Electric Vehicles in the United States - 07 Aug 2009

This is an executive summary of a paper that was commissioned by the Center for Entrepreneurship and Technology at the University of California, Berkeley http://tinyurl.com/mb9tlh. It estimates the rate of market adoption of electric vehicles in the United States through 2030 and analyzes the impact of electric car deployment on the trade balance, business investment, employment, health care costs, and greenhouse gas emissions. The market adoption analysis uses a network externalities model that accounts for the purchase price and operating costs of electric vehicles using switchable batteries and charging networks financed by pay-per-mile contracts.

The market penetration rate of electric cars and the accompanying estimates of macro-economic impacts are a function of world oil prices and the relative purchase price of drivetrains. This paper forecasts three electric vehicle adoption scenarios based on two oil price scenarios and possible purchase price incentives for electric cars. The following summarizes the main findings of the paper:

  • ELECTRIC CAR SALES: In the baseline forecast electric cars account for 64% of U.S. light-vehicle sales by 2030 and comprise 24% of the U.S. light-vehicle fleet. The rates of adoption are driven by the low purchase price and operating costs of electric cars with switchable batteries. The estimates include the cost of installing charging and battery switching infrastructure to extend the range of electric vehicles.
  • LOWER OIL IMPORTS: U.S oil imports in 2030 under the electric vehicle deployment scenarios are projected to be 18-38% lower than the scenario of improved internal combustion engine fuel efficiency, equivalent to 2.0-3.7 million barrels per day. For reference, the United States in 2008 imported 2.3 million barrels per day from the Persian Gulf and,
  • IMPROVED TRADE DEFICIT: The U.S. imported $400 billion of petroleum in 2008, which accounted for 59% of the trade deficit. This paper estimates that electric car adoption lowers the annual trade deficit by between $94 and $266 billion by 2030 over a scenario of improved internal combustion engine fuel efficiency.
  • NEW SOURCES OF INVESTMENT: Business investment in a domestic battery manufacturing industry and the deployment of charging infrastructure grows to account for between 1.1% and 1.5% of total U.S. business investment by 2030. With additional investment in battery manufacturing, the United States has the potential to become an exporter of automotive batteries.
  • HIGHER OVERALL EMPLOYMENT: There is a net employment gain of between 130,000 and 350,000 jobs by 2030. New jobs are created in the battery manufacturing industry and in the construction, operation, and maintenance of a domestic charging infrastructure network. The job gains outweigh modeled job losses among gas station attendants, mechanics, and parts industry manufacturers.
  • HEALTH CARE COST SAVINGS: Health care cost savings stem from lower emissions of airborne pollutants. The net present value of the health impact of electric vehicle deployment to 2030 is between $105 and $210 billion when vehicles are charged using non-polluting sources of electricity. Health care cost savings remain positive when electric vehicles are charged using the current electricity grid.
  • REDUCED GREENHOUSE GAS EMISSIONS: When powered by non-polluting sources of electricity, electric vehicle deployment results in a 20-69% decline in 2030 greenhouse gas emissions from U.S. light-vehicles over 2005 levels. Emissions are 8-47% lower when electric vehicles are charged using the current electricity grid.
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