwegian tax subsidies for electric vehicles and charging infrastructure. As in the United States, competition with China is pushing the EU to develop its own battery and EV supply chains to avoid single-source dependence and to maintain a high technical level.
Given the huge number of new EV models now promised by automakers, charging infrastructure is taking center stage as the crucial bottleneck for faster EV adoption. The “chicken and egg” line with respect to EVs and charging infrastructure is often cited, but a more fitting analogy (thanks to the movie, “Field of Dreams”) might be, “If you build it, they will come.”
China has shown how important it is to build charging infrastructure ahead of demand, inducing purchases by creating a sense of cultural momentum and addressing range anxiety. A Columbia University report credits the central government’s strong support for charging infrastructure and for setting national standards, with just a single recharging interface. (The United States has three.) China also centrally collects more data on EV charging, whereas the US charging network has many different owners with little coordinated analysis, the Columbia report said.
Around the world, tipping the psychological balance of EV adoption from negative and fearful to positive and confident is as important as getting the economic piece right. To that end, investments in charging infrastructure will be most effective if they represent a full-court press —a significant number all at once, rather than gradual growth. And given that home charging will meet the routine needs of many rural and suburban EV owners, installation priority should be given to the most high-leverage charging locations, i.e. urban multi-use buildings and near interstates for long trips.
While Tesla’s strategic decision to provide its own superchargers for its own customers had a salutary effect both on its sales and on public consciousness about EVs, we don’t expect future charging stations to be branded by automaker. Instead automakers will partner with private firms to build charging infrastructure, but will also look to government for investment. For example, GM’s recent announcement included a pledge to work with EVgo to install more than 2,700 fast-charging stations in the next five years.
The Biden administration is backing a major effort on EV infrastructure, with plans to install 500,000 individual chargers (five times what exists now) at 28,000 charging stations. Biden’s plan could meet more than half of US charging demand by 2030 and “spark the sale of as many as 25 million electric vehicles,” according to Inside EVs. A major push to create EV charging infrastructure would also create many thousands of jobs—a key selling point in the drive to decarbonize the US transportation sector.
Working strongly in favor of EV adoption is an increasingly powerful force: the appeal of a new approach to the grid, one that is decentralized and supports individual and community energy autonomy, independence, and flexibility. Many different forces—particularly pilot projects that experiment with changed rules for the grid and are highly publicized—could help promote this vision.
It is tempting to view these extraordinary innovations in the EV market as the product of visionary entrepreneurs like Elon Musk. But the private sector and entrepreneurs operate within a world of law and regulation. An approach that acknowledges an essential role for states and the federal government can further accelerate the EV transition. Government actions include regulation aimed at reducing emissions from new motor vehicles, the use of government procurement power to stimulate demand (the federal government fleet has more than 600,000 vehicles), and significant financial incentives for replacing internal combustion engine vehicles with EVs.
Leading states such as California will also play an essential role in the EV transition. Last September, Governor Gavin Newsom issued an executive order setting a target that all vehicles sold in the state as of 2035 be Zero Emission Vehicles (ZEVs). This would put California — which adopted its first ZEV standard over 30 years ago—“on a path to carbon neutrality by 2045,” according to the California Air Resources Board.
Eleven other states, mainly in the Northeast (with Colorado and Washington as recent additions), also have ZEV standards. In addition, 12 states along the I-95 corridor and the District of Columbia have formed the Transportation & Climate Initiative to promote a cleaner transportation system. The initiative recently launched the Northeast Electric Vehicle Network, which will work with the public and private sector to “coordinate electric vehicle infrastructure planning and deployment throughout the Northeast and Mid-Atlantic region.” The goal is a seamless EV ride from northern New England to Washington, D.C.
Such aspirations may have seemed far-fetched a decade ago, but they are now within reach as the EV transformation gains momentum. Just five years ago, emissions from transportation overtook those from electric power generation as the largest source of greenhouse gas emissions in the United States, highlighting the importance of accelerating the EV transition. If addressing climate change requires us to “electrify everything,” then we need to see EVs as part of the larger energy ecosystem, not a separate piece. EVs stand to benefit from a modernized grid and will play a vital role in that modernization. So, too, will government officials who regulate the power grid—as well the policies supporting EVs—to ensure that these innovations have room to grow. An all-hands-on-deck approach is the only way to a clean energy future.
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