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What Will It Take to Transition to Electric Cars? – Yale Insights

The adoption of electric vehicles is a key part of the decarbonization of the economy. Kenneth Gillingham, professor of environmental and energy economics, says that easing range anxiety and helping drivers understand the advantages of electric can help accelerate the shift.
Charging stations in Monterey Park, California, in May 2021.
Q: How much impact can electric vehicles have in the overall effort to fight climate change?
They can be crucial. While it varies by country, transportation is usually a third or more of total carbon dioxide emissions. And for a long time, people thought that transportation would be one of the two hardest sectors to decarbonize, alongside industry. Electric vehicles are changing the equation; the door suddenly is wide open to decarbonizing light-duty transportation. That’s a huge shift in how we think about pathways forward.
Q: Beyond emissions, what’s shaping electric vehicle adoption? What’s exciting about them? What hurdles remain?
Operating and maintenance costs are a lot lower for electric vehicles. They are very quiet and because they have amazing low-speed torque, they’re really fun to drive. All of that’s exciting.
One of the biggest challenges is range anxiety. People feel uncomfortable getting an electric vehicle because they’re worried about finding charging stations and the time it takes to recharge.
In practice, this is not a concern for people in their daily commute; this is not a concern going on errands and picking up children from school. However, range anxiety is a real concern for longer trips, and people make buying decisions based on having the option to take longer trips.
This is slowly being overcome, both from a build out of charging stations and from longer range batteries hitting the market. If you have a 400-mile battery, which some of the offerings on the market today have, it becomes much easier to not worry. It’s unusual to drive more than 400 miles in a day even on a long trip.
Q: Where do things stand with charging infrastructure?
There’s a technology piece. Typical charging stations take about 10 hours to fully charge long-range electric vehicles. Basically, the cars need to be plugged in overnight. But there are also DC fast-charging stations which draw at a higher voltage and fill up the battery much more quickly. In half an hour, some of the long-range electric vehicles will recharge to 75% or more. It’s not as quick as filling up your tank with gasoline, but it’s pretty fast. It allows you to get a cup of coffee, relax a little bit.
There aren’t that many DC fast chargers in the country yet because they are much more costly to put in, and they require dedicated infrastructure. A bank of chargers, say on I-95, will draw from the electric grid in a substantial way.
From an economics perspective what’s interesting is that this is a two-sided market with network effects. If you have more electric vehicles out there, more charging stations are going to be put in. If you have more charging stations, people are more likely to buy electric vehicles.
Tesla just went out and built charging infrastructure for their own cars. But if we really want to go from electric vehicles being 4% of the sales in the U.S. to 60%, we’re going to need a lot more charging stations.
That is a real challenge and it’s a challenge that the federal and state governments can play a role in facilitating, both through providing funding towards charging station infrastructure and by helping with permitting and expediting regulatory red tape.
Q: You mentioned electric vehicles reaching 60% of U.S. sales. Where does that number come from?
Many industry forecasts project that by 2035 to 2040, we are going to be at 60% given current regulations and technology trajectories. The Biden administration has a goal of 50% by 2030. And the state of California has a goal of phasing out new internal combustion engine vehicles entirely by 2035, which is pretty ambitious but other places have similar goals.
Q: Consumers don’t necessarily know whether the electricity coming into their homes is from renewable or fossil-fuel-based sources. Does that play into the value of electric vehicles?
In terms of carbon intensity, electricity is generally coming from cleaner sources than burning gasoline. And that’s only going to improve. Renewables are the largest new-generation sources coming on to replace sources that are being retired.
Everyone agrees that electricity is actually the easiest sector to decarbonize. We have reasonable and low-cost substitutes to fossil fuels. There will be challenges in going to high market shares of renewables, but we can do it. It will just take some time.
Q: What about the environmental impact of EV batteries?
I co-authored a paper in Nature Communication with Paul Wolfram, who was then a Yale School of the Environment PhD student and is now a postdoc at the Joint Global Change Research Institute. Looking at the full supply chains and all the indirect emissions, we compared the total environmental cost of electric and fossil-fuel powered vehicles.
It’s true there are environmental impacts from mining metals for EV batteries and there are embodied emissions in creating batteries. Those are important factors that needs to be considered. But when we account for everything in EV supply chains and compare it to the supply chain of gasoline, as well as all the things that go into making a conventional internal combustion engine and the burning of gasoline, it turns out that electric vehicles are significantly better from an environmental perspective. This was not fully understood until our analysis incorporated all the components.
Q: You’ve also looked at how consumers make a decision about whether to buy an electric vehicle.
My research tries to disentangle all the aspects of the consumer decision using data on all the purchases of vehicles in the U.S., as well as surveys and stated choice experiments. I also try to understand how those decisions have been changing over time as more electric vehicles are introduced and people have more information.
I found that network effects are powerful. An example of this would be, if your neighbor has an electric vehicle, talking to them and hearing how they like it—that’s effective in changing your perception of electric vehicles. Or if you’re a Mustang person, when the Mustang Mach-E came out, you’re going to say, “There’s an electric version of the car I like. Maybe I should check it out.” Even if you don’t care about the environment, the low-speed torque, the quietness, the great feel of driving are all attributes of electric vehicles that people may not be aware of until they experience them firsthand. Those very real benefits can change how people perceive electric vehicles and can shift the calculus around range concerns.
Q: Another behavioral component that you’ve studied is total cost of ownership. Would you explain that?
People tend to substantially underestimate the running costs of a car. I have a paper in Nature that elicits consumer beliefs about the running costs a gasoline car. People do a decent job estimating how much they spend on fuel but then they underestimate the overall running costs by about 50% when you include all of the other costs.
Many of those costs would decline with electric vehicles, particularly maintenance costs. There is either a behavioral bias or an information gap; people systematically underestimate their running costs in a way would lead them to over-adopt gasoline vehicles relative to electric vehicles if they had full information.
“I’d make the case that total cost of ownership should be labeled on new vehicles. That would be very likely to increase sales of electric vehicles.”
We have a very clear fuel economy label on every new vehicle. I’d make the case that total cost of ownership should be labeled on new vehicles. That would be very likely to increase sales of electric vehicles.
Large segments of the consumer population who buy new cars don’t care about climate change or emissions. But they do care about the amount of money that they’re spending, including total operating costs. Not having to bring their car to the shop as much—that is a very appealing aspect of many electric vehicles that’s not always accounted for.
If we’re going to be decarbonizing light-duty transportation, we’re going to need everyone eventually to be switching. It only makes sense to appeal to the various reasons they might want to do so.
Q: How much might electric vehicles change the future of how cars are used?
Electric vehicles are a natural segue into fully autonomous vehicles and connected vehicles.
For example, a few startups, including Electreon, are putting charging infrastructure in the roads to let vehicles recharge while they drive. The technology that connects a vehicle to the road could allow a whole set of other connections.
You don’t necessarily have to have electric vehicles to have autonomous vehicles or connected vehicles. But new technologies can lead automakers and regulators to think about the world outside the box that we’ve been living in for a long time, in a way that could help us reimagine transportation more broadly.
Another direction might be resiliency benefits from vehicle batteries to the electric grid. The Ford F-150 Lightning—an electric pickup that will come out later this year—can, with some modification of your home’s electric panel, keep at least some circuits of your house up and running during a power outage.
These battery-to-grid possibilities maybe a little oversold right now, but the potential is real. It could allow us to manage the grid with higher penetration of renewables. If you’re really reliant on renewables and you hit a period when the sun’s not shining and the wind’s not blowing. maybe at some point you can also take advantage of the fact that half of the households in the country will have electric vehicles with stored electricity in batteries.
It’s pretty exciting to think about the new innovations that are coming to our world in the next decade.
Q: Encouraging the transition to electric vehicles is part of a national, and global, argument about climate change. How do you frame the climate issues we’re facing?
Climate is among the most serious issues of our day. There’s no question about that. The science is incredibly clear that the impacts of climate change are going to be real and notable. While we can’t entirely eliminate those impacts—some are already happening—if we really start tackling climate change, there is time to reduce them.
It will cost us something, but by dealing with climate change we will get benefits long into the future and co-benefits today, including things like reduced air pollution, reduced asthma cases, and reduced hospital admissions.
From my perspective, there’s also strong reason to implement prudent policies to reduce the risk of catastrophic climate change. They can be seen like insurance policies.
Q: Are these policies we would implement at state, federal, or global level?
It’s going to have to be all of the above. In an ideal world, all the national governments would get together and implement carbon prices that are sufficiently high to really push the needle. If that happened, I believe we could deal with climate change, in a substantive way, in a matter of a decade or two if everyone did it. But unfortunately, the politics don’t appear to be pointing in that direction.
Yale Insights is produced by the Yale School of Management.
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