House Subcommittee Examines Competition Between Electric and Conventional Cars

May 8, 2018

The House Energy and Commerce Subcommittee on Environment examined the rise of electric vehicles (EVs) and the public policies supporting their growth today at a hearing, “Sharing the Road: Policy Implications of Electric and Conventional Vehicles in the Years Ahead.”

The hearing, which was the third in a series of hearings held by the Subcommittee on the competition between EVs and conventional vehicles, touched on a broad range of topics, from cybersecurity to “range anxiety” to market competition. The stakeholders present at the hearing were just as diverse, representing interests from AAA to the Union of Concerned Scientists to the National Association of Convenience Stores. (Click here for the full list of witnesses and their written testimony.)

Here are the highlights of the major topics discussed at the hearing; watch the full video of the hearing here.

Growing Demand for EVs

As with many Congressional hearings, the witnesses were by and large playing with the same set of facts, but messaged differently to suit their point. This was clear during the discussion of consumer demand for EVs. Mitch Bainwol, President and CEO of the Alliance of Automobile Manufacturers, stated that EVs currently represent only 1.2 percent of the market (California has far outpaced the rest of the country, at roughly 4 percent of sales). Cullen, on the other hand, preferred to talk about the supply of EVs as opposed to the demand, pointing out that there were only 2 models of EV offered in 2010 and now almost 50 varieties at different price points.

Last September, Energy Innovation forecast that EVs would make up 65 percent of new light-duty vehicles sales in the US by 2050, growing slowly through 2025 followed by rapid growth through 2040. Bloomberg New Energy Finance’s Electric Vehicle Outlook 2017 showed a similar trend.

There’s reason to believe this may happen: McKernan pointed to a AAA study that found 20 percent of Americans said they are likely to go electric for their next car purchase, five percentage points higher than last year. The respondents cited concern for the environment as their top reason for wanting an EV, followed closely by lower long-term costs of ownership. McKernan attributed rising consumer acceptance of EVs to consumer education. “The more consumers learn about the technology,” she said, “that’s what’s helping to change attitudes.”

But if interest in EVs is growing, it’s not growing everywhere: Rep. Jeff Duncan (R-SC) pointed out that people in his district only bought 13 EVs last year, or .05 percent of car sales.

Subcommittee Ranking Member Paul Tonko (D-NY) briefly turned the hearing into a brainstorming session on how to grow demand:dylan, pointed out that the expansion of DC fast charging—higher voltage (and far more expensive) chargers that allow for much faster charging of EVs—will “absolutely facilitate expanded use of electric transportation.” David Reichmuth, Senior Engineer in the Clean Vehicles Program at the Union of Concerned Scientists, listed charging stations in multi-family dwellings, updating building codes to mandate space for charging in new facilities, and fast charging in urban environments for people who cannot charge at home as other ways to grow demand by making it easier for people to fit EVs into their lifestyles.

This point was raised many times throughout the hearing—the “range anxiety” that may prevent would-be EV owners from making the purchase out of concern that they won’t be able to get where they need to go on one charge. The AAA study showed that range anxiety is beginning to ease, but it is clear more infrastructure needs to be put in place to enable long-distance drives.

Infrastructure (And Who Should Pay for It)

Opening the hearing, Chairman John Shimkus (R-IL) pointed out the disparity in the sheer amount of conventional car infrastructure vs. EV infrastructure: traditional car motorists can gas up at any of roughly 150,000 liquid fuel retailers across the country, while there are just over 20,000 EV charging stations in operation today. There’s also a difference in fill-up time. “EVs can’t compete with that level of convenience,” Chairman Shimkus said. “Charging infrastructure and charging times are still a challenge.”

Making enough charging stations available to support greater penetration of EVs would require significant upfront cost: while a home charger can cost just a few hundred dollars, Dylan Remley, Senior Vice President of Global Partners LP, said that a DC fast charging station can cost a gas station over $100,000 when the required additional square footage and distribution lines are taken into account. Remley also pointed out that the charging infrastructure “requires imports from countries that may not be politically stable.”

Geisha Williams, President and CEO of Pacific Gas and Electric (PG&E) Company, was optimistic about the infrastructure build-out, saying utilities stand ready to use their scale and capital to “spur this important resource.”

But Remley called out utilities for passing the costs of charging infrastructure onto ratepayers. Instead, he said the infrastructure investments should be made exclusively through the private sector so that people who don’t drive EVs but are within that utility’s footprint do not have to share the cost. After all, he said, EV drivers don’t pay for gas and thus don’t help fund roads and highways through the gas tax.

That was another public policy question posed several Members, including Chairman Shimkus and Rep. Joe Barton (R-TX): how do we ensure EV owners are paying their fair share to maintain the infrastructure they’re currently using essentially for free?

Rep. Barton asked if anyone on the panel had specific policy suggestions: Cullen did not present a specific policy option but mentioned there are states that are looking at “innovative ways” to reimagine the gas tax. She may have been alluding to Oregon’s per-mile driving fee pilot, for example.

Bainwol pointed out a potential complicating factor: if you make EV owners pay into the trust fund somehow, he said, it could reduce the demand for EVs by raising their cost, which hurts manufacturers’ ability to meet their EV sales mandates.

Competition and Regulation

Competition between EVs and conventional cars, and the federal and state policies that promote one over the other, was another major focus of the hearing. There were strong opinions on both sides, with Chairman Shimkus saying Congress “should reexamine old regulations like the renewable fuel standard (RFS) in light of new competition from EVs,” and Rep. Debbie Dingell (D-MI) saying the Administration “must maintain a national standard that keeps California at the table” (referring to the CAFE and GHG emissions standards, and California’s mandates that go beyond the national standards).

Opinions were as varied on the panel. Bob Dinneen, President and CEO of the Renewable Fuels Association, testified that the RFS “remains a beacon of success that is being emulated as other countries seek to expand their production and use of renewable fuel.”

On the other hand, Frank Macchiarola, group director for downstream and industry operations for the American Petroleum Institute, said Congress “must enact a transportation policy based on free market principles” and said the RFS distorts the free market. He advocated sunsetting the policy. Remley sided with API, deriding the “current skewed incentives that may lead to an anti-competitive marketplace.”

Williams said PG&E supports the existing standards—perhaps because any policy that results in more EVs will also create more demand for their product (electricity), but she noted “we have unique air quality issues in California, so it’s a public health issue.”

Less at issue was the competition between EVs and renewable fuels. Dinneen said the ethanol industry “does not see EVs as a threat. Rather, we see them as fellow travelers on our road… to decarbonization.” In a humorous moment, Dinneen—who runs the leading trade association for the U.S. ethanol industry—admitted that his wife drives an electric hybrid. “Public policy needs to make room for both,” he said.

The tax incentive for EVs was another point of contention. Asked by Rep. Dingell whether the tax incentive has helped people afford an EV who otherwise could not, Cullen said “it’s working as designed by Congress” by “making a new technology that has the standard price premium associated with new technology affordable for people,” which in turn allows that technology to scale up.

Rep. Duncan seemed skeptical of the incentive and questioned how much longer it would be justified. If EVs can come down to equal prices as conventional cars, he asked, should people still get the tax incentive to purchase one?

Bainwol demurred, saying that will be a good policy question “when we get to a point where the costs have equalized.” Bloomberg estimates that point will be in 2025.

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