Volkswagen's Dieselgate Settlement Billions Are Funding Electric Vehicle Charging Corridors. Can They Help Overcome Range Anxiety?
Volkswagen is finally atoning for Dieselgate, investing $2 billion in electric vehicles (EVs) and other clean transportation across the United States as part of the massive settlement, along with $2.7 billion paid into a trust fund to help states reduce transportation emissions.
This trust fund will be allocated based on the prevalence of illegal diesel engines in those states, and states can use 15% of it to directly fund EV charging infrastructure.
The VW money parallels increasing forecasts for the number of EVs on the road. Bullish prognosticators like BNEF have EVs hitting 10% of sales as soon as 2025, and ramping up to the majority of sales within a decade after. The U.S. Energy Information Administration, which consistently lags on emerging technology forecasts, projects EV penetration to remain under 10% in 2050.
Multiple states have set ambitious EV sales targets, and several have outlined multi-state charging corridor plans as marquee initiatives to spur EV adoption. But with limited funds to lay the foundation for a burgeoning industry capable of dramatically reducing transportation emissions, public agencies must carefully prioritize where they spend VW’s billions.
What Will Jump-Start The EV Transition?
The policy blueprint to jump-start America’s EV market is the same as the one renewable energy followed starting around 2000: provide a policy push through incentives and mandates to climb the learning curve and drive down capital costs, and then let the market take over once EVs are cost-competitive.
Like renewables, price is only the beginning; even after EVs reach price parity, policymakers must also think about complementary policies like access to charging, electricity prices, utility pilots, dealership education, and consumer awareness to jump-start the EV transition.
U.S. states are getting the demand-push done. Most U.S. demand is coming from states that signed on to California’s zero emissions vehicle (ZEV) mandate — Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Vermont. The ZEV mandate requires automakers to increase their share of plug-in hybrid electric vehicles (PHEVs), battery electric vehicles (BEVs) and fuel-cell electric vehicles (FCEVs) relative to total sales over time, reaching 15.4% of total sales in 2025, or 3.3 million EVs on the road. Washington and Colorado are also leader states, offering attractive incentives for would-be EV purchasers.
However, only California is on pace to hit its ZEV goal, reaching 4.5% of in-state auto sales in 2017. In the Northeast, where a Montreal-to-D.C. charging corridor funded by VW’s millions is being discussed, EV adoption is lagging far behind the ZEV mandate despite the fact that most of these states offer similar financial incentives to California. In other words, EV purchase prices are virtually the same, but fewer EVs are being sold in the Northeast. So what explains the difference?
For one, consumer preferences diverge between regions – a 2016 survey of ZEV mandate states conducted by Union of Concerned Scientists (UCS) found 55% of California consumers were likely to consider an EV when purchasing their next car, compared to 35% in Northeastern states. But an explanation for the difference in preferences can be hard to pin down. While the UCS survey found more than half of California consumers consider buying EVs, only 5% did in 2017. The contrast is even starker in the Northeast, where less than 2% of consumers went for an EV.
Potential buyers may get discouraged by being unable to find ZEVs at dealers – Sierra Club volunteers who visited dealers in ZEV mandate states were 2.5 times less likely to find EVs on dealership lots in the nine other ZEV states than they were in California. Charging availability and awareness is another key factor. A 2016 consumer survey by the National Renewable Energy Laboratory found customers were much more likely to consider EVs “as good as gas-powered vehicles” when they were aware of charging infrastructure on commonly traveled routes.
The UCS survey also examined which kind of EV charging infrastructure can help alleviate customer concerns, asking for the top three attributes that would make drivers more likely to consider purchasing or leasing a plug-in EV. “Driving over 200 miles on one charge” was the second-most common answer behind price reduction.
Similarly, lack of charging stations where drivers travel was the biggest concern for owning a plug-in EV in the Northeast, and the second biggest concern in California, behind lack of range on a single charge. Americans love a good road trip, and range anxiety is at or near the top of their minds when they decide not to buy an EV.
Which Type Of EV Chargers Can Quell Range Anxiety?
Though charger availability is clearly linked to EV uptake, public charging infrastructure alone doesn’t necessarily increase EV ownership. While California has more total public EV chargers than all Northeastern ZEV states combined, more chargers exist per EV in the Northeast than in California. Public charging infrastructure is not a clear causal factor in ZEV adoption rates – California only has four public charging ports per 100 EVs, while most Northeastern states have more than eight public chargers per 100 EVs.
That’s not to say public EV infrastructure has no impact on consumers choices. California emphasizes fast EV chargers that have a special role in reducing range anxiety by refueling 150 miles of range in less than 30 minutes. California leads the nation with 586 stations (each with multiple outlets), compared to just 319 total in Northeastern states.
Workplace or public charging, particularly fast-charging, for those without access to residential charging or long commutes will be essential for renters to enter the market as well. Given that rental rates are the highest they’ve been in 50 years at 36% of U.S. households, lack of public or workplace charging may yet be a significant barrier to deeper market penetration.
EV Charging Corridors Spread Across The U.S.
Given the unique role of public charging infrastructure in enabling longer drives and quelling range anxiety among potential EV buyers, interstate high-speed charging corridors have emerged as popular options for spending VW settlement funds and encouraging EV ownership, including recent proposals in the Northeast and Mountain West.
Six New England states may allocate $30 million in VW settlement money (the full amount possible for EV infrastructure) to build a charging corridor, primarily on interstate highways, from Quebec to as far south as Washington, D.C. This corridor will prioritize fast-charging infrastructure, allowing drivers, particularly EV-owning tourists from Montreal, to rapidly refuel while spending their loonies stateside. Though discussions are in a preliminary phase, many of the states are targeting range anxiety to boost tourism and in-state EV adoption.
In addition to the Northeast proposal, nine Mountain West states announced they will build a high-speed charging corridor to facilitate EV interstate travel and reduce range anxiety. The Intermountain West Electric Corridor coalesced around Colorado’s regional leadership, spanning Arizona, Utah, Colorado, New Mexico, Montana, Wyoming, Nevada, and Idaho. Colorado has already announced plans to build fast chargers along its interstate highways, and the eight other states are in a coordination phase with Colorado to apply for DOE grants, coordinate VW settlement money, and create a coherent structure with utility partners.
Whether fast chargers are the best way to use public funds to increase EVs on the road is hard to know, but they’re certainly a positive step toward reducing range anxiety concerns for buyers considering an EV, even if they’re just a piece of a larger puzzle. Charging corridors, coupled with public education and interstate planning, are a good use of public funds to decarbonize transportation.
EV expert Chris Nelder, who leads the Rocky Mountain Institute’s EV-Grid Integration initiative, agrees. “Charging corridor investments will be effective if they are mainly spent on fast chargers, if buyers design their RFPs to require interoperability and compatibility with open-source standards, and if legislatures and utility regulators create appropriate opportunities for additional investments to scale up. The VW money by itself is only going to address a fraction of the need.”
By Mike O’Boyle, Energy Innovation’s Electricity Policy Manager