The Road Ahead for Zero-Emission Vehicles in California: Market Trends & Policy Analysis analyzes California’s ZEV market, including historic sales, costs, technology trends, forecasts and challenges. It also reviews policies and implications that could affect future market growth.

As of October 2017, 337,483 ZEVs have been sold in California. ZEV sales increased 29.1% between 2016 and 2017, bringing the state’s ZEV market share to 4.5%, compared to 3.6% in 2016. When the state’s 2025 ZEV goal was set in 2012, California needed to average 35.5% annual growth from 2013 to 2025 to meet its goal. But with a 53% increase in growth from 2013-2017, the annual growth rate required to meet the ZEV goal from 2017 on has decreased to 20% annually.

Often with advanced technology, adoption hits a tipping point and then you see exponential growth—an s-curve—rather than incremental, linear rates of adoption. And zero-emission vehicles are following this pattern. Add to that the advent of autonomous vehicles and new business models such as ride hailing and car sharing, and we could be on the brink of major disruption in the transportation sector.—Adam Fowler, economist at Beacon Economics

However, California is lagging behind when it comes to ensuring its charging infrastructure keeps up with the growth of its electric vehicle fleet, the report finds. California has 16,549 public and nonresidential private-sector charging outlets—the most in the nation by far. But it works out to only 0.05 public charging outlets per California ZEV—one of the lowest ratios in the country. Studies show that California will need 125,000 to 220,000 charging ports from private and public sources by 2020 in order to provide adequate infrastructure.

Major findings of the report include:

Market Trends. Factors driving acceleration or deceleration of ZEV adoption include price, performance, choice, convenience, and public policy. Current trends suggest that barriers to EV adoption such as price, range, selection and charging-time will continue to diminish, as costs come down and technology improves.

• Total Cost of Ownership:

  • An analysis of 17 popular 2017 models found ZEVs can already be price competitive now, without government incentives.

  • Based on 12,330 miles driven per year, the pure battery electric Nissan Leaf has lower five-year and 10-year life cycle costs than the internal combustion Hyundai Elantra and the plug-in hybrid Chevrolet Volt, even without the federal government incentive.

  • The average Californian drives 14,435 miles every year. Accounting for that mileage and state and federal incentives, the smart fortwo ED and the Nissan Leaf have the lowest total cost of ownership of any of the 17 models studied, which include both ZEVs and internal-combustion-engine (ICE) vehicles.

• Price:

  • The most expensive component of a ZEV is the battery. From 2010 through 2016, average battery cost per kilowatt-hour has dropped 74%, from over $1,000 to $273/Kwh while energy density has improved 5% per year. Bloomberg New Energy Finance estimates battery cost will decline by almost 10% until 2025, when ZEVs will reach price parity with ICE vehicles.

• Performance:

  • Battery range has been increasing annually. In 2017, Tesla Model S had the farthest EPA-rated range for an all-electric vehicle, at 315 miles.

• Choice:

  • 150 different plug-in hybrids and pure electric vehicles are available worldwide, with that number set to rise to over 240 by 2021.

  • China leads with over 75 EV models. It introduced 25 new models in 2016 and saw sales jump 70%.

  • In the top California cities for EV penetration, auto dealers offer 25 to 30 different models.

  • More than half of the U.S population lives in a metropolitan area with 7 or fewer available models.

  • Volkswagen, Daimler, Volvo and Nissan have announced plans to electrify their fleets over the next 10 years. GM plans to introduce 20 new ZEV models by 2023, while Ford promises 13.

• Convenience:

  • From 2011 to 2016, the number of stations for charging electric vehicles increased by 1,138% in the US. In 2016 there was one charging plug for about every 6 electric cars.

  • As of January 2018, California had a total of 16,549 public and nonresidential private-sector charging outlets. This works out to 0.05 public charging outlets per ZEV, one of the lowest ratios in the country.

  • Tesla’s Superchargers can recharge EVs to 80% in 20 to 40 minutes. Others fully charge EVs in 3 to 4 hours, while slower charging points take around 6 to 8 hours. Automakers are reducing charging times. Honda is working on high-capacity batteries capable of 15-minute charging with a 240 km range for release in 2022 models.

  • ZEVs require significantly less time and money spent on maintenance because they have only about 20 moving parts – about 1,800 fewer moving parts than traditional ICE vehicles.

• Public Policy:

  • National governments including China, the UK, France, the Netherlands and India have stated the intention to phase out the internal combustion engine.

  • California and nine other states are moving to accelerate ZEV adoption. Eight states including California signed a memorandum of understanding (MoU) committing to bring 3.3 million ZEVs on the road by 2025. As of October 2017, California had fulfilled 22.5% of the MoU goal, followed by Oregon with 10%.

  • California appears to be the only state on track to fulfill its MoU goals. In January 2018, Assemblyman Phil Ting introduced a bill that would ban gas-powered cars by 2040.

  • There are a number of public policies within California to promote the development of charging infrastructure.

  • The growth of ZEVs represents a potential drain on motor vehicle fuel taxes, which could affect state transportation revenue.

  • Grid overload is another concern. The California Public Utilities Commission is studying it. SoCal Edison and the Los Angeles Air Force Base are conducting a pilot program that allows electric vehicles to act as batteries and send power back to the grid.