I am so excited about the momentum we are seeing in the automotive/mobility industry around electrification and, in particular, EVs. It is a calling that is larger than just buying a new vehicle or getting from point A to point B. It is about something more significant than us; it is about sustainability, the environment, and future generations. All of this is important and a Nobel goal that we should never take lightly.
And while I see tremendous adoption and momentum, we need to be realistic. Today, EV represents 5% of the sales in the automotive industry in the United States. And that 5% will increase over time, and one day there will be a tipping point. Although in my humble opinion, that day is still in the future. I never doubt the direction or where we ultimately will end up with EV. And certainly, the need to have a greener planet and a lesser carbon footprint makes total and complete sense and is necessary. EV has the promise to transform government and fleet operations as well, but all of that requires infrastructure and an alignment between private and public sectors.
My issue is the timing, as I don’t think ICE vehicles will be obsolete by 2030 or 2035. I think the EV penetration will continue to rise year over year, but I don’t think it will outpace ICE vehicles anytime soon. We have many issues that have not been addressed, such as infrastructure, starting with electrical grids that are not positioned to handle EV at scale today. In Michigan, we still get brownouts when it gets very warm during the summer. The charging stations themselves are inconsistent, with some working great and others being out of service. Today, EVs still cost more, and there is a lot of conflicting information from a consumer standpoint. This information ranges from life span and cost of batteries, range anxiety, home charger installation questions, charging infrastructure, and costs of electricity bills just to name a few. Also, some consumers are car enthusiasts, and they love ICE vehicles, manual shifting, and gas-powered vehicles.
All this brings me back to my first position on the Internet back in 1995 when at Washington Post Newsweek Interactive. Back in 1995 at The Washington Post, the newspaper was absolutely a beast that drove substantial revenue through robust subscriptions and print advertising. There were folks who thought that as washingtonpost.com came alive that it would be the immediate end of the newspaper. While at first, the newspaper was not really impacted in the digital world. Over time, consumer preferences kicked in, and the newspaper has been on a slow and steady decline in both advertising dollars and subscriptions since that time. However, in 2022 over 27 years later, even though many smaller newspapers have collapsed, many of the larger ones are still around, albeit the business model is not doing so well – but evolving in the new world. There are still consumers that prefer to hold the newspaper and especially on a Sunday morning with their coffee. We know that, eventually, newsprint will likely be a thing of the past, but you can see that change happens slowly over time. And it is a generational change that shifts more quickly with younger generations.
I think looking back and understanding the evolution of the Internet in the publishing industry has a lot of similarities to the evolution of EV in the automotive industry. There is no question that, at this point, EV is not a far-flung idea or vision but rather part of a strategic plan that all OEMs are working toward. But not unlike the Internet, the progress and speed of the transition to EV will require many changes beyond just the automotive industry. I do think we take the approach that we have always taken during periods of dramatic change and that is embracing and supporting change, which is always disruptive.
In Europe, they are much further ahead with adoption. This has to do with many factors, including more aggressive government regulations, smaller and more confined landscapes, and a culture that has a laser focus on sustainability and the environment. I realize that many people think that it has taken a very long time for EVs to become mainstream, but really it is happening quickly. Recent history tells us it took 25 years to get to 10% for hybrids! These are EVs, not hybrids – hybrids are a compromise technology, not an end goal. They offer little change in how people use vehicles since they’re still fueled 100% by gasoline (though they are more efficient, and there are benefits for widespread adoption). We’re already past 10% for EVs in California, and the nationwide EV market share is about 5% in the first half of 2022, up from 2.5% last year. All this demonstrates that this technology disruption is happening and rather quickly.
In the United States, the biggest markets today for EV are the coasts. California is leading the way, and they also have greater government regulations than other states. Consumers do want EVs, but if a company doesn’t take its effort seriously, consumers will just turn to another company that does. EV buyers just aren’t interested in first-generation EVs in 2022, a decade after the Tesla Model S (arguably a second-generation EV) hit the road. And in order to get widespread adoption, EV costs must come down a bit.
As utility leaders consider this future, momentum and pressure are on all sides in the form of increasing collaboration between automakers, battery manufacturers, and both private and public sector initiatives driving change forward. Utilities planning investment in the grid must also factor in consumer confidence and convenience. A journey by EV must start with an inexpensive, easily charged vehicle at home and then provide complete consumer confidence thanks to a network of standardized, reliable, and quick charging options anywhere along the route. To deliver that, utilities must make the investments in not only grid upgrades and technology but the design and strategic implementation of charging networks that make powering the millions of consumers’ EVs – and commercial fleets – as easy today as it is stopping at the gas station.
We are not there yet, but we are on a path toward great change and progress. The timing is right, and we are ready to incorporate EVs into our daily lives. This is one of the most significant changes in the automotive industry to date. However, I think we also must realize that OEMs setting goals independent of utilities and government will not work. Ultimately, consumer confidence in EV technology and infrastructure is what will drive the adoption of EVs. I am not ready to put a prediction on national EV penetration in the United States, but I will say I believe it has already shown itself to be much faster than that of hybrids. As EV battery designs, costs, and infrastructure continue to improve, so will adoption. This is an exciting time. I also think it makes sense to be realistic, as authenticity is exactly what consumers want. People cast doubts when predictions on EV penetration are divorced from reality. But there is so much promise. Realistically, we are playing the long game, but the change and progress along the way will be impactful.
