In an effort to combat climate change, California recently announced a ban on the sale of all gasoline-powered vehicles by 2035, sending a clear signal to automakers and utilities that the growing demand for clean fuel and zero emission vehicles (ZEVs) is here to stay. The state has consistently served as a change agent for clean energy initiatives, so we’ll likely see other states pursue similar mandates in the years to come.
Actually achieving this goal, however, comes with many challenges. ZEVs represented less than 1 percent of new passenger vehicle sales in California in 2009. Today, they represent about 8 percent. While this indicates significant progress, the share for ZEVs and other clean fuel vehicles needs to grow to 100% in the next 15 years. It’s a lofty goal requiring further build-out of the existing charging network, scaling vehicle production and delivery, and engaging with a more diverse range of customers.
Fortunately, California saw the shift to ZEVs coming and prepared its programs and infrastructure to get ahead of the curve. For instance, the CALGreen green building standards code fostered EV readiness early on by requiring that new construction and major building alterations include “EV Capable” parking spaces. Further, California’s electric utility programs designed to support EV charging infrastructure have several years under their belts and many incentives have become permanent offerings. These programs will be vital in helping California achieve its mandate, and should ultimately serve as motivation to other states looking toward similar action in the future.
Utilities Threading the Needle
One of the biggest challenges to phasing out gasoline-powered vehicles will be scaling vehicle production, particularly given the Covid-19 pandemic’s recent impacts on the supply chain. To keep up with the demand in California, automakers may need to divert ZEVs away from other states and regions where ZEV inventory is already lacking, such as the Southeast.
The good news is utilities can serve as helpful resources for automakers. To supplement the customer data available to automakers through industry surveys and real-world feedback, utility programs are in a position to leverage their customer engagement channels to help automakers better understand what customers want and need. Utilities can also reduce the costs associated with EV ownership by incentivizing charging infrastructure purchases and supporting the growing network of public charging stations. These actions will help maximize ZEV sales in the long run.
Utility participation is also critical to ensure the growing population of EVs are properly integrated in a way that improves grid management. Many offer time-of-use electricity rates that provide customers with a financial incentive to charge EVs during times when there is excess grid capacity. Managed charging programs leverage technology to predictably shift EV charging so that utilities can maximize benefits and lower costs to customers.
All in all, utilities will be fundamental in helping California successfully reach its goal of banning the sale of gas-powered passenger vehicles. However, there is still room for improvement in collaborative efforts. To make this commitment a reality in the next 15 years, utilities must become more involved — not only by supporting charging infrastructure, but also by partnering with automakers and other key stakeholders to share valuable customer insights. These relationships can be mutually beneficial since utilities seek to understand where vehicles are being charged on their system and the potential grid impacts.
How Can Other States Start Preparing?
California utility programs can certainly provide important learnings for utilities in other states, but ultimately, utilities need to take a personalized approach to developing programs that support EV adoption in their unique territories. Simply copying and pasting California’s best practices may not be effective in other parts of the country. For example, Southern California Edison’s Charge Ready Program has been incredibly successful in supporting commercial charging infrastructure, but that same program design may not be as compelling for businesses and properties in less mature EV markets.
The key is developing locally relevant programs that factor in policies, pertinent stakeholders, infrastructure needs, and consumer preferences. This starts with gathering input from customers firsthand. One simple but efficient way for utilities across the country to achieve this is by setting up customer-facing, EV-specific website content to engage customers and gather information about how EVs may suit their lifestyle. From there, utilities can develop robust, personalized education and outreach programs. The utility’s ability to educate customers on EVs and EV charging at a basic level will be imperative as we start to see mandates like California’s pop up nationwide.
Working groups and other collaborative approaches to policy development are also worth exploring. California’s ongoing work on vehicle-grid integration (VGI) is an example that aims to make EVs more valuable for both vehicle owners and utilities. And utilities shouldn’t hesitate to pilot EV charging programs, particularly those that seek to shift this growing electricity load to off-peak periods. More pilot programs are being approved by utility commissions than ever before. Plus, testing approaches while the EV market is still growing allows time for data collection, iterative program design, and further development of this fast evolving technology.
California’s mandate marks a huge milestone for the clean vehicle industry that will likely have a ripple effect across the country over the next several years. And while eliminating the new sale of gas-powered passenger vehicles is an intimidating task, utilities are in a position to play a key role. Now is the time for utilities in California and beyond to consider developing programs to fuel stronger customer engagement and infrastructure development, and smooth the transition to a zero emission vehicle future.