Solutions Journal: Summer 2011—Do EVs Create Jobs and Improve the Economy?

While we may be in the midst of an economic recovery, many people are struggling due to high unemployment and the lack of job creation. This pain is not lost on the government, which has pushed for American Recovery and Reinvestment Act funding for “pick and shovel ready” projects. One chunk of money went to the nascent electric vehicle (EV) industry—including companies such as American startup Tesla and foreign companies like Nissan— that are building manufacturing capacity in the U.S.

These funds are intended to promote the growth of an industry that will help the country shift away from fossil fuels and toward a cleaner transportation network. Will this investment also help to create jobs? The media and advocates on both sides of the debate have shouted their opinions, claiming everything from “Clean technology equals job destruction” to “EVs are a panacea for domestic employment.” The answer lies somewhere in between.

RMI’s interest in electric vehicles extends beyond transportation. The vision includes using them as a part of the electric system: to store power and deliver it back to a home or the grid during high-demand periods. With this additional capacity, EVs can help usher in an age of renewable energy and buildings with net-zero energy use.

As a way to support the EV industry, RMI and its partners have created Project Get Ready (PGR), a network of cities, utilities and industry players that shares best practices related to EV deployment. PGR regularly tracks partner cities’ activities and the lessons learned. Data includes, among many elements, the cost and timing of charging station installation, utility efforts to encourage off- peak charging, and economic development.

Rather than review what the pundits claim about job creation versus job losses, PGR surveyed 20 utilities, cities, automakers and others on the frontline who deal with EV deployment. Respondents rated their agreement with statements on a scale from 1 to 5, where 1 is “strongly disagree” and 5 is “strongly agree.”  In response to the statement “Vehicle electrification efforts in my area have been responsible for creating new jobs,” the average score was 4.5, representing a very high level of agreement that vehicle electrification is creating new jobs.

However, the statement “It is well-established in my community that vehicle electrification efforts have had an impact on jobs” scored 3.2, only slightly better than neutral, suggesting a messaging or perception challenge rather than an actual job creation issue.

RMI’s early findings are supported by some industry research. The Electrification Coalition (EC), which advocates for a large-scale EV deployment, claims that 1.9 million additional American jobs will be created by 2030 if we make a significant transition from gas-powered cars to EVs. While the EC plan is ambitious, some U.S. companies have already added real jobs. EnerDel added 1,400 jobs at its Indiana- based EV lithium-ion battery plant and plans to add another 3,000 to meet growing demand. California-based charging station manufacturers Coulomb Technologies has grown from two to 100 jobs over the early stages of vehicle electrification efforts, according to a company representative.

These are sustainable jobs, not only because they protect the environment but also because the industry won’t disappear in the near term. To support EVs, you need additional local electricians and other contractors to install charging stations, jobs that cannot be sent overseas.

While we know jobs will be created for manufacturing, installing and supporting EVs, other valuable economic measures include net jobs, induced jobs and community multipliers. Net jobs are total jobs added minus jobs that are eliminated. Some suggest that with EVs, utilities would need to ramp up hiring to help accommodate this new component of the system, while others retort that with the advent of smart meters, many jobs, such as meter readers, will be phased out.

The community multiplier effect is the idea that buying products at locally owned businesses keeps money circulating closer to where it’s spent, creating a ripple effect as those businesses pay their employees and spend locally. The argument here for EVs is two-fold.

First, a transition from oil to electricity as transportation energy offers an opportunity for domestic utilities to capture a share of the $224 billion that Americans spend on gasoline each year for their cars and light trucks. A significant percentage of this is spent on foreign oil, representing a large outflow from the U.S. economy. By contrast, spending on electricity would remain predominantly inside the U.S.

Second, the cost of electricity per mile is much lower than that of gas: A gas-powered vehicle costs on average around 10 cents a mile to operate (with gas at $3 per gallon), while an EV costs only about 2.5 cents. With gas at $4 or $5 per gallon, this difference is magnified, further contributing to the economic case for vehicle electrification.

An important consideration on the other side of the argument is that this cost advantage is accessible only to those who can afford the up-front price premium of EVs. In the larger context, however, EVs actually cost less. According to the Electrification Coalition, “Cumulatively, during the 2010-2030 period, households would experience an increase of $4.6 trillion (2008 dollars) in aggregate income, due to cost savings on fuel, if they switched to EVs—money that can be saved or spent on other goods and services.”

While large-scale EV deployment is not guaranteed, many businesses and organizations are working hard to ensure that it becomes a reality. While it’s difficult to argue against the environmental benefits, do you think EVs will help our economy as well?

Matt Mattila has been project manager for RMI’s Project Get Ready. He is currently exploring opportunities in New York City.

Justin Lowell Bellew just completed an internship with Project Get Ready. He is in the 2012 MBA class at the University of Colorado at Boulder and is now working in sales at Pangea Organics.