EVs Need a New Business Model to Make a Dent in Emissions
Some are proclaiming this the Year of the Electric Car, and the current environment may lead one to believe that EV sales are primed to accelerate. But the impact we want - significantly fewer gas miles - will elude us unless we adopt electric Vehicle-as-a-Service programs at massive scale.
Factors are aligning to drive electric vehicle sales higher. The U.S. government is investing billions in charging infrastructure and battery development. The global response to Russia’s invasion of Ukraine demonstrates the geopolitical and supply side risks of our reliance on foreign oil. And yes, gas prices suck.
But the industry has a long way to go before electric vehicles make a dent in climate change or energy dependence. Last year, when supply chain issues slowed the supply of gas-powered cars, EVs still only accounted for 9% of global car sales. And even if EV sales were 100% of the market, the vast majority of vehicles on the road would still be spewing fossil fuel emissions.
Why? The vast majority of cars are not new! In fact, the average car is getting older. From 1971 to 2001, the average age of cars in the U.S. grew from 7 years of age to 8. But in the 20 years since then, the average age jumped to nearly 12 years. Other parts of the world pose an even bigger problem, with less stringent emissions regulations and even older fleets than the U.S. (see Russia, 13.6 years, and Argentina, 17 years). To replace a gas-powered fleet at that rate will take far more time than we have.
What’s more, the average price of a new electric vehicle topped $50,000 last year. EVs today are luxury vehicles, and while automakers talk about a future of mass market electrics, cheaper models are not part of near-term product plans. Contrast that with the fact that vehicle age is inversely related to household income. That means the worst-emitting vehicles are owned by households that cannot afford to buy a new EV. Personal ownership alone does not offer the accessibility we need to reduce these “entrenched” fossil fuel miles.
Vehicle-as-a-Service (VaaS) provides a way to shift more miles from gas to electric without the barrier of buying a new, expensive EV. As we define it here, VaaS encompasses all the ways users can access personal transportation via alternatives to ownership - sharing programs, rentals, and subscriptions, for example. And accessibility is the key: the simpler it is to register, consume, and pay per use for an EV, the more likely it is that gas vehicle owners will switch to EVs for at least some of their miles. The more options we can offer to shift miles from gas to electric, the closer we can come to meeting our societal goals.
As an example, Uber has lined up EV offerings for its many drivers who need a vehicle to work on their platform. Uber has incentivized the use of EVs by collecting a surcharge for “Uber Green” rides and paying a portion to the driver. And because these vehicles are available on a short-term basis, drivers can easily switch from their existing gas-powered vehicles to a Green vehicle. When gas prices surge, like they did after markets responded to Russia’s war, drivers are able to react quickly. Less gas, more electric.
In order to drive the shift away from petroleum-based fuel, we need solutions that can penetrate to the “entrenched” miles driven by vehicles that will be on our roads for years to come. This requires making clean fleets more accessible. The transportation industry needs to adopt VaaS en masse to accelerate the transition to EV miles, because the environment is not in a mood to wait.
Photo credit: Herr Loeffler / Shutterstock.com [Herr Loeffler / Shutterstock.com]