Energy Futures Research Center

The US and Europe have ambitious plans and targets for light-duty electric vehicle (EV) market growth. This study estimates planned EV production capacity in both regions and investigates whether coordinating their combined production capacity would help them meet targets. We find that, while each region is developing a strong EV production capacity domestically, either may fall short of their targets given investments in EV production announced to-date. Transatlantic trade can serve as a critical “spare capacity” to add assurance. Yet, in scenarios where both regions seek higher EV sales targets, a combined shortfall in annual EV production capacity could reach over 6 million EVs compared to the 20 million needed by 2030. An additional investment of about $42 billion across both regions could address this concern, however, time is getting short to build new plants and bring them online. The capacity shortfall may persist even with planned EV production capacity from other major manufacturing centers such as Canada, Mexico, Japan and South Korea. Additional policies and incentives will be needed to ensure planned capacities are developed in a timely manner. Some options include providing incentives to invest and reducing barriers to trade. Exploring the potential supply of vehicles from other major EV manufacturing countries, such as China and India, is recommended.

In this study, we investigate how potential changes in US light-duty and medium/heavy-duty vehicle technology and fuel mix from 2020 to 2050 may affect the transition to a very low-carbon future in the United States. Given US targets to reach 50% or more zero-emission vehicle sales by 2030, we consider new sales trajectories for battery-electric vehicles and hydrogen fuel cell vehicles, and rates of uptake across the country needed to reach these. We also consider biofuels use (ethanol and renewable diesel) in remaining internal combustion engine cars and trucks to minimize GHG emissions from those vehicles. Costs of all vehicles sold, and their fuel and other operating costs, are calculated and projected. To account for characteristics of specific vehicle types (e.g., weight, application, fuel economy, drive cycle, etc.), we disaggregate light-duty vehicles and medium/heavy-duty vehicles into ten subcategories. Relative to a business-as-usual case, we develop a series of low-carbon scenarios where three regions of the US adopt zero-emission vehicles at different rates. One is California, where the strongest targets and policies have been set. We also consider “Section 177” states that have agreed to adopt at least some California policies, and the third is the remaining states. Our findings suggest that even slower adoption scenarios can reduce greenhouse gas emissions in 2050 by 90% of 2015 levels. Greater reductions can be attained with rapid adoption cases. However, even a case with all US states adopting California-style policies with a five-year delay—for LDVs, essentially the equivalent of the April 2023 regulatory proposals of the US EPA—may not be quite sufficient to reach the apparent US targets. Despite significant upfront investments required to undertake transitions in the near-term, these scenarios all feature large net savings to consumers after 2030 (or sooner) as fuel and maintenance savings exceed higher costs in purchasing vehicles. Overall net savings from 2020 to 2050 (mostly accrued after 2030) are in the range of $1.7 to $4.8 trillion. However, achieving these full benefits could be challenging due to the need for a rapid rate of zero-emission vehicle adoption and possibly high production volumes of low-carbon biofuels.

The transportation sector is a major source of California’s greenhouse gas emissions, contributing 41% of the state total[1]. California policy is moving rapidly toward Zero Emission battery electric vehicles (BEV) and hydrogen fuel cell vehicles (FCV). Governor Newsom has issued an executive order that all new in-state sales of passenger vehicles should be Zero Emission Vehicles (ZEV) by 2035. Further, the California Air Resources Board has approved rulemaking requiring that more than half of trucks sold in the state must be zero-emissions by 2035, and all of them by 2045 [1a].California has the ambitious goal of achieving a 60% renewable electricity grid by 2030 and 100% carbon free grid by 2045. High penetration of variable renewable energy (VRE) requires seasonal storage to match supply and demand and hydrogen could be a possible candidate for this purpose [1b]. The author has developed the CALZEEV energy-economic model to study possible roles for hydrogen in a VRE intensive future grid with a large Zero Emission Vehicle fleet, comprised of both BEVs and FCVs. In particular, we study whether we can provide sufficient seasonal storage for a 100% zero carbon electricity grid and the potential role of H2 infrastructure in a BEV/FCEV combination for a sustainable path towards a zero-emission energy system. The role of hydrogen infrastructure in seasonal storage for balancing VRE generation while meeting demand for hydrogen vehicles year around has been studied, including economic impacts.

This report makes an initial investigation into the potential for combining very high penetration levels of electric vehicles with similarly very high penetration of variable renewable electricity (VRE) in California. A literature review is performed regarding the potential for high levels of EV sales and VRE penetration at both the U.S. and California level. Such scenarios have been developed by a number of researchers, such as U.S. national laboratories for the White House (under the Obama Administration), and by Energy and Environmental Economics, Inc. (E3) for the California Energy Commission. Such studies indicate that both of these “extreme” futures are entirely plausible and have the potential to coexist. However, none of the reviewed studies has undertaken detailed analysis of how large numbers of EVs could interact with and support a VRE-dominated system, and how these might interact in a useful way. This could include grid-to-vehicle (G2V) and vehicle- to-grid (V2G) movement of electricity, with vehicle batteries providing large scale electricity storage.

We undertake our own preliminary simulation for a 2030 and 2050 scenario for California, using an 8760 hours (full year) electricity demand profile and VRE generation example. We assume a ramp- up of VRE to 60% of all electricity generation by 2030 and 100% by 2050, with a similar increase in the EV share of new LDV sales, creating a significant stock (about 7 million) by 2030 and nearly complete transition (to over 20 million vehicles) by 2050. Using an “averages, peaks and valleys” analysis on the electric side, and a typical spare battery storage potential on the vehicle side, our simulation shows that by 2030 a large share of excess VRE electricity generation could be stored, and a large share of electricity shortfall from VRE could be provided, by electric vehicle batteries throughout the year, though there would be many cases where they cannot provide full coverage of these situations. However by 2050, if nearly 100% of the fleet were EVs, only about half of their available, spare capacity is needed to store the excess electricity from a full VRE system on the highest generation day and only about 40% would be needed to store and supply the shortage from lack of VRE generation on the highest shortfall day.

While these results are encouraging, a deeper simulation is needed to provide a true hour-by-hour assessment of battery use and the incidence of storage need compared to driving need. Management of charging times that could not be assessed here may also play a critical role. In addition, our initial assessment only covers a single day shortfall. Shortfalls could occur for longer periods, particularly if the VRE electricity system were sized to take better advantage of seasonal storage options. Vehicle batteries are best suited to very short duration storage and may not be adequate to keep the electricity reliable for many consecutive days of shortfall. Hydrogen (H2) has the potential to be a longer-term energy storage option and could be stored in fuel cell vehicle tanks (and the H2 system associated with generating, storing and distributing H2 to those tanks). The next stage of our research will involve running a full simulation using our (ITS-Davis) California ZEV power model (“CALZEV”), a version of the larger Message model, applied to consider both electricity and hydrogen (with large numbers of both of these types of vehicles) in order to: 1) gauge the relative storage potential and cost over a range of time frames and VRE scenarios, and 2) estimate the relative value and possible synergies in a system with both types of vehicles and fuels.