Navigant Research Blog

Utilities, Regulators Push Forward on EV and Infrastructure Plans

— May 3, 2018

Across America, utilities are beginning to take advantage of EVs as an electricity asset by investing in charging infrastructure. There is new motivation to install charging infrastructure as EV sales increased by over 20% in 2017 from 2016, despite overall vehicle sales decreasing. Business models for these charging programs and pilots vary widely, from rate-basing investments to leasing charging infrastructure and having a customer-owned and operated model. With several options, expanding infrastructure programs in all states is becoming more feasible, and many utilities are taking advantage of this momentum.

State by State, Charging Is Expanding

Baltimore Gas and Electric, Potomac Electric Power Company, Delmarva Power, and Potomac Edison Company have submitted a petition to spend $104 million to support charging infrastructure in Maryland. The program would build out 2,400 charging stations across Maryland in residential, workplace, and public charging areas. The Maryland Public Service Commission is expected to make a decision on the petition in the next few months. The state wants to expand the number of EVs on its roads to 300,000 by 2025, and these new proposed charging stations are a key step toward reaching its goal.

In Missouri, Ameren has proposed an $18 million charging program known as Charge Ahead that would install about 1,200 charging plugs (about 600 stations) in its territory. If approved, Ameren will partner with third-party charging companies to install the stations near interstate highway corridors, workplaces, multifamily housing, and other public areas. The chargers would be a mix of DC fast charging and Level 2. Prices for charging at these stations will be determined by the third-party operator.

Eversource was part of a rate case in the Massachusetts Department of Public Utilities, part of which passed on November 30, 2017. As part of the order, the utility received the green-light to invest $45 million in charging infrastructure, which will mean installation of around 4,000 Level 2 charging plugs at businesses and 67 DC fast charging stations along major roadways. Under this program, Eversource will cover the cost of installation and—in disadvantaged communities—it will offer a rebate for partial cost of the charger.

The Public Utilities Commission of Ohio recently approved American Electric Power’s (AEP’s) Electric Security Plan (ESP). The ESP allows AEP to expand access to EV charging and other renewable generation to ensure grid reliability. As part of the program and other partnerships, site owners will be able to apply to AEP to recoup a portion of their initial EV supply equipment construction costs.

Utilities in the Lead

Given the continuing EV market momentum and Volkswagen diesel-gate state settlement funding for charging infrastructure via Electrify America, utilities are well positioned to continue expanding charging infrastructure and offering educational support for prospective EV buyers. Increasing charging stations will decrease customer concerns around charging availability and range anxiety, leading to more EV sales nationwide. As new utility charging programs are announced monthly, it seems the trend of utility involvement in charging infrastructure installations will likely continue to quell consumer charging fears and prompt EV adoption.


Lack of Automated Vehicle Test Standards Is an Oversight

— May 3, 2018

In a capitalist economy, companies have a fiduciary responsibility to maximize the returns for their shareholders. That can often be at odds with the general public good. Ideally, political and regulatory leaders can find ways to strike a balance between the two that helps the economy grow and allows the populace to be safe. When it comes to the automated vehicle industry, in the past few years those leaders have abdicated their responsibilities.

Vehicles today are safer than they have ever been. While we have seen an uptick in traffic fatalities in the past couple of years, the overall trend has been downward for nearly half a century. In large part, that is due to leaders having the courage to impose safety and emissions regulations since the early 1970s. Automakers complained vociferously every step of the way, but in the end, they have largely complied. We are now safer while automakers remain very profitable.

Regulations created some speed bumps, but the world did not come to an end. In virtually every business sector, companies faced with new rules whine about it, but ultimately, they adapt.

From a societal good perspective, 37,000 deaths on the nation’s roads every year is not acceptable. On the other hand, when considered against the 3.2 trillion miles we travel annually, that’s about 1.1 death for every 100 million miles. Over the long haul, a shift away from human drivers toward automated mobility will almost certainly slash those numbers dramatically. However, engineers still have a lot of development to do to prove that the technology we have available is better than us flawed humans.

We Need Real World Testing

The vast majority of the testing will probably be done in ever more sophisticated simulation environments. But we also need real world testing, and it seems reasonable to begin with the same tests we apply to humans that want to drive. Before a teenager can get their first driver’s license, they have to take a vision test to demonstrate that they can see and recognize pedestrians, signs, and other objects in the driving environment. They also have to demonstrate a basic knowledge of rules of the road.

In the US, the federal government is responsible for motor vehicle safety standards like occupant crash protection. The states are responsible for licensing and registration of drivers and vehicles.

Human test drivers have to pass those aforementioned evaluations. So too should the virtual drivers that many hope will someday replace us. The death of a pedestrian struck by an automated Uber test vehicle demonstrates the failure of the laissez-faire approach taken by Arizona and many other states to automated vehicle testing.

We Also Need Standards

SAE International has for decades provided a platform for industrywide standards development. The oft-quoted (and misquoted) automation levels are the product of an SAE standards committee. Now would be a good time for SAE to develop standards for testing that a sensor system can detect a pedestrian or cyclist at a minimum distance in various lighting and weather conditions. With those standards in hand, every state should require that any company wishing to test automated driving systems on public roads must demonstrate that they can pass those tests and respond appropriately when other road users are detected.

The standards should be technology agnostic, but would demonstrate the most basic functionality, just as a human must do. We will undoubtedly have more fatal crashes along the way to some hoped-for automated utopia, but requiring automated cars to pass a driving test is a minimum today.


Ford Takes the Exit Ramp from the Car Business

— May 1, 2018

In many respects, the company that Henry Ford built more than a century ago moved America from the cart to the car (this October will mark the 110th anniversary of the Model T). Today, Ford is undergoing another transformation as the transportation market continues to morph. During its 1Q 2018 financial results, Ford confirmed that its North American vehicle lineup will include only two cars from 2020, the iconic Mustang and the new Focus Active—and even the Focus is morphing into a crossover-style vehicle.

More than 90% of Ford sales in the next decade will be pickup trucks, utilities, and commercial vehicles. Despite the change in the shape of the average Ford vehicle, the company is committed to improving energy efficiency in addition to operational efficiency. In part, that means adding electrified propulsion options to just about every vehicle it builds—from the Mustang to the F-150 and every new SUV.

Until now, Ford has just taken token stabs at the battery EV (BEV) market with vehicles like the defunct Transit Connect Electric and slow-selling Focus Electric. Even its hybrid systems, which are second in sales only behind Toyota, are only available on three nameplates: the soon to be discontinued C-Max and the midsize Fusion and Lincoln MKZ sedans.

Changing with the Times

However, that’s all about to change. At the New York International Auto Show in March, Lincoln revealed a concept version of its upcoming Aviator SUV with a plug-in hybrid drivetrain. That vehicle is expected to share its hardware with the next generation of one of Ford’s best-selling vehicles, the Explorer. The upcoming Bronco, Escape, and other models will also be available as hybrids.

In addition, Ford is committing to BEVs with a new dedicated platform rather than just conversions like the current Focus. This will enable much improved packaging and performance and a better cost basis. Starting with a performance crossover BEV in 2020 to be built in the Mexican plant that currently builds the Fiesta, Ford plans to launch 15 more BEVs globally in 3 years. While six of the BEVs will be available in North America, many of rest will likely be optimized for the Asian market, where Ford has formed partnerships with Zotye in China and Mahindra Group in India. Some of them may even be cars.

These vehicles will likely represent the bulk of Ford’s business for many years to come. But Ford is also working to build its mobility service business into something that is commercially viable and profitable as soon as possible.

Surviving Today’s Crises

The first three generations of Fords to run their eponymous company, Henry, Edsel, and Henry II, surely wouldn’t recognize this new enterprise as the one they built up over more than 7 decades. But during their tenures, Ford also faced several existential crises and survived—albeit without quite the radical product changes today’s business is facing.

It seems that almost everyone running a car company today is cursed to “live in interesting times.” Today’s company leaders, including the founder’s great grandson Bill Ford and CEO Jim Hackett, will have their work cut out for them to rebuild Ford for a new generation and move travelers from the car to whatever comes next.

However, there is precedent for a company to make similarly shocking moves while transforming into more of a services company. IBM exited the PC business in 2004 that it helped to found to focus on supercomputers, software, and services. And that paid off: within a few years, the company was generating even higher revenue and profits.


The Need to Balance Ride-Hailing Costs and Benefits

— April 26, 2018

People who frequently use ride-hailing and carsharing services enjoy the flexibility and freedom that comes from operating or owning a car. Others complain about the perceived shift back to personal car use from public transit and increases in traffic congestion.

Perspectives from Texas

Case in point is the city of Austin, Texas, where Uber and Lyft have returned after a 2-year hiatus. According to Automotive News, not everyone in the city was happy to see the services return, with some residents miffed about the increasing congestion. Adding to the fray in Austin is General Motors, which recently brought in a fleet of all-electric Chevrolet Bolts via its Maven Gig rental program. The Bolts are offered to people without a car who want to work for the ride-hailing and delivery services, with drivers paying weekly rental fees. The Bolts provide the benefits of zero-emissions driving, but still add to the number of vehicles on city streets.

Austin was rated as one of the 26 best US cities to be an Uber driver based on analysis of earnings per trip. All of these cities will likely see more ride-hailing traffic in the coming years. According to Navigant Research’s Mobility as a Service report, the number of drivers working for ride-hailing services in North America will grow by 20% annually and surpass 5 million in 2026. The benefits and costs of these services to the cities where they operate will continue to generate debate.

Are Millennials Killing the Personal Vehicle, Too?

There have been several studies on the impact of ride-hailing, including analysis by the Institute of Transportation Studies at the University of California, Davis. According to a recent report, ride-hailing customers report using public buses, light rail, and bicycles less, but actually walked and took trains more. While traffic may be increasing, parking is getting easier as people are parking at destinations less, and many cities are seeing declining rates in car ownership. According to UC Davis data, 9% of millennials who use ride-hailing services disposed of one vehicle in their household, and others have delayed car ownership. As the frequency of using ride-hailing services increases, the likelihood of giving up a car rises, while vehicle miles traveled in personally owned vehicles declines.

Sharing Services Continue to Gain Popularity

Between 2010 and 2015, several of the largest US cities saw declines in vehicle ownership among millennials, including Seattle, Detroit, Washington, DC, New York, and San Francisco. The decreases in vehicle ownership are likely to continue as ride-hailing and carsharing services rise in the coming years.

There are positive repercussions for urban land use with the reduction of vehicle ownership and personally owned vehicle trips. Eliminating parking spots in the urban core frees up spaces for greening cities and other uses that are more aesthetically pleasing than parking. Reduced vehicle ownership will make more spots available in residential areas for those drivers who retain their cars.

Economic Benefits

Ride-hailing services also are good for the economy as customers can freely travel to areas with limited parking, stay out later, and indulge in drinking alcohol knowing that a safe, reliable ride is available in minutes. A recent study from the University of Pennsylvania found a correlation between the presence of Uber and reductions in drunk driving, a safety benefit for all. Another benefit is less costly transportation access for an aging population and people with disabilities. Uber recently announced the UberHealth service, which enables caregivers to book appointments for patients.

Ride-hailing should not be left unchecked to create more traffic problems and reduce use of public transit. That said, the benefits of ride-hailing services for customers and local economies are real.


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