The push for electric vehicles and the enthusiasm propelling it have reached the pivot point that redirects most trends: Simple, idealistic visions compromise with realities that take time to work through.
The National Auto Auction Association hosted a panel on "EVs Infrastructure, Standards, and Equipping the Workforce" that drew straight talk on the gaps and hurdles that fleets and the driving public must navigate in adopting EVs.
“There are more EVs showing up in the lanes and rapidly growing but they haven’t done much yet,” said Glenn Mercer, a veteran auto industry expert and panel moderator. “If you took California, Oregon, or Washington out of the equation, the percentage of EVs on the road fall further, he said. “It’s a coastal phenomenon so far.”
While manufacturers are moving EVs beyond sedans to larger vehicle types and models as battery technology improves, the inconsistent charging infrastructure remains a problem, Mercer said. “Charging not as easy as using fuel pumps. Without that level of ease, you will not have mass adoption.”
Mercer was joined by these panelists who touched upon an array of developments complicating the EV outlook:
- Alan Lang, vice president of Manheim North America's Local and Mobile Division
- Jay Bahel, vice president of strategic initiatives of KAR Auction Services, Inc.
- David Aahl, vice president of North Bay Auto Auction in Fairfield, California
- Colleen Jansen, chief marketing officer of ChargePoint, a provider of electric charging stations
- Dr. Mark Quarto, founder of Quarto Technical Services (QTS), a technical development firm of autonomous, hybrid, electric and fuel cell components
No Straight Path Emerges on Electrification
Among the points and insights Mercer and the panel relayed:
While Norway gains positive media coverage for the most electrified vehicle nation, it comes at a steep price of $65,000 in subsidies and incentives for each EV, including parking and toll privileges.
So far, EV carmakers cannot make much money on them. And can consumers afford them? “Operating an EV is greener, but it costs a lot more in environmental damage to make an EV,” Mercer said. An EV must first run for 25,000 miles before its net reduction carbon emissions makes it greener than an internal combustion vehicle.
“We haven’t had that Model T moment, where a Model T is cheaper than owning a horse and an EV is less expensive that owning an ICE vehicle,” Mercer said.
While EV sales are increasing by double-digits in recent years, they make up only about 1% of all vehicles on the road. In 2Q 2022, EV sales were 5.6% of total vehicle sales, and are expected to reach 8% of sales in 2025 and 20% of sales in 2030.
Any mass adoption raises the issue of power grid capacity that could involve adding more electric sub-stations to accommodate more vehicles plugging in.
The supply of minerals amid shortages and rising prices creates a new area of uncertainty about the feasibility and performance of EVs.
“If you buy an EV every two years you are actually worse for the planet,” Mercer said.
In addition, many EVs sold in America increases dependency on China. “They just don’t own the mines, but the processing capacity,” Mercer said. “They disclosed 20 years ago they would apply their cell phone expertise to batteries for cars, and we’re coming for your markets. It will take time to build up capacity in the U.S. battery industry.”
Effects on Dealers, Auctions and Remarketers
For dealers, the EV sale can get complicated, with having to explain to consumers how the vehicles operate and charge while walking them through the paperwork for incentives and benefits.
Meanwhile, auctions will need to prepare for a larger wave of EVs coming through the lanes, such as installing enough charging stations, stocking battery packs, training technicians, and adopting safety standards handling the electric power components, Lang said.
Bahel added that auctions and dealers must prepare for the used EV buying experience. Based on customer surveys and responses, they want to know about the drivability of EVs, the KPIs behind the battery, and how well the battery will function after three years.
He cited the success of Recurrent, an EV battery analytics firm, with mining data from tens of thousands of EVs, factoring battery quality with weather, terrain and vehicle performance in determining battery strength scores.
So far, Tesla EVs have worked out the best, since they can be prepared and turned over without major challenges and issues, Aahl added.
Most EVs coming through auctions fall into the 90th percentile of battery quality, Bahel said, with some eight to nine years old. That raises questions of how to determine residual value in vehicle pricing, and what roles auctions play in stabilizing the used EV market, Mercer added.
Lang commented: “It’s about getting a firm understanding of what the value of that battery is. That dictates what values will be set at.”
Pulling on More Power as the Grid Grinds Down
Jansen assured the audience that with enough time and technological advances EVs will charge faster and require shorter dwell periods. “OEMs will figure out battery breakthroughs. Think about where you have electricity distributed at your site,” she said. “Much of the expense is not just in charging stations, but the supplying electrical capacity onsite.”
Quatro predicted EV charging rates will fall to eight to 20 minutes at 120 kw within a few years. For now, Level 3 fast chargers cost about $25,000 to $75,000 each, while Level 2 chargers, usually needing six to eight hours for a full charge, cost about $300 to $500 per charger.
“How quickly does that EV need to be charged up?” Jansen asked. “They are pulling a lot of power quickly which will be more expensive. Electric utilities tend to have a threshold of usage in a service territory and try to plan for that with incentives for businesses to keep electricity below a certain level of consumption.” That can avoid demand surges while software helps manage power usage at the lowest possible costs, she said.
Later in the discussion, Ahl said he lacks enough confidence in the power grid of California, the state with the most EVs. “I’m not ready to buy an EV yet,” he admitted. “I’m not sure I can plug in and get to work tomorrow. I’m not sure if the power grid will work. There are many issues that need to be solved.”
Planning for EV Infrastructure and Technical Training
To choose and install the right charging network, auctions and fleet operations should look at the mix of EVs and how they are deployed. Managers must do a site walk to see where vehicles arrive, where they service and wash them, and how long they must run. That determines how and when charging occurs.
Charging and servicing EVs requires the expertise of well-trained technicians and engineers, Quatro said. The legacy technical expertise of ICE vehicle mechanics does not transfer over to electrics and hybrids, he said. “On the high voltage side, working with new systems is completely different from ICE systems in how to power, repair and test.”
As a result, more time is needed to train EV technicians to the point they are proficient and competent, he added.
“You cannot hand over an EV to any mechanic today,” Lang said. “It can be very dangerous. Our vision is use companies like Spiers Technologies to assess whether a battery needs to be replaced. What does the cost to scrap scenario look like? The ability for today’s technician to transfer will be a steep hill.”
The average age of an ICE vehicle technician and shop owner is now 50+ years, which means EV repair operations have to factor in a generational shift in training younger technicians, Quatro said.
More Inconvenient Realities
As if the above lessons aren’t enough, panelists confronted other EV challenges that raise wider questions about the long-term results of electric vehicle adoption.
Mercer cited potential power grid outages, forest fire disruptions, coal usage to fill energy gaps, and the mining, digging, and cratering of vas earthen tracts for minerals. “The layers of irony that we have to work our way toward are amazing.”
While such issues are real and formidable, Jansen said, the silver lining is that most passenger vehicles spend about 90% of their time parked. “They can be managed for charging with enough time. It’s challenging, but scheduled charging is possible. When is it cheapest? Will it come from renewables?”
Aside from securing energy supplies, the auction industry must adopt consistent safety standards that are widely followed, Lang said. “We need experts to help us navigate what it will all look like. Who wants to inherit $20,000 mistakes on battery replacements? Buyer and seller education will be critical to our way of doing business in the future. We have to be aligned and consistent in how we approach the handling and sharing of information,” he said, citing the need to educate and train NAAA members.
Then there is the added issue of auto transport for EVs as they make their way among consignors, auctions, dealerships, fleet lots and customer destinations, Bahel said.
“There are a lot of implications around vehicle weight. A nine-hauler (truck) becomes an eight-hauler.” A Rivian electric pickup truck is twice as heavy as a conventional Ford F-150. “This needs to be thought through."