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Will The VW Settlement Make More People Buy Electric Cars?

That massive $2 billion investment required by the settlement might be the tipping point for EVs.

Will The VW Settlement Make More People Buy Electric Cars?

If you own one of the VW cars illegally rigged to cheat pollution tests, a new settlement means that you can now sell your car back to the company. A separate part of the settlement is aimed at helping everyone else: VW will spend $2.7 billion to offset some of the pollution it caused, and another $2 billion to help install new electric car charging stations and teach consumers about the benefits of electric cars.

That massive investment might be enough to help speed up sales of EVs. "I think it will make a big difference," says Gil Tal, a researcher with the Plug-in Hybrid & Electric Vehicle Research Center of the UC Davis Institute of Transportation Studies. "We need public infrastructure, and we cannot wait for business to build it. If the VW settlement will do it, that's probably better than using taxpayer money to do the same thing."

There are roughly 16,000 public charging stations for electric cars in the U.S. now. That's 40 times more than there were in 2008—but it's also a tiny fraction of the number of gas stations in the country (around 150,000). Even if most people can charge a car at home, it still can be challenging to take longer trips.

"If long-range EVs are to compete with gasoline cars, you need fast-charging infrastructure," says Nic Nigro, founder of Atlas Public Policy. "That's one of the essential requirements."

A previous large investment in EV infrastructure, through the Recovery Act, happened at a much smaller scale—less than $200 million. A major White House program, launched in July 2016, also offers up to $4.5 billion in loan guarantees for new infrastructure. But the VW settlement money might be a tipping point.

Right now, partly because the number of electric cars is relatively small, the business model for charging companies can be challenging. Consumers often choose to charge at home much of the time, rather than paying at a charging station, and the small market makes it hard for a business to get a large return on a new installation. "Loan guarantees alone, in the current state, are not likely to be sufficient to fund widespread charging infrastructure," says Nigro.

The settlement's funding of education about electric cars could also make a difference. Even in a "hot" EV market like California or Oregon, only about 7% of households consider EVs when car shopping. Some consumers still don't even realize that electric vehicles are available for sale; others don't understand the advantages or think the disadvantages are bigger than they are.

"The overall experience and the value proposition of an EV is just so different from a typical gas car that it takes a lot of education to get people to understand that value proposition and want to make that purchase," says Nigro. "A lot of different organizations have made a run at consumer education campaigns, but none have really broken through yet."

VW might be able to break through that information gap and, along with the new charging infrastructure, could help the electric car market grow. "The VW settlement can be a big boost," says Tal.

Some charging companies have argued that it will be critical how the settlement is implemented—and that VW shouldn't have the power to choose which charging technologies and vendors make it on the market, or where charging stations end up.

The details of implementation still have to be worked out—in California, for example, the Air Resources Board is helping develop a plan. However it's rolled out, the funding—while huge—won't be enough to build all of the infrastructure needed for a complete transition to electric cars. "If electric vehicles actually succeed, the market's going to call for a lot more fast-charging infrastructure than what this settlement could provide," says Nigro.

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