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How Tesla, GM And Others Will Fix Electric Vehicle Range Anxiety - YouTube
Channel: CNBC
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Investors and automakers agree
the future is electric.
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Electric cars are very
much in America's future.
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We still do believe in an all electric
future and we're using this time to
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accelerate our work.
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And we believe let's get to all
electric vehicles as quickly as possible.
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The popularity and success of Tesla
has proven there's demand for electric
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cars in the U.S.
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Tesla made up about 80 percent of
electric car sales in 2019, and new
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competition continues to enter the market
as more countries and states
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promote the use of EVs.
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Analysts predict record growth for EVs
in 2021, especially in Europe and
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China. But in the U.S., electric vehicles
are less than two percent of
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autos sold annually.
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Several hurdles remain for the market to
really take off, and one of the
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biggest is charging.
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The demand for EVs is
not very high right now.
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And that's been one of the
biggest discussions is how much infrastructure
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should we build out compared to
the sales, because everyone's planning for
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an electric future, but we're not even
close to it being there yet.
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And consumers know it.
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In one study, 83 percent of consumers
who would not consider buying an EV
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said it was because of
battery life and charging anxiety.
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This is not a simple problem.
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Transitioning a whole transportation and
energy set from petroleum based
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all the way to electrification is
not something that's going to happen
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overnight. We wanted to explore the
current state of electric charging and
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what needs to happen in order
for electric vehicles to become mainstream.
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Electric cars are not a new idea and
were invented as far back as the 30s,
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but it hasn't been until the last
20 years that electric vehicles or EVs
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have started to gain popularity, thanks
in part to the advancements in
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battery technology and the push
to reduce greenhouse gas emissions.
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And when the all electric Tesla Roadster
came out in 2008, it changed
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people's perception on what electric cars
could be and helped launch and
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accelerate more EV programs.
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But a lot of consumers
still aren't making the transition.
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Consumers are very set in their ways.
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You have to know how to plug them in.
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You have to know the range.
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You have to know what impacts your range
so you don't run out of energy.
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Last year, 143 new EVs launched across
the globe, and by 2023, IHS predicts
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over 43 brands will offer an EV.
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The range of how far our car can
drive on a single charge is improving,
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but still remains a
concern for some buyers.
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Tesla's Model S leads the industry with
a range of 402 miles, while other
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manufacturers can be anywhere from 100
to 250 miles per charge.
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And Lucid Motors new EV sedan is expected
to have a range of 517 miles.
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Clearly, the technology has its merits
and that the remaining challenge
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relates ultimately to the
electric vehicle charging.
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In 2019, 68 percent of owners said
that there is not enough charging
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available around their home.
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There are over 88,000 charging
outlets and roughly 27,000 charging
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stations, compared to the 156 ,000 gas
stations in the U.S., according to
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the Breakthrough Institute.
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There is an anticipated need for 9.6
million EV chargers in the U.S.
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by 2030. Not all charging
stations are the same.
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Tesla Chargers, for example, only
work on Tesla vehicles.
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While most other companies are brand neutral
and can charge any type of
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EV, there are three
major types of charging.
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Level one and level two are most
common in homes, workplaces and public
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charging areas. They charge between two to
20 miles of range per hour.
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DC fast charging or a level three can
deliver 60 to 80 miles of range in
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roughly 20 minutes.
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Not every EV on the market
can handle this type of charge.
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As more cars come out, most
are working towards higher voltage charging.
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We're not going to to charge electric
vehicles in exactly the same way that
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we refuel gasoline vehicles, the
vast majority of electric vehicle
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charging so far does and will
continue to take place at home.
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But of course, this
isn't applicable for everyone.
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Not everyone has perhaps their own car
or their own garage in which to
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charge. California is
somewhat different.
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They have a lot of charging stations,
which is why Tesla sells so well
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there. But I mean, in the heartland
of America or anywhere else, it's very
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difficult to find
EV charging station.
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Tesla has set a high bar
when it comes to charging.
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Its supercharging network has created what
Morgan Stanley referred to as a
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"competitive moat" over other
EV charging companies.
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A majority of the DC
fast chargers in the U.S.
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are Tesla Superchargers.
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GM's philosophy. They have not wanted to invest
a lot of their own money to
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build out their own network.
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They've instead partnered with different
EV charging startups or
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companies. Gm announced earlier this year
that it plans to spend 20
[312]
billion through 2025 on its next
generation, all electric and autonomous
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vehicles. It unveiled the Cadillac Lyriq,
GM's all electric Hummer and
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acquired an 11 percent stake
in electric truck maker Nikola.
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But the company is
also getting into charging.
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GM announced a partnership with EVgo in
July to build more than 2,700 new
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fast chargers across the U.S.
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in the next five years.
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GM and EVgo declined to announce
how much it plans to invest.
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When we're looking at strategies
associated with bringing infrastructure
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to light, we really want to
enable that infrastructure for all customers.
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And so part of that is also
enabling a business model that works.
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And so partnering with a group like
EVgo really helps us establish those
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business models where things like utilization
and other aspects of the
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business can come to market.
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Many automakers have decided to partner
with private companies rather than
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take the route Tesla did and build
out their own networks, Ionity is a
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joint venture made up of several automakers
that aim to add more charging
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stations throughout Europe.
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Other automakers are not necessarily going
to follow the path that Tesla
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have taken because it is quite unique
and it's certainly one that we
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should admire and learn from the
path that they've taken with the
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infrastructure that
they've installed.
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I think what Tesla did great was they
realized from the off that the high
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power, fast charging capability on key routes
was the bit that they would
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need to implement in order to convince
potential consumers to buy a Tesla.
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Other automakers are realizing
having reliable, widely available
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infrastructure can help sell cars.
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The bottom line is, if you want those
vehicles in your backyard, you got to
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have the charging. The infrastructure has
to come first and customers have
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to see that infrastructure start
to be comfortable with it.
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Several key players have emerged to fill
in the gaps across the U.S.
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Chargepoint says it has 115,000 charging
point globally, most of them in
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the U.S. Chargepoints investors include Daimler,
BMW and the venture arm
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of Chevron Corp., among others.
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It plans to create as many
as 2.5 million chargers by 2025.
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Electrify America was created as
part of Volkswagen's diesel emissions
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settlement with the U.S.
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and California. As part of the settlement,
it will spend two billion by
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the end of 2026. We have
470 sites in operations right now.
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The distance that we have between
the sites, it's already in average,
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about 70 miles.
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And already today we have 96
percent of Americans, they actually live
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within 120 miles from our site.
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So we are young, actually,
but we are growing fast.
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The company started with a focus
in California and is now expanding
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throughout the U.S.
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It sees Tesla not as competition, but
as an example of what its network
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could be. Tesla is a reference for
us in terms of charging experience.
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And the good news , we
are working with these companies.
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We are building some sites together and
we are using Tesla batteries to
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mitigate the cost of the charges on our
site, one of the 20 sites actually
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at the moment. Several other companies
in the space are taking different
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approaches. Volta, for example, uses
its chargers for digital advertising,
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allowing users to recharge for free.
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There are also mobile charging companies
like Spark charge and FreeWire,
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whose business model is
a portable approach.
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FreeWire has received investments
from Volvo and BP.
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Envision is taking a solar approach.
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And even Shell is
investing in the space.
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Bigger oil and gas companies
are getting into the space.
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They've invested in a big U.K.
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network Chargemaster.
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We've seen the same with Shell.
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They've taken a significant stake
in NewMotion in the Netherlands.
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I guess some of the investments in
these in these companies at this stage
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is relatively minor, given the given
the funds that these companies have.
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So it could be argued that they
are making these investments to see a
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future for themselves, whether
EVs thrive or not.
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Developing infrastructure for electric charging
is complex, companies need
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to decide how much power they need,
the kind of chargers they're going to
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install and where to install them.
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Do we need a charging
station in every corner?
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I would say no, that we don't.
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And we don't need as many electric
vehicle charging stations in the public
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domain as we need at
gas stations to date.
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Defining exactly how much we
need is a huge challenge.
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What's greater and really neat about
this industry is sort of matching
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charging times with the use case.
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Faster isn't always better.
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Frankly speaking, when you can get out of
the car, plug in at home at
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night and go to bed and wake up
with a full charge, much like your cell
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phone, you really can match the
charging speed, the technology and the
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experience together to really get at
what you're trying to tackle, which
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is get that customer their range
back as they need it.
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When we think about faster charging, when
you're out and about, maybe you
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live in an apartment building and
you don't have access to charging
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overnight. So putting in charging at
the grocery store, you're going to
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want to get most of their battery back
in that 30 to 45 minute shopping
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trip. Electrify America just finished
building a cross-country route which
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gives users access to its D.C.
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fast chargers. The company says its
primary focus is fast charging.
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If you want to serve customers out
there, you know, to bring into the
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charging station and back
from the road.
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Well, actually, I believe that
you need to be fast.
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In the U.S. alone, McKinsey and Company projects
it will cost as much as 11
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billion dollars to ensure public
charging stations are as easily
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accessible as gas stations.
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The biggest challenges for the charge
point operators now are to continue
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the build out of their network and
continue to put an increased amount of
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infrastructure in the ground
whilst maintaining profitability.
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From that perspective, I think if you
ask them what do they need, they
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need that advice. But they also would
like to see, of course, legislation
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from the governments
to promote ownership.
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Another challenge when building chargers,
especially fast chargers, is how
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much power companies need to
pull from the grid.
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A study by the U.S. Department
of Energy found electric vehicles could
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raise national power consumption by
38 percent by 2050.
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The amount of energy needed affects the
cost for the customer to calculate
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the cost per mile of an EV depends
on the battery type and the cost of
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energy. Energy costs are different from
state to state, and therefore
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pricing may be less in
Nevada and more in California.
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Residential and commercial
rates also differ.
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Tesla charges 28 cents per kilowatt
hour at most Supercharger locations,
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at that rate, it would cost $21
dollars to fully recharge a Model 3.
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Charging network pricing models are pay
as you go, monthly subscriptions
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or in some cases free.
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They can charge by the
minute or by kilowatt hour.
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Paying by kilowatt hour is similar to
paying by the gallon at gas
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stations. California recently banned pay by
minute, stating time is not an
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acceptable unit of measure for dispensing
and billing electricity as motor
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vehicle fuel. When it comes
to charging infrastructure, the U.S.
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lags behind Europe and China, where
the government has made electric cars
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a huge priority.
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China recently announced it will spend
almost 2.7 billion yuan on battery
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charging infrastructure.
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And we think that the US has somewhere
in the region of 15,000 outlets for
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charging at somewhere in the
region of 4,000 locations.
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Compare this to China, who at the end
of 2019 had somewhere in the region
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of 200,000 DC fast charge outlets, and
that's expected to rise to 270,000
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by the end of this year.
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That's a level of magnitude higher.
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Of course, the challenges are
slightly different as well.
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A lot more people are living
in the urban environments in China.
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Even less people will have
the opportunity to charge domestically.
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Electric charging infrastructure has grown quickly
in the past 10 years and
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will continue to grow as vehicles,
ranges with batteries and charging
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capabilities continue to improve the capability
and also the maturity of
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the network will evolve.
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So you going to have and you
will be able to have a bidirectional
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communication between the cars
and the network.
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So the sun shines at two o'clock
in the afternoon in California and there's
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an overabundance of electricity
because the sun's shining.
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How do we start to match that
opportunity where we say, hey, cars start
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charging the sun's here and doing that
in such a seamless way for
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customers where they've forgotten about,
they're sort of charging
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behaviors. We're managing that with
electric utilities in the background
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and we're getting cheaper energy.
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It's better for the grid and making
it more efficient as well as cleaner
[847]
energy overall. So I think over time,
what you're going to see with
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charging is essentially it'll become such
a seamless thing that most
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customers won't even have
to think about it.
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The question remains, even when we
do add more charging infrastructure, can
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it boost electric vehicle
sales and adoption?
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Once we get to that level where the
price is with gas or even lower, the
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range is with gas or even lower.
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I think that's really going to be
an inflection point for consumers and
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people that are early adopters to
come into the EV space.
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