What’s Driving EV Adoption and What’s Holding It Back

What’s Driving EV Adoption and What’s Holding It Back

October 2021:

What’s Driving EV Adoption and What’s Holding It Back

The outlook for EVs is sunny, but the industry must address barriers both perceived and real.

By 2025, BloombergNEF estimates there will be 14 million passenger EV (electric vehicle) sales globally, which is a sharp increase from the 3.1 million sales BloombergNEF says occurred in 2020. Consumer spending on EVs is also on the rise, according to the IEA’s (Intl. Energy Agency’s) Global EV Outlook 2021. In 2020, IEA reports the global stock of electric cars reached 10 million, a 43% increase from 2019 despite the pandemic-related drop in new-car registrations during the first half of the year. Consumers also spent $120 billion on electric car purchases in 2020, which is a 50% increase from 2019.

A recent Pew Research study suggests 39% of U.S. adults are either very likely or somewhat likely to consider an EV for their next car purchase. The percentage is highest among Millennials (47%), those who already own a hybrid or EV (72%), and those who have heard a lot about EVs (53%). Pew also reports a majority of Gen Z (56%) and Millennial (57%) adults are in favor of phasing out the production of gas-powered vehicles by 2035.

Yes, the outlook for EVs is sunny. Advancing technologies are making EVs and their batteries better and cheaper, EVs have policy support from many world governments, and there’s more societal concern about climate change than ever before, which is encouraging automakers to meet demand with supply. The electrification of mainstream vehicle models—notably, the Ford F-150—will also drive adoption in the U.S.

The U.S. is not keeping up with other global markets, however. BloombergNEF predicts China and Europe will continue to be the dominant EV markets between now and 2025, thanks to regulations and government programs in those areas. Hurdles in the U.S. (and, in some cases, globally) include EV affordability and availability, as well as public charging infrastructure. Will the next five years see a shift in this reality?

EV Trends

Jeff Allen, executive director of Forth Mobility, says the EV space just keeps moving faster and further every year. “One key trend right now is that the technology, especially around batteries and their management, has gotten much better and cheaper,” Allen says. “Another trend is that policy support for transportation electrification has gotten much stronger at every political level, in part as the urgency of addressing climate change has become more clear. Finally, we have seen extremely ambitious investments and announcements from both incumbent automakers and newcomers to the space. These trends seem to be combining into a ‘virtuous circle’ that is driving electric vehicle production and sales far faster than seemed likely just a couple of years ago.”

Olivier Trescases, professor of electrical engineering, director of the UTEV (University of Toronto Electric Vehicle Research Centre), and Canada Research Chair in power electronic converters, says EV technology is rapidly evolving, and he is seeing many technologies transition from the lab to the road. He lists trends such as V2G (vehicle-to-grid) power transfer, digital twins, in-situ state-of-health battery monitoring, and innovative charging methods as important trends in the space.

“Future EVs will be considered as versatile programmable mobile power sources and energy buffers, where the bi-directional onboard charger can be used to transfer power back to the grid,” Trescases explains. “This implies that EVs will be an integral part of renewable energy integration since their batteries can buffer the intermittent nature of solar and wind. In remote locations and during natural disasters, which are becoming more frequent and severe, EVs will provide mobile emergency backup power.”

The technology is here, but the business models are still evolving, Trescases says. Who will bear the costs of V2G technology integration—the OEM (original-equipment manufacturer), the owner, the electrical utility, the municipality? Trescases says he and his team have been working on leveraging a new semiconductor technology, Gallium Nitride, to enable V2G with the highest efficiency and smallest physical footprint in the vehicle.

Another EV trend is the use of digital twins to create simulation models of individual EVs that track their performance over time. The use of digital twins in industries like manufacturing, agriculture, energy and utilities, and healthcare, as well as the automotive industry, is a broader IoT (Internet of Things) trend. In fact, according to the latest data from ResearchandMarkets.com, the digital-twin market will reach $63.5 billion by 2027.

“Onboard cellular telematics have always enabled basic data capture and over-the-air software updates, but there is a migration towards much richer datasets that reveal the in-depth operation of the EV in realtime,” adds Trescases. “This vehicle-specific data will be used to create a cloud-based ‘digital twin’—a simulation model of the EV that tracks the performance and degradation of each individual EV over its lifetime. The amount of data is staggering, and yet the benefits in terms of predictive maintenance, fleet optimization, disaster response, design optimization, and lifetime prediction are very exciting.”

Forth Mobility’s Allen describes current lithium-ion EV battery technology as fairly advanced, but that doesn’t mean there isn’t room for improvement. “We’re seeing a ton of innovations, not just in weight and cost but in areas like management systems, controls, etc., that will keep driving costs down and vehicle range up,” he says. “There are a lot of exciting new battery technologies under development too that promise even bigger leaps eventually.”

For instance, the ability to leverage embedded technology to monitor EV batteries while they’re in use will be a huge boon for the space, and Trescases says this work is already underway with research organizations like his and top automotive manufacturers. “We are seeing more efforts to dig deeper on determining the state of health of EV batteries during operation,” he explains. “This involves deploying custom hardware in the car to inject test signals over a wide range of frequencies and measuring the response with onboard sensing.  There are many challenges to overcome, but this is a very promising approach to fully unleash the power of lithium batteries. Today, there remains a high level of conservative design and ‘guard-bands’ around the operation of batteries due to the uncertainty in their operating conditions and ‘state of health’. This embedded technology will unlock more power and more driving range.”

EV charging innovations are also in the works. For instance, there are companies and labs working on integrating the DC fast charging with the motor drive system. “At the core, the idea is to repurpose the electric motor when the car is stationary as a power filter to enable low-cost fast-charging onboard,” Trescases says. “This has the game-changing potential to reduce the cost of or even eliminate the bulky DC fast charger hardware that sits outside of the vehicles at charging stations.” Wireless charging is also maturing as costs come down.  

Mika Kanninen, CEO of Akkurate, a software provider that helps EV ecosystem actors understand the history and current state of health of EV batteries, adds another trend to the discussion—the fact that EVs are part of a much bigger picture in how mobility is changing. “With autonomous driving and new business models such as mobility-as-a-service, electric vehicles will become part of a larger system and will no longer be so much individual devices,” Kanninen says. “The car will be an integral part of the software platform that OEMs are now rushing to develop and that is central to the customer experience. This development will be pivotal for the success of an OEM.”

For many OEMs, because of this trend, they must essentially transition to software companies. “As part of that transition, digitization of electric vehicles will require fast development of holistic data capabilities,” Kanninen explains. “It starts with the capabilities of intelligent data collection from a hardware and software perspective and continues to the transfer of data to servers, as well as from data analysis to the exploitation of results.”

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EV Barriers—Perceived and Real

Edward Sanchez, senior automotive analyst for Strategy Analytics and contributor to The Watt Car EV blog and podcast, says one of the biggest barriers to EV adoption is public charging infrastructure availability and reliability. “Within the U.S., charging point density and availability varies widely by region,” Sanchez says. “The Northeast and California are better than average, whereas some less densely populated areas in the Midwest, Southeast, and Mountain West states have a less comprehensive charging network. And it’s not just ‘build it and they will come.’ These charging networks require maintenance, and the experience has to be reliable and consistent. This is still an issue with a lot of charging points that are either neglected or poorly maintained or rely on cellular network communication in areas with poor cellular connectivity. In some cases, people that purchased EVs and had a poor experience with charging ended up going back to an ICE (internal combustion engine) or hybrid vehicle.”

Cost is also a barrier to adoption. Jennifer Weiss, senior policy associate for climate and energy at Duke University’s Nicholas Institute for Environmental Policy Solutions, points out that EVs are still financially out of reach for many consumers. “The newest EV versions of vehicles have a higher upfront cost than their ICE counterparts, making the EV transition a bit harder for financially challenged consumers,” Weiss says. “In addition, many auto dealers do not carry a large inventory of electric vehicles, making it difficult for consumers to test drive and compare.”

Alan Jenn, assistant director and assistant professional researcher for the Institute of Transportation Studies at the University of California, Davis, agrees, saying EV pricing relative to their gas counterparts is perhaps the biggest hurdle to adoption. However, this will change. “As battery technology improves and economies of scale ramp up, the costs of production will ultimately fall,” Jenn says. “This will be a matter of when, not if.”

Jenn also points to the limited availability of EVs in many segments as another reason the technology hasn’t become as mainstream as it could be. “However, as more vehicle models come out, we should begin to see growth of the market into portions of the population that previously haven’t considered the technology—particularly in the compact SUV and light-duty truck segments,” he says.

Weiss and Sanchez made similar observations. “I think the electrification of mainstream cars and trucks like the Ford F-150 and the Jeep Wrangler will drive a rapid transition in the consumer space over the next five years,” says Weiss. “As the familiar becomes electric, more consumers will test drive and purchase new electric alternatives. This transition, coupled with fleet electrification and charging at the workplace, will increase the awareness of electric vehicle options and their perception as a viable transportation choice.”

Sanchez says: “Up until now … you couldn’t get an EV in certain market segments. With the introduction of the Ford F-150 Lightning, the Rivian R1T, and announcements by GM and Stellantis (Ram Trucks), the full-size truck segment—the U.S.’s largest by volume—will soon have multiple choices for EVs. The crossover space will soon have multiple options in EVs, including the Hyundai Ioniq 5 and Kia EV6, Nissan ARIYA, and in the premium crossover segment, the Cadillac LYRIQ, BMW iX, and the Audi e-tron, (which is) already on sale.”

Another hurdle, which may be more psychological than anything, is range anxiety. “Range is somewhat of an issue, but I would argue more perceptual than real,” explains Sanchez. “Multiple studies have shown the average number of miles driven by a typical U.S. commuter is about 40 miles. This is well within the range of almost all EVs on the market, even those with a shorter range.”

Another psychological/perceptual issue is that EVs are being “forced” on people by the government. And while regulatory compliance is a real factor, Sanchez says once people experience modern EVs firsthand, they’ll discover that in many ways, EVs are objectively and demonstrably better than internal-combustion cars—not just from an environmental perspective, but also from the perspectives of driving experience and cost of maintenance, among other factors.

Incentives encouraging greater investment in infrastructure will help overcome certain barriers, and there are initiatives at the federal and state level to help move things along in this regard. In terms of increasing consumer awareness and excitement in EVs, Sanchez recommends a “butts in seats” approach. “Some consumers still have a perception of EVs as ‘wimpy’ or ‘underpowered,’” he says. “Although Tesla is changing that with its high-performance EVs, these are six-figure models outside of the average buyer’s budget. Even modestly priced EVs generally have impressive acceleration and responsiveness. Many people are genuinely surprised by the level of performance in modern EVs. I would strongly encourage any organization or business with a stake or interest in increasing the adoption of EVs to hold ride-and-drive events or encourage the public to experience EVs firsthand.

Major questions the space will need to ask and answer in the next decade include one posed by Jason Siegel, associate research scientist at the University of Michigan: What should we do with all the batteries that are removed from EVs in 20 years? He says: “We need to develop methods to quickly and cost-effectively assess and sort batteries removed from the vehicle to determine the most economical outcome for the re-use, remanufacturing, or recycling.”

Another key question, this one posed by the University of California, Davis’s Jenn, involves the future of transportation funding as society makes the shift to EVs. “The vast majority of (transportation) funding comes from gasoline taxes, but as vehicles continue to become more efficient or electrify, these funds will erode the revenues necessary to pay for transportation infrastructure,” Jenn points out. “Currently, many states are exploring the implementation of road user charges, also known as mileage fees, that may eventually replace gasoline taxes.”

As advancing technologies, government programs, and concern for climate change push the EV space forward, ecosystem players are working hard to overcome remaining barriers to EV adoption. Costs, though coming down, must come down farther. Charging infrastructure, though getting better, isn’t yet good enough in the U.S. But EVs are part of a bigger picture—a new transportation paradigm that will involve V2G power transfer, autonomous vehicles, and new types of mobility services that will, eventually, all run electric. As Jeff Allen of Forth Mobility puts it: “Everything that moves is going electric, and it is happening much faster than most people think.” Certainly, the future is electric. Just how quickly the U.S. reaches this future depends on how it navigates the remaining barriers to EV adoption in the next 5-10 years.

5 Barriers to EV Adoption

Jeff Allen, executive director of Forth Mobility, lists and discusses five barriers to EV adoption and how to overcome them.

  1. Consumer awareness. Since a car is usually the second largest purchase most households make, consumers are hesitant to try new and unfamiliar technology. This is an even larger challenge since electric vehicles are poorly understood by most consumers. We need to create more opportunities for Americans to see, touch, and drive these vehicles through strategies like brand-neutral ride-and-drive events.
  2. Product availability. There are more than 40 EV models available for sale in the U.S., but most of these vehicles have been passenger cars. That’s why it’s so exciting to see electric pickup trucks coming to market, including the electric version of the iconic Ford F-150. Trying to talk consumers out of their love of large vehicles and into a new technology at the same time has not proven particularly effective.
  3. Electric vehicles still typically have a higher upfront capital cost than their gasoline counterparts, but they are far cheaper to operate. Battery costs have dropped dramatically over the past decade and most experts predict electric passenger cars will reach purchase price parity with equivalent gasoline cars in the next 5-15 years. The automakers are now doing their part by scaling up production, which will bring down costs. We need the federal government to update the federal tax credit, lift current limits, and make it refundable or transferable. We will also continue to need state and local incentives for the next several years, particularly ones that target low- and moderate-income drivers.
  4. Charging anxiety. Consumers do not understand how, where, and when to charge, and they need to adapt to different fueling behavior (e.g., more like a cellphone than a gasoline car). Fuel providers—meaning electric utilities—need clearer regulatory authority to support EV drivers. We need a strong federal investment in charging infrastructure, but we also need this investment to come with strong guidance, technical support, and outreach investments to help drivers and those who are installing charging understand this new industry.
  5. System inertia. Elements within the oil and gas industry and their allies have been fighting hard against electrification for decades. The most powerful lobbyist against change, however, is simple inertia. We’ve spent decades building a transportation system that works a certain way, and electric mobility requires us to rethink many aspects of that system. Faced with the need for change, it’s easy for policymakers and businesses to stick to “business as usual.” However, climate change demands more from us—and the industry changes are now coming, ready or not.

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Transcription

Peggy and Henry Bzeih, CTO/CSO, automotive & transportation, Microsoft, talk about the latest automotive advances at the company. He talks about mega trends, saying mobility is the movement of people and the movement of goods.

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