ElectricCarsandUtilityPricingBy:GarrettGottfried

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Introduction:

In1769FrenchmanNicholasCugnotbuiltthefirststeampoweredmotor

carriage,thiswasaself‐propelledvehiclelargeenoughforonepersonandcargo.

Thismotorcarriagewouldeventuallystarttherevolutionoftransportationthat

wouldleadtotheautomobilesthatweusetoday.Sincethesteamenginewas

createdtherehavebeenmanytechnologicaladvancestocarsincludingthegas

motorandtheelectricvehicle.RobertAndersonofAberdeen,Scotlandbuiltthefirst

electriccarin1839.Thiscarriageusedanon‐rechargeablebatteryandwasnota

veryeffectivemeansoftravelcausingverylittleimpactinthehistoryof

automobiles.Extraordinaryadvancesintheelectricalcarshavebeenmadeoverthe

past200years.Allofthesetraveladvanceshavebeentowardsefficiencyofenergy,

cleaneremissionsandeconomicallyprofitablewaystotravelinoureverydaylives.

Electricalchargingvehiclesmusthaveefficientpricingofelectricitybyutilitiesto

makeadifferenceinthelongrun.Themaineconomicissuethatthisprojectwill

addressis,“willelectricvehiclesinthelongrunbeeconomicallyprofitable,efficient

andbeneficial?”

Theresearchanddevelopmentoftransportationtobecomingefficientand

sustainablehasbeenaverylongandon‐goingprocess.Thistransformationofcars

startedintheearly1800’sabout40yearsafterCugnotcreatedthefirststeam

poweredmotorcarriage.Thesefirstsetsofcarsusedinternalcombustionengines

thatweredevelopedforrunningonfuelgaswhichleadtothemoderngasoline

enginethatcarsusetoday.Duringthistimewhenthefuelgasenginewasbeingused

RobertAndersonsinventionofthefirstcrudebatterypoweredcarriagethatwas

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overlooked,thisdidnotlastforverylongthough.Intheearly1900’selectric

vehiclesgainedpopularityoutsellinggasvehicles,PresidentWoodrowWilsonand

ThomasEdisonwerefamouspeoplethatbackedtheideaofelectricvehicles.These

vehiclesatthetimecouldtravelanywherefrom55to70milespercharge,whichis

almostthestandardforelectricvehiclestoday.

Electricvehicleswereusedintheearly1900’s,thetechnologyinthesecars

wereseenandusedintrolleysystemsaroundcities.NationalCityLines,Inc.afront

companyforGeneralMotors,FirestoneTire,StandardOilofCaliforniaandPhillips

Petroleumacquiredtheselocaltransitsystemsshuttingdowntrolleysandreplacing

withgasolinepoweredbuses.Thiswentonbringingupcasesofconspiringto

monopolizewithsalesofbusesandotherproblemsbyNationalCityLines,which

endedupinconviction.Aroundthistimetherewasahaltinproductiontowards

electricvehiclesthatdidnotseeinterestagainuntilthelate1990’s.Popularityrose

duetothegreeneffectandareintroductionofelectricvehiclesinthe2000’sstarted

toemerge.ManydifferenttypesofEV’shavebeenproducedincludinghybrid

gasolinecars,plug‐inhybridvehiclesandbatteryelectricvehicles.Plug‐inelectric

vehiclesusechemicalenergystoredtooperatethecar,usingnogasoline.Withnew

carsemergingonlyusingelectricwemustlookintotheenergyresourcesthat

providetheenergyaswellastheefficiencyofutilities.

Thereareninemainenergyresources:crudeoil,coal,naturalgas,

hydroelectric,nuclear,wind,bio‐fuels,solarandgeothermal.Crudeoilhoweveris

thehighestproducedresourceofenergythattheworldcurrentlyuses.TheUnited

Statesistheleaderinoilconsumptionintheworldwhileitisthethirdlargest

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producerofitin2011.Outofallconsumptionofoilonlyhundredthsofapercentgo

toelectricityproduction,mostoilandpetroleumuseintheUnitedStatesgoesto

transportation.Ifwecanreplaceoil,whichhaslargerfixedcostsandlargervariable

costtoextract,withenergiesthathaslowerfixedcostsandloweroperatingcosts

thanproducingenergyforelectricvehiclesmaybemoreefficient.Thereductionin

useofoilandpetroleummighthavealargepositiveeffectintheUnitedStates

economyaswellasefficientuseofresources.Eachdifferentresourcerangesin

efficiencyofenergyproducedandeachhasdifferenteconomiccosts.

Inthispaperwewilllookintoifelectricvehiclesareeconomicallyprofitable,

efficientandbeneficialinthelongrun.Thisisanimportantissuetolookatdueto

theamountofresourcestheUnitedStatesusesdailyandhowthereductioninoil

usetopowercarsmightbeeconomicallybeneficial.Toseeiftheuseofelectriccars

willbebeneficialwewilllookintotheeconomiccostsofelectricvehicles.The

differenttypesofenergyresourcesthatareusedtoproduceelectricityandifthey

containbeneficialcosts.Toimplementelectricvehicledrivingtherewillbeacostof

buildinganinfrastructureandaneffectivewayofpricingtheseproductstothe

consumers.Theevaluationandanalysisofgathereddatawillanswerthequestion

ofwhetherelectricvehicleswillbeeconomicallyprofitableandefficientinthelong

run.

EconomicCostsofElectricVehicles:

Allmeansoftransportationhavedifferenteconomiccostsassociatedwith

them;electricvehicleshavemanydifferentfactorsthatmakeuptheeconomiccosts

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ofowninganddrivingone.Therearemanydifferenttypesofadvantagesand

positiveexternalitiesthatdrivinganelectricvehiclemightproduce.Accordingthe

U.S.DepartmentofEnergy,electricvehiclesconvertanywherebetween59to62%

oftheelectricalenergyfromthegridtopoweratthewheels.1Thisisconversionis

almosttriplewhatconventionalgasvehiclesconvertupto,thusmakingthe

consumptionofenergymoreefficientinuse.Whilelookingintooverallefficiencywe

mustlookintotheefficiencyofgoingfromfueltoelectricity.Electricvehicles

releaselowtonoairpollutantswhenoperatedandwhenchargedfromCo2emitting

sourceslikecoalornaturalgaspowerplantscarbonproductionistypicallycutin

halfratherthangaspoweredcars.Thechargingfromotherpowersourcescould

possiblyallowforcheaperorlowexpensetravel.

Whencalculatingtheeconomiccostsofelectricvehiclesyoumustlookinto

thealternativeconsumptionofenergyandelectricitycomparedtoconventional

gasoline.Thechangeofenergyresourceswillresultindifferentspendinghabitsdue

toachangeoftransportation;thiscanbeseennotjustinuseofelectricvehicles

comparedtoconventionalgasvehiclesbuttheopportunitycostsoftakingapublic

transportationtrainintothecityinsteadofacar.Iwillexaminethreedifferenttypes

ofelectricvehiclesduetoopportunitycostandconsumersbehaviorofdifferent

products,withtheirinitialcostsofpurchasingthemandtheelectricitythey

consumetorun.

1"ElectricVehicles."ElectricVehicles.U.S.DepartmentofEnergy,n.d.Web.1Oct.2012.

<http://www.fueleconomy.gov/feg/evtech.shtml>

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Fuelefficiencyistheprocessofconvertingchemicalpotentialenergy

containedbyacarrierfuelandproducingitintoakineticenergyorformofwork.All

differentfuelsourceshavespecificenergycontentthatisreleasedwhentheobject

ismanipulatedorburned.Weseethisprocessconductedtosupportourelectricity

infrastructurethatwehaveinplacetoday.Thisisimportantduetoallconversion

processesofelectricityutilitieshavingdifferentefficiencylevels,allowingforthe

highestreturnofenergyproduction.Solarproductionhasthelowestefficiencyrate

withstartingaround6percentandwaterturbinesallowingforaround90percent.

Theprocessofenergyconversationratioshastodealwiththeeconomiccostsof

electricvehiclesbyapplyingoverallefficiencyofgasconsumptiontocoal

consumptionorothernaturalresources.Theuseoftheseresourceswillaffectthe

gridthatpowersthesecarsandchangemonthlycostsofhousehold’sutilities.

Eachdifferentcar’selectricalusagedependsonthecharge‐requireddailyto

operate;thefirstcarwewilllookatistheNissanLeaf.TheNissanLeafistheworld’s

topsellingelectriccar,startingaround$27,700USD.TheNissanLeafusesa24kWh

lithiumionbatteryforitsfull100+milecommute,andaccordingtoNissanis

warrantedupto8yearsor100,000miles.2TheaveragehomeinAmericauses

around25kWhperday,increasingelectricityusagearound50%.Atahighrateof

12.5centsperkWhitwouldcosttheLeafa$1.50to$3.00adaytorun.Amonth

worthofdrivingit50milesorlesswouldaddthecostsof$45toyourelectricbill

andatthemaximumcostitwouldadd$90dollarswithovera100‐milecommute

2"VERSIONS&SPECS."NissanUSA.Nissan,n.d.Web.Oct.‐Nov.2012. <http://www.nissanusa.com/leaf‐electric‐car/versions specifications?next=ev_micro.overview.specs.button>.

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everyday.The100‐milecommuteperdaywouldallowthiscartobeunder

warrantyfor1000daysor2.73years(eventhoughitshouldlastlongerthan3years

wewillsaythatthecardieswhenthewarrantydiminishescompletely),averaging

outto$10,110(initialcostofvehicle/yearslasted)+$1080(increaseinelectricbill

peryear)equalingtoanaveragecostof$11,190peryearata3yearlifespan.

ThesecondcarwewillbelookingatistheChevroletVolt.TheChevroletVolt

isoneofthenewestelectricvehiclestobeintroducedandhasbeenmarketedmore

thananyotheronetodate.Thiscarstartsatthepriceof$31,645USD,usesa16.5

kWhT‐shapedlithium‐ionbatterypackthatgetsupto38‐milesonafullcharge

whilealsousinggastoallowittogotoa380miledrive.Thiscariswarrantedupto

8‐yearsor100,000‐milebatteryandVolteccomponentlimitedwarranty.3

ComputingforthesameaveragehomeuseofenergyandpricingastheLeaf,theVolt

wouldcost$1.03to$2.06toruneachdaywithouttheuseofgasoline,adding$30to

$61toyourelectricbillamonthwithdriving38milesadayorless.Witha38‐mile

commuteperdaywouldallowthiscartobeunderwarrantyfor2631daysor7.21

years,averagingoutto$4,389.16(initialcostofvehicle/yearslasted)+$732

(increaseinelectricbillperyear)equalingtoanaveragecostof$5,121peryearata

7yearlifespan.DuetotheLeafbeingabletodrive100milesonachargewemust

computethepossiblepricesatthesameoperatinglevel.Thiswouldincreasecosts

by2.5timestheamountstatedabove,makingmonthlycostsincreaseto$75to

$152.50.A100‐milecommuteperdaywouldallowthecartobeunderwarrantyfor

3"Models&Specs."ChevroletVolt.N.p.,n.d.Web.Oct.‐Nov.2012.

<http://www.chevrolet.com/volt‐electric‐car/features‐specs/trims.html>.

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1000days,averagingoutto$11,591.57(initialcostofvehicle/yearslasted)+$1830

(increaseinelectricbillperyear)equalingtoanaveragecostof$13,421.57peryear

ata3yearlifespan.

ThelastandbyfarthemostaestheticallypleasingcarIwillbeevaluatingis

theFiskerKarma.TheluxuriousKarmaisahigherendelectriccarandgas,starting

around$96,895USDA.Thiscarhasa20.1kWhmid‐mountedlithium‐ionbattery

withNanophophatetechnologythatreceivesupto50milesonafullchargewithout

usinganygasandupto300withgas.4TheKarma’swarrantyis5‐yearor60,000

milesonthebatterybutisexpectedtolastupto10yearsor100,000miles.Using

thesamecostsforelectricchargingastheLeafandVolt,theKarmawouldcost$1.25

to$2.51toruneachdayfroma25to50‐milecommute.Increasingyourelectricity

billfrom$37.69to$75.38amonthwithouttheuseofgasolineanddrivinglessthan

50‐milesaday.A50‐mileperdaycommuteunderwarrantywouldallowthecarto

runfor1200daysor3.29years,averagingoutto$19,379(initialcostof

vehicle/yearslasted)+$904.56(increaseinelectricbillperyear)equalingtoan

averagecostof$20,283peryearata5yearlifespan.Ata100‐mileratethiswould

doublepricesincreasingmonthlyelectricityto$75.38to$150.76withouttheuseof

gasoline.A100‐mileperdaycommuteunderwarrantywouldallowthecartorun

for600daysor1.64years,averagingoutto$58,944.45(initialcostofvehicle/years

lasted)+$1,809.12(increaseinelectricbillperyear)equalingtoanaveragecostof

$60,753.57peryearata2yearlifespan.

4"TheWorldNeedsNew."FiskerKarmaOverview.N.p.,n.d.Web.Oct.‐Nov.2012.<http://onward.fiskerautomotive.com/en‐us/karma/overview/>.

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Thesethreedifferentcarsareuniqueinalltheirownwaysrangingfroma

pureelectriccartoluxurioushalfelectrichalfgasdailydriver.Eachoneofthese

carshasdifferentwarrantiesandprojectedlifespansthatwilllastfromtherangeof

3to7yearswhiledrivingthemtheirmaxdistanceeverypossibleday.Outofthe

threeestablishedcarsheretheChevroletVolthasthebestcost‐benefitanalysis

comparedtotheotherchoicesbyhavingatotalcostof$35,847over7yearswith

operatingwithoutgasifonlycommuting38‐milesaday.Ifyouwantacarthatcan

beoperatedatalongercommuteof100‐milesadaybuthasasmallerlifespan,the

Leafwillintotalcost$33,570over3yearsandneveruseanygasoline.TheKarmais

notaelectriccarforyouraveragefamilyandmightbelookedatasaluxurious

everydaydrivingthatcancommuteupto50‐milesadayandcosts$101,415ata5

yearlifespan.Beingabletocomparethreedifferentelectricvehiclesattheirmax

distancetraveledinonechargeandatthe100‐milerateshowsthepricedifferences

incurrentproductsinthemarket.Thethreedifferentcarscomparedallhave

differentspecsanddifferentbenefitstodriving;whetheritisapricepoint,distance

traveledoroverallstyleeachcarhaschallengesithastofacetobeacosteffective

car.

Thechallengesfacedortoeventuallyfacewithproducinganddrivingan

electriccarcanbeproblematic.Solelyelectricity‐basedcarshavealimitedamount

ofrangepercharge,makinglongdistancedrivingaproblem.Thelackofcurrent

developmentsandcharginginfrastructureonlyallowselectricvehiclestochargeat

theirhomesorthe4,756publicelectricstationsaccordingtotheU.S.Departmentof

Energy.IntheareaofBloomington‐Normal,ILtherearecurrentlyninefreepublic

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chargingstationswithonebeinglocatedintheparkinglotofMilnerLibrary.5This

mayseemlikealargeamountofdifferentfreeoptionstochargeatbutcomparedto

the150,000+publicgasstationstherearethatisjustaround3%ofpossiblefueling

stations.Theproblemofpossiblechargingandbarrierstocreatinganew

infrastructurearenottheonlyproblemsthatarefaced.Energytransferinthecoldis

worsethaninthesummerorpeakdrivingconditions.Thiswouldslowdown

efficiencyofdrivingandpossibleproblemsinsidethecarwithheating,makingthe

useofthesecarslimitedincertainconditions.Oneoftheotherpossibleproblems

thatoccuristheuseofgreenenergy;withtheuseofcoalornaturalgasenergyto

powerthesecarswewouldstillnotbecarbonneutral.

Theeconomiccostsofelectricvehiclesdependonmultiplefactors,whichare

exertedfromuseofthem.Anincreaseofutilitiesthroughtheefficiencyofelectricity

conversionisatopicthatmustbefurthermorelookedinto,thepossibilityof

increasedminingofcoal;naturalgasdrillingorenergyturbinescouldaffectthe

overallgirdpower.Whenitcomesdowntotheextrapowerconsumptioneach

personthatuseselectriccarswillhavetheirownmarginalbenefitandunitelasticity

associatedwiththisproduct.Theincreasingcostofanelectricitybillmightallowa

persontothinkitsmarginallybeneficialtothemswitchawayfromgas.Lateronin

thepaperIwillcomparethecostofgastoelectricityfordrivingeachdaytoseeifit

ischeaperonasmalldistancedrivingscale.Tofindoutifusingelectricresourcesto

5"ElectricVehicleChargingStationLocations."AlternativeFuelsDataCenter.N.p.,

n.d.Web.Oct.‐Nov.2012.<http://www.afdc.energy.gov/fuels/electricity_locations.html>.

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powercarsisbeneficialwemustlookintothedifferenttypesofenergyresources

usedandthemostefficientcostbeneficialutilities.

Theincreaseofelectricvehiclescouldmakeasignificantimpactonthecar

marketandeventheenergymarketthatisvitalineverydaylife.Around17,000

electriccarsweresoldin2011;theNissanLeafhasbeenthebestsellerwith32,000

totalontheroad.In2011therewere13milliontotalvehiclessoldintheU.S.,

electricvehiclesonlymakeuponetenthofapercent.TheChevroletVoltandNissan

Leafcombinedsoldmoreunitslastyearthananyhybrideverdidincludingthe

Prius.Hopesofinthenexttenyearsanincreaseto1percentofvehiclesontheroad

willbeelectric.Therearecurrentlyaround1billionvehiclesontheroadinthe

worldandifelectricvehiclesweretogetto1percentofallcarsthatwouldmean

therewere10millionelectricvehiclesrunning.Thecostofdrivingelectricvehicleis

averyimportantpartofchoosingifitiseconomicallybeneficialfortheconsumerto

choosethatoveraconventionalgascar.

EnergyResourcesandEfficientUtilities:

Theconsumptionofoil,gas,electricityandotherenergycommoditiesplaya

hugeroleintheUnitedStatesinmanydifferentwaysevidentbythedailynews,

changesincommoditypricesandnationalenergyrelatedissues.Theimportanceof

findingthemostefficientwayofusingournaturalresourcesisanimportantissue.

Thecostofstoringlargeamountsofelectricityovertimeistoocostly;thereforethe

amountofenergydemandediswhatisproducedatthattime.Ifwecanlimittheuse

ofoilandexpandcheaperenergyproduction,wecouldbenefitinthelongrun.We

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mustlookintodifferentelectricitygeneratingresourceswehavetoseewhatways

aremosteconomicallybeneficialtotheU.S.

Currentlythereareninemaintypesofenergyresourcesthatcanbe

generatedintoelectricalpower.Coal,naturalgasandoilarethethreetopfuels

burnttorungeneratorsthatsupplypowertotheUS.Uraniumusageinnuclear

plantsisthesecondclosest,thathashighfixedcostbutlowoperatingcosts.Energy

sourceslikewind,water,andsolarpowercouldpossiblyprovidecleanerand

cheaperwaystosupporttravel.Theserenewableenergiesareusedduringtheday

andhaveverylowoperatingcoststoothem.Theuseofelectricalchargingvehicles

mayhelpfindbalanceinpricingofcommoditieshereintheUnitedStatesaswellas

improvenaturalresourceusage.Theuseofelectricityasanenergythatwillpower

carsaswellasotherobjectscouldbeoneofthemostefficientusageofour

resources.Thepossibilityofusingelectriccarstohelpreintroduceenergybackinto

thegridduringpeakhourscouldmakerenewableenergiesmoreimportantby

allowingthemtobeusedduringpeakhoursloweringcosts.Thiscouldpossibly

decreasethehighestusedresourceusagebyallowingstorageofenergy.

Thecurrentresourcethattheworldusesmostiscrudeoil,whichis

separatedintooils,gasesandotherbyproductsusedtooperatehomes,carsand

machinery.AccordingtotheEPA“In2009,worldtotalprimaryenergyconsumption

was483QuadrillionBtu.TheUnitedStatesenergyconsumptionwasabout95

QuadrillionBtu,about20%oftheworldtotal.”6Coalandnaturalgasarethetwo

6"Energy.gov."EnergySources.N.p.,n.d.Web.Oct.‐Nov.2012.

<http://energy.gov/science‐innovation/energy‐sources>.

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highestusedenergiesthatsupplypowertothegridsandourhomes.Theseareused

duetohavinglargeamountsofcoaldepositoriesintheUSandlargeamountsof

naturalgasreservoirsandthenewtechnologyofhydraulicfracturing.Accordingto

theEPA39%ofthetotalenergyconsumedinAmericaisusedforelectricpowerand

27%isusedfortransportation.7ThiscanbeseeninFigure2.0PrimaryEnergy

Consumptionbysourceandsector,2011fromtheEPA’swebsite.

Thisgraphshowstheimportanceofhowweusetheresourceswehavecurrentlyby

showingtheconsumptionin2011.

Differenttypesofelectricityproducedhavedifferentimpactsonthe

environmentdotoitsgeneration.Eachdifferenttypeofsystemshasadvantagesand

disadvantagestotheproductionofenergy.Theeffectsofoildrillingcanbeseenin

theBPoilcrisisandalsothepollutionemissionsthataregivenoffineveryday

7"EnergyandYou."EPA.EnvironmentalProtectionAgency,n.d.Web.Oct.‐Nov.

2012.<http://www.epa.gov/cleanenergy/energy‐and‐you/index.html>.

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situations.Coal’senvironmentalimpactisseenintheminingandtheburningofit,

therehavebeenactsandplanstoreducethecarbonsandtoxicpollutiongivenoff

fromcoal‐firedpowerplants.Naturalgas,whichisoftenconsideredoneofthe

cleanestfossilfuels,stillproducescarbondioxidebutinlessamountsthanoilor

coal.Nuclearpowerenvironmentalimpactsarecausedbyaccidentsthatrarelytake

placelikeChernobylandFukushima.Theseimpactscanbehorrificandlife

threateningtoomanypeople.Otherrenewableresourcesgiveoffless

environmentalimpactsthananyotherssourcebutcanonlyberanatcertaintimes

duetonaturalproductionofthem.Withdifferenttechniquesofextractionand

differentenvironmentalimpactsallresourcesmustbepricedatdifferentlevels.

Thepriceofaresourceschangefromonetypetoanother,witheritbea

renewableresourcetopetroleumbasedproduct.Eachresourcehasdifferentcosts

toproduceonaperkilowatt‐hourbasis;thisisduetothegenerationofelectricityat

theloadpointofthegrid.Theoverallcostsofextraction,emissionsand

distribution/transmissionmakeupthepriceatwhichitisprovidedtothepublic.

Factorsofcapitalcostofbuildingastructure,fuelcoststoruntheplantandpossible

wasteareallfactorsthatgointoefficientlypricingtheseresources.

TherankoflowestcostdifferentiatesfromareaofproductionandsourcesI

havefound.Itseemsthathydroelectricisthecheapestproductionofenergy,with

windandcoalrightbehindandnuclearrightafterthat.Thesepricesare

determinedbytotalsystemlevelizedcost,whichisthedollarcostpermegawatt‐

hourthatmustbechargedovertimeinordertopayforthetotalcost.Thisisdivided

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by100togetthecostperkilowatthourandthenthedecimalpointismovedover1

placetothelefttogetcostincentsperkWh.

Neo‐classicalwelfareeconomicsistheprocessofaddinginexternalitiesor

externalcoststhathavetobeaddedtothepriceofelectricitytoachieve

consumptionofresources.Theseexternalcostscoverhealthimpactsofburning

harmfulchemicalsoremissionspollutants.Aswellasenvironmentdamagesthat

canbenotjustairpollutionbutharmtonaturalenvironment.Theseeconomic

lossesarenotalwaysaccountedforinelectricalpricingandareexternalcosts.All

typesofenergyproductioncauseexternalitiestothepublic.TheenergythatIhave

foundthatproducesthelessenvironmentalthreatsandemissionsiswindturbine

energy.DuetowindenergyprovidingsuchalowamountofenergyfortheUnited

Statesandtheworldgrowthmustoccurinthisrenewableenergytocutdown

externalities.

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Inthistableaboveitshowsthathydropowerandwindpoweraretwoofthelowest

levelizedcostingproducersofenergy.Theproblemswiththeseenergiesarethat

theyarealsorenewablewhicharenotalwaysprovidedincertaincommunityareas.

Coalandnaturalgasresourcescanbeseenalowlevelizedcostsofproductionand

almostmakeup46%oftheenergytheUSconsumes.Todeterminethemost

beneficialuseofenergywemustlookintonotjustthecoststoproducebuttheother

externalitiesandbenefitsassociatedwiththeseenergies.Theenergyproduced

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allowsforutilitiestobesenttocustomersanddifferentbusinessestosupplyenergy

tothepossibleelectricvehicleinfrastructure.

InfrastructureCostandPricingtoConsumers:

Poweringstationscanbesuccessfuliftheyprovidecheaperandcleaner

utilitiestoelectricvehicleusers;theonlyproblemisthatthereisascarcityof

poweringstationshereinAmerica.Asstatedbeforetherearecurrently4,756

poweringstationsthatservethepubliconaneverydaybasiswhiledoingitforfree.8

Theminimalamountofpoweringstationsdoesnotallowforalarge‐scaleelectric

travelonaday‐to‐daybasis.Electricvehicleswouldhavetohaveademandfora

largercharginginfrastructureforittobeeconomicallybeneficialtoownacarlike

this.

TheAlternativeFuelsDataCenter,whichishostedbytheU.S.Departmentof

Energyhasdevelopedaninformationalguidetoexplainbuildingandsupplying

energythroughchargingstations.Thetotalinstalledcostestimatesdependsonthe

typeofstationyourestablishmentwantsinstalledandthepreviouselectric

equipmentandsupplyyoucurrentlyhave.Thestationthatwouldbeinstalledwill

bearegularLevel2EVSE(electricvehiclesupplyequipment)oraLevel2EVSEDC

fast‐chargingstation.AnestimatedcostforastandardLevel2EVSEisaround

$15,000to$18,000perstationwithanadditional$4,000to$8,000percharging

unit.TheDCfast‐chargingEVSEunitrangesfrom$65,000to$70,000plusan

8"ElectricVehicleChargingStationLocations."AlternativeFuelsDataCenter.N.p.,

n.d.Web.Oct.‐Nov.2012.<http://www.afdc.energy.gov/fuels/electricity_locations.html>.

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additional$45,000to$100,000.TheAFDCstated,“Thesepricesareexpectedto

trenddownwardasEVSEproductionvolumesincrease.”9Thesepricesforcharging

stationsdonottakeintoconsiderationforgovernmentincentivestotheownersof

thesestations.

Thecostofasinglechargingstationcanbeaninvestmentforyour

establishmentbyattractingnewcustomers.Chargingstationshavebeenseenat

multipledifferenttypesofareaslike,retailstores,parkinggarages,officeparksand

governmentproperties.Chargingstationsinlocalretailstorescanincreasepossible

shoppersbyattractingEVdrivestoshopsomewheretheycancharge,increasing

profitsforyourestablishment."Igooutofmywayandplanmytripsaroundpublic

chargingstations.You'rehelpingme...soI'mpayingyoubackwithmyloyaltyand

spendingmybusinessthere,"–LinMurphy10.Therehasbeenalotofspeculationon

howtheelectricvehiclemarketwillgrowandhowtheavailablewillelectricvehicle

chargingstationsare.TwodifferentarticlesIfoundaboutexpansionofcharging

stationsarebyFrostandSullivanandLuxResearch.

FrostandSullivanabusinessresearchandconsultingfirm,releasedareport

statingthatbytheyearof2017NorthAmericawillincreasethenumberofelectric

vehiclechargingportsto4.1million.“Themostcommonones,71percentwillbe

Level1chargingstationsforhomechargingwhichareincludedinthepurchaseofa9"EERE:AlternativeFuelsDataCenterHomePage."EERE:AlternativeFuelsData

CenterHomePage.N.p.,n.d.Web.Oct.‐Nov.2012.<http://www.afdc.energy.gov/fuels/electricity.html>.

10Yan,Holly."PublicChargingStationsFuelDesireforElectricCars‐CNN.com."CNN.

CableNewsNetwork,01Jan.1970.Web.Oct.‐Nov.2012.<http://www.cnn.com/2012/10/24/us/public‐car‐chargers/index.html>.

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caroraround$600,followedbylevel2,whichwillaccountfor27percentofthe

installednetwork(DCfastchargerswillonlymakeupasliverofthetotal).Togo

alongwiththefactthatmostchargerswillbeprivate,nearly87percentofall

electricvehiclesareexpectedtobechargedinresidentiallocations,wherethey'llbe

parkedinthegaragefor10to12hoursinaday.”11Theybelievethecompound

annualgrowthratewillbeat128.12percentandcurrentlythereareover35,000

homeswithchargingstationsintheirgarages.Theincreaseincharging

infrastructurecanbeduetocurrentoilpricesandmovetogreenliving.

LuxResearchatechnologyscoutingandmarketresearchfirmbelievesthat

therewillbeanincreaseof1.3millionstationsbytheyearof2020whichare

significantlydifferentnumbersoveradifferenceof3years.TheincreasebyLux

Researchstatesthattherewouldbeanincreasetoa$1.15billioncostforthis

infrastructure.““SuccessforEVSEwillultimatelyfollowthesuccessofelectric

vehicles,”saidKevinSee,LuxResearchSeniorAnalystandtheleadauthorofthe

report.“It’scriticalforthoseinvestedinchargingstationstofindtheapplications

wherethere’ssubstantialgrowth.”“12

InthesetwoarticlesweseenumbersthatbothpromotegrowthintheEVSE

marketbutnoconcretenumbersthatwecanprojecttopossibleelectricvehicle

drivers.Theproblemwiththisinfrastructureisduetothedemandsetbythe

11LeSage,Jon."4.1MillionElectricVehicleChargingStationsinFiveYears?What?!

*UPDATE."AutoblogGreen.N.p.,n.d.Web.Oct.‐Nov.2012.<http://green.autoblog.com/2012/08/08/4‐1‐million‐electric‐vehicle‐charging‐stations‐in‐five‐years‐wh/>.

12Falk,Tyler."EVChargingStations:$1.2BillionMarketby2020."SmartPlanet.N.p.,

n.d.Web.Oct.‐Nov.2012.<http://www.smartplanet.com/blog/bulletin/ev‐charging‐stations‐12‐billion‐market‐by‐2020/4268>.

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consumers,whenthereisalowamountofelectricvehiclesontheroadthereseems

tobelessinterestandsupplybythemarket.ToincreasetheinfrastructureofEVSE

theremustbeanincreaseinelectricvehiclesinthemarketplaceandgovernment

spendingtosubsidizecostsforsuppliers,topreventdeclineintheEVindustry.The

lastfederalsubsidyforchargingequipmentwasofferedin2010andwasabusiness

qualitytaxcreditupto$50,000forlargerinstallations.Possibleincentivesand

subsidiescanstillbefoundbasedonstate,cityorutilityeligibility.Anincreasein

EVSEinfrastructurecouldbeincreasedbyimplementationofchargingonaper

kilowatt‐hourbasis.

Chargingonaperkilowatt‐hourbasiscanincreasebusinessesdemandfor

chargingstationsduetothereturnandorevengainoninvestmentofEVSEstations.

Allcalculationsofpricingdependonaperkilowatt‐hourbasisandwhatlevelof

electricchargingthesestationswilluse.Anexactrevenuesystemhasnotyetbeen

putintoapublicformbuttrailsofdifferenttypesofrevenuehavebeguntesting.The

EVProjectisthelargestdeploymentofelectricvehiclecharginginfrastructure,

whichhassetupover2,600chargingstationsin21cities.Thisprocessbeganin

winterof2010andisoneprojectthatistestingmethodsofrevenuebuilding.13The

EVstationsaremostlypoweredbytheelectricalgridandchargearound$2perhour

sometimesupwardsof$3.14Thesechargingstationswillbethefirstofitskindthat

13"TheEVProject."EVProject.N.p.,n.d.Web.Oct.‐Nov.2012.

<http://www.theevproject.com/index.php>.14Yan,Holly."PublicChargingStationsFuelDesireforElectricCars‐CNN.com."CNN.

CableNewsNetwork,01Jan.1970.Web.Oct.‐Nov.2012.<http://www.cnn.com/2012/10/24/us/public‐car‐chargers/index.html>.

21

chargeapriceforelectricityandwillchangehowfreechargingcurrentlyworks.The

increaseofstationsthatchargeastandardpricewillallowbusinessestoseeif

havingthesestationswillbeprofitableandattractpossiblenewcustomers.Each

cityandstationvariesinpricingduetothecostofelectricityandthenincreasesfor

revenue.Theallowanceofrevenueforquickchargingwillbebeneficialtothe

marketofEVSEstationsduetoallowingexpansionforproducersandsuppliers.

Currentgasstationswouldbeabletosupplyanothersourceoffuel,allowingelectric

vehiclestooperateinlargersettings.Arevenueplanforbusinessesisoneofthe

mostimportantpartstobuildinganelectricvehicle‐charginginfrastructure.This

wouldallowbusinessestoseethattherearebenefitsforthemtosupplycharging

stationstocustomers.Phasingoutfreechargingstationsandintroducingpay

stationsgiveincentivestobusinesseswithcompetitivepricingaswellasincreasing

thepossibleinfrastructurethatwecurrentlydonothave.

EvaluationandAnalysisofGatheredData:

Thecostofdrivingelectricallycomparedtogascouldbeorisforsome

peopleasubstantialamountinaresidentialdrivingsituation.Tosimulateoperating

economicsbetweenelectriccarsversusconventionalgascarswewilltakethe

NissanLeaf,whichisasolelyelectricvehicle,andcompareittoanaveragecarata

100‐milerange.Asstatedintheeconomiccostsofelectricvehiclessection,amonth

worthofdrivingit50milesorlesswouldaddthecostsof$45toyourelectricbill

andatthetopsaddupto$90dollarswithovera100‐milecommuteeverydaywith

theNissanLeaf.Thecostsofelectricitywillbecomparedtothecostsofusingthe

22

amountofrequiredgasoline.Wewillassumethattheaveragegasolinepoweredcar

gets25milespergallonandatarateof$4pergallon(whichislowerthanthe

nationalaverageintheU.S.).At100milesaday,30daysamonthat$4agallonthe

grandtotalofdrivingis$480amonth(100milesperdayx30dayspermonthx$4

pergallon/25milespergallon,100x30x4=12000/25=480).Usingelectricutilities

tochargeyourcarforadailydriveat100mileswillcostyou$390moredollarsina

conventionalgascarthananelectricvehicle.

Apossibleincreaseofelectricvehiclespluggedintothegridduringthenight

wouldhaveslightaffectstowardspowersupplyandusage.Duetothechargingof

mostvehiclesbeingduringthenight,thiswouldnotaffectbaseloadhours.This

wouldalsoencouragelowerthepricingofutilitiesatnight.Examplesoflower

pricingatnightcanbeseeninmanyindustrialmanufacturingfacilitiesbeingopen

atnightduetodecreasedpricing.Thepossibilityofvehicletogridchargingcould

decreasetheneedforrunningexistingplantsduringpeakhoursbyusingthecars

supplytogenerateelectricityforyourhome.Notallcostsforelectriccarsare

relatedtotheutilitiesthatareusedtopowerit,emissionsimpactsalsocanfactor

intobeingbeneficial.

Theevaluationofthecostofanelectricvehiclechagriningstation

infrastructuremustcomeintheformofamacroeconomicevaluation.A

macroeconomicevaluationshouldlookpasttheindividual’sdecisionsandlookat

thehigherupcountryandgovernmentdecisionsonwhattodo.Tounderstandwhat

anincreaseininfrastructurewoulddototheeconomywemustlookintothecosts

ofbuildingone.AsstatedearlierinmypapercurrentlytheUnitedStateshasaround

23

150,000publicgasstationsoIwillusethisnumber,asareferenceastoaminimum

amountoflevel2electricvehiclestationsmustbeneededtooperateatasufficient

size.AlsoearlierinmypaperaFrostandSullivanstatedby2017NorthAmericawill

have4.1millionelectricchargingpostsand27percentofthosewillbelevel2

stations.Thesenumbersallowmetofigureoutthattherewillbe1,107,000

(4,100,000posts*.27level2=1,107,000level2posts)chargingpostsandateachof

these150,000stationtherewillbe7chargersperstation(1,107,000#ofchargers/

150,000#ofstations=7.38chargersperstation).Thecostsassociatedwiththis

infrastructurewillstartat$15,000to$18,000forthefirstchargingandan

additional$42,000fortheother6($6,000perchargerpost*6additionalposts=

$42,000)atotalof$57,000to$60,000.Thegrandtotalofthisprojectwouldcost

$8,550,000,000to$9,000,000,000at150,000totalstations($57,000*150,000=

$8,550,000,000or$60,000*150,000=$9,000,000,000).Theproductionofan

infrastructurethisbigcanaffectthenationsGDP,changeinunemployment,rateof

growthandmore.Ipersonallycan’tproducethenumbersinwhichaninfrastructure

likethiscouldchangetheUnitedStateeconomyIsimplydonothavethenecessary

resourcesordatatoconductit,butIbelievethatproducingapossibleninebillion

dollarindustrycouldhelptheeconomyaswellasgivethegovernmentincentivesto

helpstructuresomethingasbigasthis.

Conclusion:

Inthelast10yearsthemarketofautomobileshasbeenchangingina

positivedirection.Thispositivedirectioncanbeseenbytheproductionofcheaper,

24

highermilepergallon,andcleaneremissioncars.Electricvehicleshavestartedto

gaingrowinginterestagainsincethedownfallofthemintheearly1900’s.This

interesthasledtomultipledifferenttypesofcarsthatrunoffofpureelectricityor

anelectricmotorwithgasasabackup.Oneofthedownfallsthatelectricvehicles

liketheNissanLeaffaceconsistofisthedistancethattheycantravelpercharge,

whichrangeupto100‐milesoffafullcharge.Thedistanceissuehasalsoleadto

problemswiththescarcityofchargingstationsandrelativepricing.Forelectric

vehiclestobeeffectivethereneedstobeanincreaseingovernmentsubsidiesto

allowthegrowthofpotentialEVSEchargingstations.Theincreaseininfrastructure

needstooccur;withemergingchargingstationspossiblerevenuestructurecanbe

builtallowingcompaniesandrechargestationstoprofitoffoftheirinvestments.

Therearetwomainoutcomesfortheelectricvehiclemarketthatcould

happeninthenexttenyears.Thesetwooutcomesareincreasedinterestinthe

marketofelectricvehiclesoraplateau/decreaseresultinginthesameoutcomesas

theearly1900’s.Thesetwooutcomessolelydependonwhatisdoneinthefuture

andifpeoplebelieveelectricvehiclesinthelongrunwillbeeconomicallyprofitable,

efficientandbeneficial.

Ibelievethatthereisagreatpossibilitythattherewillbeanincreasein

interestinallfieldsthatdealwithelectricvehicles,chargingstationsandpricingof

utilities.AfteralloftheinformationIhaveread,gatheredandcomputedIbelieve

thatelectricvehiclescanbeeconomicallyprofitable,efficientandbeneficialinthe

longrun.Totheconsumerelectricvehiclessavealargeamountofmoneyofgasper

monthiftheydriveintherangeof50to100milesperday.100milesmayseema

25

shortrangebuttheaveragepersondrivesaround30milesadayintheU.S.allowing

foraincreaseofdailyhabitsby3timestheaverageamount.Iflargerdistancesthan

100milesneedtobedriventhenaninfrastructurelargerthanTheEVProjectmust

beimplemented.TheEVProjectisagreatstarttoexpandingelectricvehicleusage

butmorebusinesses,governmentestablishmentsandpublicresourcesneedtoback

thiscause,bysupplyingstationsandmakingaprofitoftheirown.Theprocessof

buildinganinfrastructureasbigasthecurrentgasonewehavetodaycouldcostup

to$9billiondollarsbutcouldchangethemacroeconomywecurrentlyhavetoday.

Theincreaseininterestwithbusinesswillhelpexpandprofitabilityaswellas

supplytheincreasingdemandforelectricvehiclecharging.Thepossibleincreaseof

growthintheelectricvehiclemarketcouldhelpdecreasetheenvironmental

economicimpactaswellashelpchangethedemandofpeakloadpricing.Electric

vehiclescanbebeneficialtotheenvironment,efficientiftheproperinfrastructureis

developedandeconomicallyprofitabletotheconsumerbyreducingoverallcostsor

travel.

26

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