How regulation can boost electric vehicle adoption

The adoption of electric vehicles (EVs) has become one of the battleships to counteract the threat posed by climate change. However, to continue growing the EV market, there is more work to be done which highly involves the government. Legal entities are essential for developing policies that promote this technology and encourage utilities to enter this business. The parties directly involved, such as utilities and EV vendors, are expecting policies to arise that will help them on this long and complex journey.

How regulation can boost electric vehicle adoption

Electric vehicles (EVs) have arose surged as a way to reduce the carbon footprint generated by many human activities. In the past decade, the adoption of this technology has increased steadily by a combination of developments of specialized corporations like Tesla Motors and government endorsement of ‘green’ projects. At this point, the complete replacement of hydrocarbon-fueled vehicles may be a feasible mid-term reality.

At present, utility companies, together with manufacturers, are leading a variety of many projects and pilots to incentivize consumers to purchase for integrating electric vehicles in the network and product portfolios. AlthoughWhile they keep recognizing revenue opportunities are apparent, this business will ey will be transforming both the electricity grid network and the customer experience, which will require, requiring strong support from the government regulations.

In recent years, the total number of regulatory dockets has grown considerably as utilities have put EV programs into operation. Yet, technology is running faster and pushes regulators to address many challenges. To address the implications of electric vehicles, factors such as financial and non-financial incentives, and environmental regulations must be considered. Likewise, regulation entries should still focus more on special EV rates, customer engagement efforts, and public and fleet charging infrastructure. To catch up, the task of policy-makers is to design a comprehensive plan that addresses each of these aspects.

Incentives.

By implementing financial incentives, governments can make EVs more accessible to a broader public who is interested in becoming more environmental-friendly. Because of the high retail price, granting rebates to EV buyers is a common action to speed up adoption. For instance, the American federal government, along with state and local governments, are actively boosting the adoption of electric vehicles by offering tax credits or other incentives for electric vehicle purchases. These incentives depend on the size of the vehicle, battery capacity, location such as state and city, and utility provider. They can also include additional vehicle or infrastructure incentives, registration fee reductions, loans, and low-cost charging rates.

Nonetheless, not only financial incentives may be introduced to foster EVs; by creating non-financial incentives at a local authority level, such as preferential parking spaces or the elimination of license-plate-based restrictions (e.g. rush hour restrictions), having an EV becomes even more enticing. Today, incentives like preferential parking policies benefit electric vehicle drivers in Nashville, Phoenix, Raleigh, Salt Lake City, and many areas in California(1).

To secure the success of these initiatives, coordinated action from the government and the private sector is required to channel public funds into private manufacturers and retailers that will ultimately make the discounts available to the end consumer.

Charging infrastructure.

According to the Smart Electric Power Alliance (SEPA), one of the main challenges that face regulators face is defining utilities’ rights and their role over the charging infrastructure. It is necessary that the regulator determines if utilities can invest in, own and/or operate assets behind a customer meter. Some states are already resolving this issue. For instance, in 2013, California regulators decided to enable behind-the-meter investments for utilities, as it could accelerate EV adoption and improve charging-station scenarios. A similar case happened in November 2017, when the Florida Public Service Commission approved a settlement to allow a utility to own and operate an EV charging network. However, it still missing that if all regulators are coming together to jointly solve this problem, they could achieve a successful eMobility environment(2).

Environmental regulations.

Given the ability of traditional manufacturers to adjust combustion mechanisms to comply with pollution standards and stay in the ballpark of EVs environmental performance while maintaining a competitive price and performance, other regulatory measures besides tailpipe emissions are required to make green cars appealing. In that sense, Governments need to increase and enforce the use of renewable sources of electricity as the primary source of fuel, which, in combination with the aforementioned incentives, creates a ripe environment for the decision to leave behind fossil-fueled transportation.

Regulations, as well as the efforts of utilities and manufacturers must be harmonized to produce a synergy resulting in the general adoption of EVs. By coordinating them, the democratization of this technology can be achieved, levering the relentless evolution of an industry that renovates itself with every new model released to the market.

Learn how to identify the main challenges and mitigate the risks of EV adoption.

(1) International Council on Clean Transportation (ICCT), The surge of electric vehicles in United States cities. 2019. Retrieved from: https://theicct.org/publications/surge-EVs-US-cities-2019

(2) Smart Electric Power Alliance, Utilities and Electric Vehicles: Evolving to unlock grid value. 2019.

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