What The Auto Industry Can Learn From Utilities
January 7th, 2020 | by Olivier Pinçon
The growth of electric vehicles (EVs) is the story of two massive, multi billion-dollar sectors coming together: the auto industry and electric utilities. While they have common traits, these two sectors operate with different strategies, approaches and cultures. Therefore, we believe they can learn a lot from each other to foster the development of transportation electrification.
In this piece, we examine what the auto industry can learn from utilities. Please refer to other articles in this 3-part series: Utilities and the Auto Industry: The Romance That’s Meant to Be, Eventually and What Electric Utilities Can Learn from the Auto Industry.
What Do Electric Utilities Know That Automakers Don’t?
We sometimes hear skepticism about utilities’ ability to move the EV market — aren’t they stodgy, slow, uninspired? We don’t think so. In reality, the industry has developed a wealth of assets that are complementary to the auto industry, and will be crucial to the growth of EVs.
These assets are centered around three themes: (1) local knowledge and relationships, (2) fluency in the language of electricity, and (3) service stability and reliability.
Utilities Play a Better Ground Game
Power suppliers — whether investor-owned, municipal, co-op, or community choice aggregators, and to some extend power retailers — are one with their local service territory.
They have a relationship with every single residential and commercial customer, as well as with local government and EV promotion non-profits. They collect EV data from organizations such as state regulators or DMVs to measure EVs registered in their territory.
Many of them use this local clout to foster transportation electrification locally.
For instance, in the Boston area, National Grid and Eversource conduct regular and extensive community engagement meetings on EV charging, addressing stakeholder questions. Utilities such as Duquesne Light in Pittsburgh or Austin Energy in Texas engage local auto dealers to make sure they have to tools they need to sell. In California, SMUD and SDG&E have the pulse of the local market through a dealer engagement programs with Plug In America.
All of this matters tremendously.
In an early market such as electric vehicles, everything is local — every location has its own challenges and opportunities. Close relationships enable the utility to foresee and troubleshoot obstacles, as well as publicize success stories. People can learn about EVs from nearby sources that they trust.
Automakers can leverage this principle by building local ties to key regions — starting with local utilities, of course. OEMs such as Nissan have built a national network of utility relationships, via special vehicle deals administered through the utility. Once that network is established, it can also be leveraged to engage commercial and industrial businesses to foster sales of electric fleets.
Utilities Can Speak Electricity
Automakers are able to successfully communicate traditional notions such as horsepower, gallons of gas, or miles per gallon. With EVs, they struggle to shift gears (pun intended) and explain kW, kWh, kWh/mile. In their defence, it can get complicated.
The good news is that utilities have been talking about electricity for over a century. They are equipped to provide help with EV rates, smart charging, home charging, and help their customers overall get a better understanding on the cost of fueling their EV.
For instance, Pacific Gas and Electric offers a tool which allows their customers to evaluate the cost of driving electric across multiple possible rates, and help the customer pick the rate that makes the most sense for them.
As the market develops, we anticipate that OEMs will borrow from utilities and get smarter about speaking the electricity lingo to their customers, simplifying and synthesizing as needed, to create trust and confidence in the technology.
Utilities are Paragons of Stability and Reliability
While utilities don’t particularly excite their customers, what they do well is deliver electricity, without interruption, enabling modern civilization as we know it.
Unfortunately, stability and reliability are still somewhat lacking — or at least, perceived to be lacking — in the EV world.
In many parts of the country, EV inventory is uncertain at best, and customers can’t find the electric car they are looking for. Customers’ experience with individual dealers still leaves much to be desired, as highlighted in a recent Sierra Club report. News reports about Tesla’s stuck windows or crashes while on autopilot detract from customers’ interest in the technology.
Utilities are tapping their trusted reputation to promote EVs: if my utility tells me an EV is a good choice, I can trust that information and seriously consider an EV. However, in a fast changing EV industry, they run the risk of providing inaccurate information, or associating their brand with a poor customer experience.
All in all, there is no substitute to OEMs and dealerships providing stable EV inventory and consistent, high-quality customer service.
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Please consult other articles in the series:
Utilities and the Auto Industry: The Romance That’s Meant to Be, Eventually and What Electric Utilities Can Learn from the Auto Industry.