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The electric vehicle infrastructure problem

Words by:
Account Executive
February 26, 2019

As set out in the Road to Zero Strategy, the government plans to end the sale of petrol and diesel vehicles by 2040, and for all vehicles to be zero-emission by 2050. This is a significant commitment to electric vehicles and is part of the government’s wider Clean Growth Strategy.

The government anticipates that most drivers will charge their electric cars at home or at their place of work. But these options are not available to everyone; many people do not have access to off-street parking, nor does every workplace have the capacity to provide electric vehicle charging. These problems are particularly pronounced in urban areas, which suffer the most from low levels of air quality.

The government believes that if electric vehicles are to become truly mainstream, there will have to be provision for on-street vehicle charging. Delivery of this infrastructure has been left to local authorities and the private sector (with some funding available from central government), but many local authorities do not have the money or the expertise to build it and have struggled to coordinate with network companies. This has meant the electric vehicle charging network lacks size and geographic coverage.

A further issue is that increased use of electric vehicles will increase the pressure on the UK’s energy network. The National Grid is confident that new capacity, and reinforcement of the existing grid, can be brought online in time to meet any increase in demand. However, this will require significant investment in new electricity generation capacity and in ‘smart charging’ technology. The latter is particularly necessary to ease the burden on distribution networks that could be subject to local overload.

The development of infrastructure can also be encouraged from the demand side; increased demand for electric vehicles should be a catalyst for greater provision of charging infrastructure. More electric vehicles on the road provides a greater incentive for firms and local government to work together to install electric vehicle charging points. However, the government has recently decided to reduce the subsidy for electric vehicles, and tax incentives relating to the use of electric vehicles remain limited. The government believes that the price of electric vehicles will fall as battery technology improves, but a lack of demand side support is likely to constrict growth of electric vehicle ownership and charging infrastructure.

Money, knowledge and planning are issues that affect all government infrastructure projects, particularly ones that involve a significant amount of coordination between different levels of government and the private sector. However, there is a more fundamental problem that has received little attention: how to make long-term infrastructure decisions when faced with technological uncertainty? Current government policy is to end the sale of petrol and diesel cars by 2040, but this is over 20 years away. In 20, or even 10 years’ time, how we use cars and roads might have completely changed. The danger for the government is that it might be doing the equivalent of investing in CD players, with digital streaming just around the corner.

The government recently announced that it wants to have self-driving cars on UK roads by 2021. While this is an ambitious target, it signals a technological revolution that could completely alter the way we use vehicles, and therefore the infrastructure those vehicles need. Should vehicles become truly autonomous, there may be no need for individuals to even own their own car. Driverless cars could be used like taxis and charged in out-of-town charging centres when not in use. Privately owned autonomous cars could drive to charging stations when not being used, negating the need for on-street charging.

This presents a puzzle for government: should it invest billions of pounds in a charging network that may only have a useful lifespan of a decade? While this may seem like an unattractive option, the alternative may not be very palatable either. If the government adopts a ‘wait and see’ approach and does not fully commit to on-street charging in the short-medium term, there is a danger that the take-up of electric vehicles will stall. This will directly affect the UK’s ability to achieve reductions in greenhouse gas emissions and could slow the growth of an important emerging industry in the UK.

The government is in an unenviable position. It will need to invest in on-street charging technology to keep to its promises on climate change, and to stick to its Industrial Strategy aims. But, thanks to rapid technological change, it may only be able to reap limited rewards from this investment. This dilemma tells us something about the role the state can play during periods of technological uncertainty. If private actors are unwilling to invest in a new technology due to concerns over its long-term profitability, investment from the state may be necessary to bridge the gap and allow greater gains to be realised in the future. This investment may only provide short-term or limited benefits directly, but it could lay a foundation on which private sector investment can then build. On-street charging infrastructure may not be a permanent fixture on our streets, but it may be required if the electric vehicle industry is to succeed in the UK.

Rather than assessing government investment in new technological infrastructure on a case-by-case basis, we should be content with a broader view. It is almost impossible to accurately predict the path of technological development, and under such conditions there will always be wins and losses from government investment. Rather than being distracted by the noise surrounding each individual decision, we should focus on whether government investment supports innovation and growth throughout the economy.

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