Yahoo Autos Almost Nobody's Ready to Make EV Charging Stations in America Yet
Electric vehicle and battery makers aren’t the only ones having a tough time navigating the Inflation Reduction Act’s rules to secure subsidies, new car sales are recovering in Europe and Tesla figured out the secret to selling EVs in China — deep discounts. All that and more in this edition of The Morning Shift for Tuesday, March 21, 2023.
1st Gear: Charger Manufacturers Are Scrambling, Too
Most of the attention around the Inflation Reduction Act’s stipulations for domestic electric vehicle production and material sourcing has been focused around batteries, but EV charging stations are included in the language, too. And if one thing is already clear, it’s that the companies that build them are even less prepared than automakers for what’s to come. From Reuters:
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Requirements to immediately start assembling the chargers at U.S. factories and to use U.S.-made iron or steel enclosures have caught many in the EV charging industry off guard, according to company executives and industry experts. [...]
Companies and some state officials who will manage the federal funds are warning that the country currently lacks the domestic production capacity - particularly on high-speed chargers - and that strict enforcement will slow the rollout, drive up costs and possibly hurt the industry Biden seeks to nurture.
“Everyone was hoping that there would be a waiver on the Buy America and Made in America,” said Aatish Patel, co-founder of XCharge North America, which imports chargers from its manufacturing plant in Beijing. “That throws a wrench in a lot of people’s plans.”
A requirement to source 55% of the cost of components from the United States was deferred until mid-2024, but executives expected deferrals in other terms as well.
Patel said it typically takes 12-18 months to move production from another country, adding that XCharge, one of the largest sellers of EV fast chargers in the European Union, was accelerating setting up a U.S. facility to comply with the rules, which could push costs up by about 25-30%.
It’s probably no surprise that one of the few manufacturers of charging stations that is already equipped for U.S. final assembly is Tesla, whose chargers come out of its Buffalo plant. EVgo, on the other hand, is a shining example of what’s transpiring across the rest of the industry that’s attempting to bargain with the federal government for a little more time:
EVgo Inc, a charging network operator with more than 850 fast-charging locations, said there is a process to individually request for a deferral of the “Made in America” rules but it is unsure if the government will allow that. Its South Korean charger manufacturer, SK Signet Inc, is planning to open a Texas factory to produce up to 10,000 direct-current fast chargers annually by 2026.
But EVgo Chief Commercial Officer Jonathan Levy said there is risk that 2023 projects could wait while the supply chain catches up, and it is difficult to plan.
“You have this uncertainty. Am I going to get that waiver? Do I need to hold off? What does it look like?”
Shares of EVgo jumped nearly 10% on Feb. 15, when the U.S. government announced the new rules for chargers. Since then, they have lost about a quarter of their value. Rivals ChargePoint, Wallbox, Blink Charging Co and Tritium have dropped about 30% over the same period compared with a drop of near 5% in the S&P 500.
So all in all, not a wonderful time to be running an EV charging company, unless you randomly (and against all common sense) decided to base your assembly and an increasing percentage of the production process in the U.S. years ago.
2nd Gear: DOT Thinks These Traffic Projects Are ‘Smart’
The Department of Transportation is about to dole out a total of $94 million across a number of states that have developed potentially life-saving “smart” traffic technologies, according to Reuters. Here are a few examples of the tech they’ve created:
Detroit is getting $2 million for sensors to create smart intersections by using existing traffic cameras to deploy artificial intelligence software solutions to “predict and prevent traffic accidents” in the city, Michigan’s largest. [...]
New Jersey has won $2 million for sensors to address wrong-way driving events while New York is receiving $2 million for an app to allow visually impaired New York subway and bus customers to safely navigate their transit trips.
Los Angeles is receiving $2 million to integrate transit trip planning with event ticketing for major activities, including the 2028 Olympic and Paralympic Games
Cleveland, Ohio will get $1.8 million for smart traffic signals to provide the right of way to emergency vehicles, and Harris County, Texas is receiving $2 million for sensors for a new flood warning system.
Three tribal nations in North Dakota are receiving $2 million for drone technology for medical care and equipment deliveries, while a project to use drones to deliver medical supplies in Virginia’s Eastern Shore will get $1.9 million.
Massachusetts is receiving $2 million to use drones and sensors to monitor and analyze railroad infrastructure threatened by ground water variability while New York will use $1.5 million for drones to inspect infrastructure along a major highway.
Some of these — particularly those that mention “smart intersections” or involve vehicles communicating with the grid, or other cars — depend on vehicle-to-everything (V2X) technology. It’s the future that telecoms have been promising for at least five years, ever since they began making noise about how 5G’s low latency and improved data speeds would foster the overnight manifestation of smart cities and cars that talk to each other.
In other words, many of these ideas aren’t new, and even if they’re technically possible, they require so much departmental cooperation that we’ll be lucky if they ever come to pass. There are common sense solutions to our ongoing traffic calamities, but unfortunately they’re just not sexy enough, and don’t have Verizon’s endorsement.
3rd Gear: Car Sales Continue to Grow in Europe
Call it now seven straight months of auto sales growth in Europe. From Bloomberg:
Registrations jumped 12% in February to 902,775 vehicles, the European Automobile Manufacturers’ Association said Tuesday. Sales of battery-electric vehicles surged 34%, expanding more than any other type of powertrain.
Shortages of semiconductors and other components are becoming less of a problem, but automakers are still contending with logistics snags, slowing economies and inflation. Order books remain full for now but carmakers are growing more pessimistic about the outlook, a survey of German manufacturers showed earlier this month.
“Supply-chain constraints have abated, though tightening consumer budgets amid inflation and rising interest rates are a risk to pricing and the auto-sales recovery,” Bloomberg Intelligence analysts Gillian Davis and Michael Dean wrote in a report Monday. They expect sales to expand at least 5% this year based on pent-up demand.
