Utilities and the Auto Industry: A Romance That’s Meant to Be | SEPA Skip to content

Utilities and the Auto Industry: A Romance That’s Meant to Be

In 1882, Thomas Edison opened the first power plant, and 8 years later, William Morrison released the first electric car in the United States. The electric utility and auto industry were born and the two would dabble with the idea of working together.

Henry Ford, a good friend of Thomas Edison, wanted to build an electric vehicle (EV) version of the Model T. He told the New York Times in 1914 “The fact is that Mr. Edison and I have been working for some years on an electric automobile which would be cheap and practicable.” However, continued improvements to the internal combustion engine would usher in the gasoline-powered car and EVs could not compete on range or cost. The missed opportunity of over a century ago is now resurfacing as the growth of EVs is poised to shape the future of both industries.

A Strong Mutual Attraction
Today, improvements in EV range, technology, and cost are encouraging the two industries to communicate and collaborate. It is really about commercial symbiosis – as drivers buy more EVs, utilities and automakers benefit. These synergies are appealing in that each party brings a unique skill set to the table. Utilities have local presence, customer trust and existing relationships. Automakers bring national and global insights, as well as deep expertise in customer segmentation, branding and communication.

This complementary approach among industries is common. One industry sells the hardware, the other sells the commodity needed to operate the hardware. For instance, phone manufacturers work with wireless carriers (think Apple and AT&T) to grow market share. PC hardware vendors team up with software vendors (think Microsoft) to create combined offerings that propel growth and benefit consumers and businesses.

Likewise, many opportunities for collaboration exist between utilities and automakers to get more EVs on the road, including but not limited to: cross promotion, joint marketing, strengthened dealer training, bundled offers, vehicle-grid integration opportunities that may result in profit sharing, relaying incentives and special discounted rates so consumers can save money, providing visibility into EV sales so utilities can proactively make upgrades before there are grid problems, and much more.

And indeed, we have seen small but growing attempts to collaborate. For example, Nissan is engaging utilities nationwide to promote the LEAF. AEP partnered with Honda to test vehicle-to-grid integration via second life EV batteries. Consumers Energy has worked with GM to educate the public on EVs and DTE Energy with Ford and GM on similar projects. Duke is working with Workhorse to provide financing. Daimler is actively reaching out to utilities to promote their electric truck offering, and to ensure the required infrastructure gets deployed. PG&E is working with BMW on a managed charging pilot using on-board vehicle telematics. Many of the automakers are currently working with utilities through EPRI to develop and implement the Open Vehicle-Grid Integration Platform (OVGIP).

However, the small scale of these efforts suggest we’re still at the early stage of this relationship, and there are many challenges to overcome.

What Electric Utilities Can Learn From The Auto Industry
Many utilities have made efforts to engage and educate their customers on the benefits of EVs via email blasts, online campaigns, ride and drive events, and social media outreach. This is good news. However, while effective individually, these efforts are sometimes not tied to a long-term strategy or measurable goals, making it difficult to justify their return on investment when budgets are reviewed.

In contrast, automakers take a more calculated and long-term approach to marketing. They leverage “big data” to segment customers, understand them at every step of their journey, and use year-round marketing and artificial intelligence-inspired techniques to influence consumers.

Automakers also understand the importance of emotional messaging. They appeal to the emotional part of buying a car — because it works. On the other hand, many utilities take a more technically centered approach when engaging customers on EVs. They are quick to emphasize the electric details of the vehicle, give lessons on power trains options, or bring up notions such as kilowatts — which all tend to mute customer interest.

“We talk about the 3 P’s of EVs: purpose, practicality, and performance,” says Greg Bolino, Managing Director of Utilities Strategy at Accenture, regarding the factors that are driving EV adoption. According to Accenture’s global research, one of the leading reasons customers consider an EV is for the environment. In addition, 84% of customers want charging of EVs to be “smart” – a further recognition of the purpose behind switching to EVs.

In addition to the cost and environmental advantages, utilities should communicate the performance that comes with driving an EV. They should talk about the feel of the acceleration and think about how the customer will feel when electric torque enters their life.


Utilities and the Auto Industry
Austin Energy’s creative and memorable campaign makes customer engagement fun, with only a small budget.

The Importance of Leading By Example
The auto industry views their product line as a badge that many employees and executives will drive with pride. This lends credibility and confidence to their sales efforts. If you really love a vehicle because you drive it everyday, your customer will feel it, and will be more likely to buy.

With EVs, individual utility workers have an opportunity to drive using the fuel they sell. Fortunately, many utilities have started to electrify their passenger car fleets and some of their medium-duty fleets, which is a prerequisite to engaging commercial customers around fleet electrification. Further, some utilities have begun to incentivize their employees to purchase EVs by offering free workplace charging and rebates.

National Grid, for example, offers a $1,500 rebate for plug-in hybrid electric vehicles and $5,000 for battery electric vehicles. National Grid also installed over 100 free workplace chargers as an additional incentive. So far, approximately 425 employees have taken advantage of the rebates, which are being funded by shareholder dollars. When employees drive these cars into their communities, they essentially become EV ambassadors and provide their neighbors, friends, and family with the opportunity to ask questions — and maybe even test drive — an EV.

However, we are still seeing a relatively small portion of utility managers, executives and board members embrace EVs as a personal choice. More broadly, Public Utility Commissioners and political decision-makers also have very little personal experience with EVs. Leaders in the power sector have an opportunity to lead by example. After all, driving a gas car amounts to vouching for your competitor’s product.

What The Auto Industry Can Learn From Utilities
Utilities have several assets that are complementary to the auto industry’s efforts to drive EV adoption, namely (1) local knowledge and relationships, and (2) fluency in the language of electricity.

Utilities have relationships with every residential and commercial customer, as well as with local government and EV promotion non-profits. 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.

Automakers can leverage this by building local ties to key regions — starting with local utilities, of course. For example, Nissan has 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.

Auto Industry
Example of utility & automaker joint marketing

Speaking the Electricity Language is Not Easy for Automakers
Automakers are able to successfully communicate traditional notions such as horsepower, gallons of gas, or miles per gallon. But with EVs, they struggle to explain kW, kWh, kWh/mile. The good news is that utilities have been talking about electricity for over a century. They are equipped to provide help with EV rates, managed 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.

Towards the Happily Ever After
How do we move this relationship forward? First, more formal multi-stakeholder efforts would greatly help in catalyzing EV adoption. Fortunately, promising efforts are underway and growing with organizational coordination through entities like the Electric Drive Transportation Association, Veloz in California, and the Alliance for Transportation Electrification. We’ve also seen progress from joint efforts, such as the 2019 recommendations from the Alliance to Save Energy’s 50×50 Commission and the California Vehicle-Grid Integration Working Group. Utility groups such as the Edison Electric Institute and the Smart Electric Power Alliance (SEPA) are also active in engaging OEMs. For example, SEPA recently announced a strategic partnership with CharIN e.V to “collaboratively address barriers to EV adoption.”

Second, closer collaboration on the ground would alleviate several issues, including lack of inventory at dealerships, lack of dealer training and lack of marketing coordination. To address these issues and more, some automakers are setting up a regional network of EV managers that build regional relationships with utilities — an effective tactic, which we think more OEMs will leverage in the future.

Third, utilities can help automakers improve EVs with additional features that customers want. Examples could include choices to easily implement managed charging, clear options for renewable energy, and vehicle charging systems that operate optimally according to basic customer preferences (e.g, fast, cheap, or clean). According to Accenture’s research, concerns about the complexity of home charging and lack of economical renewable options are the top two barriers customers point to for not choosing an EV.

While the relationship between automakers and utilities may not have formed a century ago, the opportunity today exists to rewrite that moment. We have only scratched the surface of the many channels that exist in bringing these two industries together — and we look forward to seeing the market continue to change and grow. Given the urgency to decarbonize our transportation sector, there is no time to waste.

Olivier Pincon is the CEO of ZappyRide. ZappyRide provides world-class, end-to-end, integrated experiences to EV customers to increase adoption. The company works with electric utilities, OEMs, dealers and advocacy groups to make that vision a reality.