Washington state commits to supporting a growing EV market

Business Models for Financially Sustainable EV Charging Networks

In May 2014, the Washington State Legislature’s Joint Transportation Committee commissioned a study to develop new business models that will foster private sector commercialization of publicly available EV charging services and expand the role of private sector investment in EV …

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The power and transportation sectors are the top two sources of greenhouse gas emissions in the United States. So for a state like Washington that already relies on low-emission power, transportation is the key opportunity to reduce emissions.

That’s why two concrete steps by the state to support its growing electric vehicle (EV) market in the near term are significant. As part of a transportation package signed by Governor Inslee on July 15, Senate Bill 5987 will:

1. Extend the state’s EV sales tax exemption to 2019, opening up it up to plug-in hybrids that can travel at least 30 miles on electricity while capping eligibility to cars that cost under $35,000.

2. Create a unique EV infrastructure bank to fund innovative charging station projects.

Although both steps were less than the broader climate action the governor sought, it’s notable that the state has given a clear market signal that it wants more EVs on its roads, and that it is encouraging public-private partnerships to fund EV charging infrastructure.

These actions are grounded in broader research C2ES completed this spring for the Washington State Legislature’s Joint Transportation Committee. The study analyzed a variety of roles that the public sector can play to help expand private investment in EV charging infrastructure.

With demand for public charging still low and charging infrastructure costs high, it’s critical to capture the indirect revenue streams associated with charging services.

For example, automakers that sell EVs can benefit as new infrastructure fills in charging gaps and people gain more confidence in the technology. If the automaker shares some of this additional revenue with the provider of those charging services, the business case is greatly improved.

We’re already seeing this in action. In January, BMW, Volkswagen, and Nissan committed to major investments to install more than 1,000 charging stations in Oregon, California, the Northeast, and elsewhere.

Another example of indirect value is the additional revenue businesses, such as stores and tourist destinations, can bring in by hosting charging stations. Wine enthusiasts flock to the more than 100 wineries in the Walla Walla region, but getting there and back with an EV can be difficult. By hosting charging stations, these businesses can differentiate themselves and attract new visitors.

Washington state’s new infrastructure bank will offer low-interest loans and grants to help fund profitable projects that address an existing infrastructure gap and capture the indirect value of charging services. This type of public-private partnership aims to attract more private investment in charging infrastructure.

But to attract that investment, demand at stations must continue to grow. That’s why extending the state EV sales tax exemption is important.

A cleaner transportation sector is critical if we’re going to reduce the emissions that are altering our climate. More publicly available charging is key to EV success, and leveraging near-term public support can attract the private investment needed to make EV charging part of our national landscape.

Learn more about our project and download the business model tool we developed to complete this analysis.