2019 was a Banner Year for Electric Vehicles. What's Next?

Electric vehicles were the talk of every car show this year, and numerous mainstream automakers are heavily investing in their development. $300 Billion was committed by automakers over the next 10 years to shift their production facilities to build batteries and electric motors in place of internal combustion engines. Global electric vehicle sales are on track to have their best year yet, with the Tesla Model 3 continuing its dominance by accounting for over 45% of all electric vehicle sales.

Volkswagen announced their mass-market ID.3, which spearheaded their initiative to bring forward 75 all electric model by 2029, with production capacity for 26 million all electric vehicles. Ford's Mustang-inspired SUV gave rebirth to the "Mach" Mustangs of old, and the Mach "E" will max out at 50,000 vehicles per year (roughly 1/2 of Tesla's Model 3 production). If Ford can sell all 50,000 EVs they make right out of the gate, it would show mainstream viability to electric vehicles, and possibly solve the chronic issue of extended inventory on dealer lots of fossil fuel vehicles.

Electric Vehicles as a Disruptor

This good news only tells part of the story. There are concerns that increased electric vehicle production will decrease the size of the workforce needed to manufacture these vehicles. Indeed, these kinds of stories have facts behind them: Daimler, Audi and BMW have announced plans to cut 10,000, 9,500 and 6,000 jobs respectively over the next 3 years in order to increase capital investment in EV production. Diesel sales have slowed dramatically in Europe as a result of various emissions cheating scandals, and growth of auto sales in China has stalled.

In the European and Chinese market specifically, stronger emissions standards that are more than twice as stringent as in North America have driven automakers to produce more efficient vehicles for those markets. This has resulted in fewer electric vehicles being developed for North American consumers, as well as limited deliveries for electric vehicles in general. Models such as the ID.3 and Honda's E will likely never come to North America, while Tesla remains the only automaker delivering vehicles at scale.

Disrupting more than Transportation

While the benefits of lower operating costs, less emissions and overall safer vehicles grow to become a larger percentage of vehicles on the roads of today, the impacts of greater electrical demand on both the wider system and localized situations cannot be ignored. Infrastructure that makes up the electricity network is worth Billions, while Millions of dollars are invested every year to maintain its reliability and at the same time replace unreliable or outdated technology with the best new available technology.

The Rocky Mountain Institute produces excellent work highlighting the importance of understanding the integration potential of electric vehicles with the broader electricity grid. Electric vehicles are capable of supporting the grid in various ways: from discharging energy within the batteries to the grid in order to reduce peak demand, frequency regulation of the grid to balance variable supply and demand, and reducing the need to invest in new peak-production electricity plants. However, in order to achieve these benefits smart planning decisions are needed now in order to ensure they are realized.

Considerations such as driving patterns, the percentage of the electricity produced from renewable and intermittent sources, the overall load profile of the electricity grid, and the equitability of transportation in local settings are important. Each jurisdiction will have to holistically evaluate the potential for charging station installations to support a growing network of electric vehicles connected to the grid, as well as the potential benefits that such a fleet could provide.

Starting a grid modernization effort before these vehicles become mainstream would be prudent, and would allow a smooth transition to electric mobility rather than a sudden need to install outdated and expensive technology. With the pace of technological innovation, rapid changes to today's prominent technology could spell trouble unless learnings are put into practice, and future-forward planning takes centre stage.