The EV Ecosystem, including reliability, reliance, affordability, and scale

Jill: Doug, are we making progress in terms of building out the infrastructure?

Doug: For sure. And I think the industry's made great strides over the last few years focusing on tackling that range anxiety question, in particular focusing on building charging infrastructure on corridors and for on route needs as the guys have talked about here. And I think that's part of the reason why now we are seeing a million EVs on the road each year coming onto the road each year. And that's a good thing, but there's more that needs to be done and it has had some unforeseen consequences – particulalry if you look at a lot of the financial health of the charging infrastructure companies that are the building own and operating these charges. And one of those main reasons is that when you're building corridor and on route charging infrastructure, you're exposing yourself to a lot of utilization and revenue volatility. And that's just the nature of the business model of those particular charging types. So as we move forward and other forms of charging infrastructure build out across the EV ecosystem that will hopefully address some of those things. And in the meantime, a lot of the sites that are being built are great sites, which will in the future yield really good revenue opportunities for charging infrastructure companies. But certainly for the next 12 to 18 months, we believe that there'll continue to be scrutiny over the financial health of some of these charging infrastructure companies that are operating.

Jill: Another financial concern of course is cost as well. So when you think about the cost to the consumer and then scalability, to your point, it's a CapEx intensive business. So it's kind of how do you achieve that scale so that it is more cost friendly to the consumer?

Doug: I'll kick this off. The challenge is we have a very fragmented charging infrastructure ecosystem in the US and that's just how it's naturally evolved. So being able to take advantage of the economies of scale that you would associate by being able to potentially deploy large amounts of capital across a particular ecosystem, we aren't quite there yet. I think as we move into areas like fleets, electrification and home charging and charging of multifamily building dwellings, that's going to present a much bigger opportunity for the investor community to deploy capital at scale for utilities to be able to get benefits of additional electricity load. And for the entities that are providing those services to get a lot more revenue certainty in the investments that they're making. But we're a little while off yet, I think from that being achievable.

Jill: We saw what happened with classic infrastructure when we had our highway and route programs implemented. How mobility just it changes everything including looking at it from federal economic opportunities and local economic opportunities once you open up this infrastructure and affordability.

Kate: Absolutely. And something that I always like to talk about is, again, as an EV driver and what the EVA wants to make sure people know about is one, there are grants and incentives right now that folks can take advantage of. So you want to make sure that we're communicating that information down to our consumers, to our business owners, to folks in the communities who can take advantage of those resources to build out the infrastructure and also for businesses not to miss out on an opportunity. If you're a hotel and you don't have a charging station and someone's looking for a place to stay, odds are you're going to pick the place that has the charging station, so that's lost revenue immediately. You've lost a customer because you don't have the infrastructure in place to support them. It's big opportunities for folks to cop in and make sure that they're providing that to the consumers who are looking for it again, and there's funding opportunities to do it. So as part of what the EVA does is we want to make sure that folks know in your states and your communities, find these local grants, find the federal grants, and let's try to get people on board that way to utilize the resources that are out there.

Doug: Just to build on Kate's point, Jill, I think the cost question is an issue at the moment, particularly to your point as a result of some of the scaling issues that we have. I think it will sort itself out over time. So I'm not so concerned about that. I think there are other issues facing charging infrastructure such as reliability, which are going to have a real material potential impact on EV growth across the US that the industry needs to get a handle on and tackle much more aggressively. And I think those sorts of things can solve those sorts of problems. They're going to provide an additional catalyst for EV adoption across the US.

Jill: And Rich, to Kate's point, it's always a technology that tends to evolve quicker than let's say the infrastructure, the regulatory end of things. What about grid capacity? Are we able to provide this power once infrastructure and scalability is here and available?

Rich: I think that's going to depend on, maybe Doug's going to be better to answer that question, but I think from my point of perspective as a manufacturer in owning several EVs and traveling a lot through my business over the years, being one of the original EV manufacturing teams and leaving ICE in general to go with an electric vehicle, I saw that vision from Elon in my discussion with him originally and saw that this was the future. So it is going to grow, it is going to improve. I happen to live in California, which is probably the most popular state in the US for electric vehicle. It has probably also the strongest infrastructure grid, which actually Elon probably helped make that grid. As Tesla grew, most of that grid has grown. So I think the grid's going to grow even as popular as it is in California. I mean, if you don't charge at home, you're still going to wait in line because they're full. The infrastructure, to my point of perspective as a user, they're almost always full. You always have to wait 15, 20 minutes to get one open. So I think you could always have opportunity to grow that grid. The power is another thing because right now we're charging with, most people are probably charging with less than 200 kilowatt charge, and some of 'em are charging with maybe only 80 kilowatt charge or 60 kilowatt charge. There's new companies and technology that it's out there now that can do it at five, 500 kilowatt charge, but which is very fast. They can do a 200 kilowatt pack in five minutes, almost like a gas station. But the technology, the hardware and the software, the vehicles aren't to that level. So now that the charge station is going to grow and get to that level, we have to work on the tech side of that from automotive manufacturer side.

Jill: Doug, we need to find a balance here between the technology and the vehicles.

Doug: To add a simple answer to the question, the grid has enough, probably enough power, enough generation capability to be able to support the level of EV adoption that we're seeing right now. So it's not a pure question of that. It's a question of whether the grid is able to cope with the peaks of when people are charging. So this year there'll be about 24,000 gigawatt hours of additional load electricity load that is created as a result of charging infrastructure in the US and vehicles in the US. So there's a huge opportunity there for the utilities to step in and I think take a bit more of an active, proactive role in terms of trying to solve for this, right. And so I think there's a role there that the utilities can definitely play. I also feel there's a role the consumer needs to play as well with this. And Kate, maybe you can opine on that too, where we're actually going to have to try and find ways to encourage consumers to charge at particular times of day and in particular locations that to begin with may not necessarily be the most convenient for them.

Jill: What's the most popular? I would imagine nighttime when you're done for the day, you're done with work.

Kate: So right now a lot of companies, utility companies, do have incentives for folks to charge overnight during low peak demands. And that's the same not just for your electric vehicle, but for anything in your household or when you're using any type of electrical product. They want you to use those products at lower peak times and oftentimes they will incentivize you to do that. It will cost you less to run your vehicles or plug in your vehicles or use your dishwasher or your air conditioner for that matter later on in the evenings. So there is definitely opportunity there. And it's the same with the technology out for charging stations that are out doing fleet managements as well as out in your community where there are software solutions that can power down and utilize the grid and make it so that it's more level, that you're not using power when it's the highest of demand so that we can redistribute the energy to where it's really needed most.

Doug: So in places like California, probably the ideal time to charge vehicles is from 9:00am to 12:00pm, where the sun is shining and there's a lot of excess generation on the grid. That can be used that may not necessarily be the most convenient time for people to charge. Like most people are either charging overnight at home, which is probably a bit more convenient for the energy mix we have here on the East Coast. But a lot of charging takes place on the way to work or on the way home from work. And it's those peaks where they coincide with other peaks of electricity consumption from people at home, coming home, turn their kettles on, cooking their dinners, etc. Those are the sort of peaks that the utilities are trying to work to solve for.

Jill: And Rich, I'm curious to get your perspective on this. Thoughts on GM Ford, the larger car manufacturing that they're halting EV production. Is that because consumer demand is lagging or they just don't have the manufacturing available to get these models to scale? What are your thoughts on that?

Rich: So I've been in manufacturing for 40 years now and with six major OEMs, and basically I've launched two major electric vehicles companies. So one of those being Tesla and a horse, another one being Lordstown Motors. I've Reconverted General Motors plant from ice to electric vehicle. So I think the biggest challenges are, first of all for Ford and General Motors is they already have a cash cow in their truck line, so in their SUV line. So on an ice side, they're making profit, they're making money. So it's difficult to take that away to reinvest that into an electric vehicle line to manufacture it because it takes a lot of cost to convert the line. It takes a lot of time to train the team. It takes a lot of time to launch those new models and understand those new models. So it's a slow progress. I think they can sell as many as they can build. I don't think it's a demand issue they maybe want to perceive, because I think most people want the electric vehicle. Most states incentivize that electric vehicle, California being one of the best for that.

Jill: That's an important distinction to make relative to consumer demand.

Doug: And just to build on Richard's point, I'm not particularly concerned with that news as it pertains to the health of EV adoption growth in the US. For many of the reasons that Rich said, the Fords and the GMs are never going to want to really be accelerators of EV adoption in the US right now for the very reasons that Rich laid out. They're still very much vested in the ICE business model. I also think the other piece here is to look at production numbers of EVs in the context of overall vehicle demand in the US which is stagnating a little bit because people are holding onto their vehicles for a little bit longer time. So when you're looking at EV production numbers in the US and EV sales in the US, you could look at it in the context of the overall sales side. So we're looking at 1.5-1.9 million EVs being sold this year, up from 1.2 million in 2023 and maybe 13%-16% of the overall new vehicle share coming from EVs. So I think that's a good news story. I'd be encouraging us to look at entities like Rivian and Tesla and the sorts of entities that Rich works for as a better steer for levels of EV demand and EV production moving forward.