Challenges to Vehicle Electrification Come From Many Angles

Sales of electric vehicles are gradually growing in the US.  In 2012, 52,000 EV’s and plug-in hybrids were sold.  That number grew to over 95,000 in 2013 and sales during the first quarter of 2014 have outpaced the same period in 2013.  Growth is expected to continue as automakers will have to meet a fleet-wide average of 54.5 mpg by 2025, though consumers will see numbers closer to 36 mpg on the window sticker as the EPA uses a different method for window stickers, according to Jessica Caldwell, senior analyst at Edmunds.com.

While growth in this sector of the auto industry is all but assured, challenges ranging from raw materials to technology to infrastructure remain.  Each one of these areas presents unique challenges to the industry.  In a recent discussion with Mike Tinskey, head of vehicle electrification at Ford, we touched on a wide range of topics regarding the EV and plug-in hybrid market.  Tinskey was in San Diego for a quarterly meeting of the California Plug-in Electric Vehicle Collaborative, a group whose members include automakers, utilities, government bodies, and various policy institutes.  While other automakers have been developing platforms that are EV/plug-in specific, Tinsky noted that Ford is committed to offering consumers the power of choice, meaning Ford can leverage existing platforms for multiple types of vehicles.  For instance, with the Ford Fusion, you can have your choice of the traditional internal combustion engine, hybrid, or plug-in hybrid.

During our conversation, Tinskey noted that cities like San Diego where there has been a shift in recent years to high-rises and multi-family housing, EV charging infrastructure has become a big issue.  No longer can you simply drive into your garage and plug-in.  With high rises and multi-family housing, you might have to work with property management or the homeowner’s association (HOA) or both to obtain the necessary charging infrastructure.  This can be a big hurdle in getting consumers to buy EV’s or plug-in hybrids.

HOA’s may initially be reluctant to install charging stations that only benefit one or two of the homeowners.  The underlying thinking may be that this is only a benefit to one or two, so why should the HOA pay for it.  That thinking misses the point, which is homeowners and prospective homeowners are asking for this infrastructure now.  Absent this infrastructure, the long term value and attractiveness of a building may be lower compared to a building that has charging infrastructure in place.  What that means is if HOA is reluctant or unwilling to put in charging stations for one or two homeowners, the HOA does harm to the whole community by effectively limiting the pool of prospective buyers in the future where EV’s and plug-ins become more prevalent than they are today.

Because of the efficiency standards automakers are required to meet in the future, EV’s and plug-ins will become a greater part of the pool of vehicles available to consumers.  Assuming sales of EV’s and plug-in hybrids continue to rise, there will be a larger pool of people who own these vehicles, which means residential buildings which lack the charging infrastructure may lose out.  Put differently, if you are a homeowner in a high rise or multi-family housing complex, would you want the pool of prospective buyers to be limited simply because your HOA refuses to put in the charging infrastructure?

While in states like California, HOA’s cannot prohibit or restrict the installation or use of an EV charging station.  Reasonable restrictions that do not significantly increase the cost are permitted however.  Yet, despite this generally favorable law, the overall cost of installing a charging station by an individual owner in these circumstances may be significant and defeat the whole purpose of purchasing an EV or plug-in hybrid.  Third party solution providers are out there, but be wary of the monthly “membership fees” that such third party solution providers may charge.  These “membership fees” combined with the payment for electricity usage may in certain circumstances be equal to how much one might spend on gas depending on your habits.  The solution is for HOA’s to move forward, make the capital improvement that will benefit the entire community in more ways than one.

We hear daily about range anxiety, cost of these cars, and national and local infrastructure.  These are all valid challenges the industry faces.  Yet, as our living habits shift towards more urban environments, the challenges in dealing with HOA’s are brought to the fore and may be the most difficult challenge yet.  Technological innovation will solve range anxiety and cost issues.  National and local infrastructure will eventually take hold.  After all, it’s possible to drive a Tesla across the country using Tesla’s supercharger network.  The real challenge is getting the HOA to say yes to a capital improvement when HOA’s are often reluctant, skeptical, and not very progressive.