Expanding the Electric Vehicle Market

In my series of podcasts, I’ve had the opportunity to engage in conversations with remarkable people who have worked at the intersection of economics, energy, and environment, with backgrounds and experiences in multiple sectors, including academia, government, the private sector, and NGOs.  My most recent podcast guest was no exception, because I was joined by Elaine Buckberg, my colleague at the Harvard Kennedy School, where she is a Senior Fellow in the Salata Institute for Climate and Sustainability, and previously served as Chief Economist at General Motors, and before that worked at a number of economic consulting firms and investment banks, as well as the U.S. Department of the Treasury and the International Monetary Fund.

So, I was eager to feature an episode with Elaine in my monthly podcast,  “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” The podcast is produced by the Harvard Environmental Economics Program.  I hope you will listen to our conversation here.

Elaine Buckberg draws on her experience in macro, micro, and financial economics, both domestic and international, and much of her current work at Harvard focuses on the economics of electric vehicles (EVs) and policies intended to encourage their development and adoption.  

In our conversation, she remarks that despite progress in the growth of the U.S. EV market over the past decade, there remain a couple of significant obstacles.

“Number one is [the] availability of public charging. Everyone, even if they can install home charging, want to believe that if they buy an EV, they can do a road trip, and it won’t be a challenging or frustrating experience. So, having highway charging that works, that’s widespread, and that’s reliable is huge for adoption. And that comes through in JD Power surveys of vehicle buyers too, for the top five reasons why people just bought [or] don’t buy an EV in recent quarters are all about charging. The other barrier is about price differentials … People have a limited willingness to pay more for an EV,” she says.

Of course, the Trump administration is taking steps through its “One Big Beautiful Bill Act,” Buckberg notes, to roll back subsidies for domestic EV purchases and impose a $250 per/year fee on EVs to compensate for lost gas taxes.  I will add that the OBBBA also functionally eliminates any effect of CAFE standards for motor vehicle fuel efficiency (which go back 50 years to a law signed by President Gerald Ford) by eliminating the penalty for non-compliance.

However, Elaine says that most automakers understand that changing market dynamics on their own will compel them to embrace green technologies. 

“[They] overwhelmingly believe that EVs are the future and are ambitious about getting into the market and want to be early winners in the EV market but also need to achieve profitability along the way in order to satisfy investors and be able to make those very substantial investments in their EV program,” she explains. “There [are] some differences among automakers. Automakers that are heavily in Europe or in China have to shift over their portfolios faster. I think GM and Ford are very ambitious. The Europeans are very ambitious. Hyundai and Kia [are] doing very well with EV models in the U.S. market.”

Looking over the longer term, Buckberg states that as EV battery ranges and charging capacities expand, this will further drive the advancement of the EV market – both in the U.S. and abroad.

“I’m a really big believer in the technological progress that the amount of research that’s happening on batteries – public and private – around the globe will really continue to drive down battery costs and get us to that point where buying an EV is actually cheaper than buying an internal combustion engine (ICE) vehicle even on the upfront costs, and that will be very compelling to people,” she states.

“I also think that some of the other challenges around charging and speed of charging are improving with continued rollout of chargers as well as improvements in the batteries that enable them to take in faster charges. You may have seen that there were a couple of breakthroughs from BYD and CATL, two Chinese companies, where they’re saying you could charge a vehicle in five minutes on new chargers they are developing that could provide more than a thousand kilowatts per hour and vehicles that could take them in at that speed.”

At the other end of the spectrum, Buckberg sounds an alarm for U.S. automakers who drag their feet on their EV programs.

“This is the future of auto, and if we want the U.S. to continue to compete in auto, if you want us to have jobs in auto and be a producer, we can’t fall further behind the rest of the world. Even without the emissions requirement, from a pure jobs and industry requirement, you want domestic production. This is the future of the auto industry, and if we don’t make them domestically, if we don’t promote sales, we will fall further behind in efficiency in learning, and we may not have a domestic auto industry in the future,” she warns.

For this and much more, please listen to my complete podcast conversation with Elaine Buckberg, the 68th episode over the past five years of the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunesPocket CastsSpotify, and Stitcher.

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Reflecting on Federal Regulatory Policy and the Future of Electric Vehicles

As I’ve discussed previously, the political barriers that exist in the U.S. Congress to the enactment of significant new climate change legislation will likely force the Biden administration to turn, at least in some cases, to regulatory approaches.  This is in addition to the numerous government subsidy programs that are part of the administration’s infrastructure plans, some of the most important of which are for diffusion of electric vehicles (EVs).

So, this is a particularly opportune time to reflect on the role of federal regulatory policy, as well as the outlook for EVs.  For that purpose, an exceptionally qualified observer is my newest podcast guest, Dr. John Graham, Dean Emeritus and Professor at the Paul O’Neill School of Public and Environmental Affairs at Indiana University, and former Administrator of the Office of Information and Regulatory Affairs (OIRA) in the U.S. Office of Management and Budget (OMB).

You can hear our complete conversation in the podcast here.

In these podcasts – “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program – I talk with well-informed people from academia, government, industry, and NGOs.  John Graham obviously fits perfectly in this group, with tremendous experience both in academia and government.

John Graham is Dean Emeritus – and still a professor – at the Paul O’Neill School of Public and Environmental Affairs at Indiana University.  Previous to that, he was Dean of the Pardee RAND Graduate School in Santa Monica, California.  And before that, he served in the George W. Bush administration as the Administrator of OIRA.  And prior to that, he was a professor at the Harvard T.H. Chan School of Public Health in Boston, where he founded the Harvard Center for Risk Analysis.

In our podcast conversation, Dr. Graham offers his thoughts on Regulatory Impact Analysis, federal energy policy, domestic climate change policy, and electric vehicles.  He also talks about his early experiences in the Bush 43 White House, where he and his team had to make the case to the President to increase the stringency of Corporate Average Fuel Economy (CAFE) Standards at a time when the Vice President was opposed.

“We had to actually go into the Oval Office and make our case to President Bush. And when I did so, it was apparent that the president and the vice president were not totally on the same page on this issue, but we were able to persuade the president to move forward and we did so, and now it’s a very important part of the program that the federal government has on fuel economy and on carbon dioxide control,” he says.

Graham, whose Ph.D. dissertation was on the topic of automobile airbag technology, also discusses his new book, “The Global Rise of the Modern Plug-In Electric Vehicle: Public Policy, Innovation, and Strategy,” which outlines the significant ways in which the wide use of electric vehicles will influence our daily lives, economies, urban air quality, and global climate change.

“When I was working for George W. Bush, we were very convinced that the electric vehicle was not a very cost-effective technology, and we resisted strongly California’s efforts to mandate so-called zero-emission vehicles, and they really had in mind electric cars,” Graham explains. “But what has happened is the spillover of lithium-ion battery technology from consumer applications to the auto industry, [and the extent to which it] is now creating enormous excitement and innovation in the auto sector, and that’s the stimulation for the book.”

Graham predicts that electric vehicles will play a significant role in the future of transportation.

“The transition from the internal combustion engine to electric propulsion is in fact underway and irreversible seeds have been set to make this happen. However, the pace of the transition is going to move at very different rates in different parts of the world, and a lot of this depends as much on politics as it does on markets,” he says.

John Graham explains that Norway is leading the world with electric vehicles, making up 80 percent of the nation’s new car fleet. That compares to ten percent in Germany and the UK, and approximately three percent in the United States. Production in the USA will grow, Graham argues, once appropriate government policies are in place.

“This is one of these cases I find it fascinating where the industrial policy strategies, which many Western economists regard as in disrepute … are in fact the standard approach to making a big change in an industry like this, and I think that’s what’s going to have to happen. Now the details about whether the Biden Administration gets it right, it’s far too early to judge.”

My complete conversation with John Graham is the 23rd episode in the Environmental Insights series, with future episodes scheduled to drop each month.  You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

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