Overcoming Barriers to Electric-Vehicle Deployment: Interim Report (2013)

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2 The Customers, Manufacturers, and Dealers The customer is identified in Chapter 1 as part of the ecosystem of the plug-in electric vehicle (PEV) and is important to consider in identifying needs for and barriers to the deployment of PEVs and the necessary infrastructure. Potential customers include individuals, households, and organizations— such as rental-car companies, corporations, and government—that purchase fleets of vehicles. In this chapter, the committee focuses on individuals and households because they make up the largest segment of potential buyers and because there might be more obstacles in the way of their adoption of PEVs. The chapter first describes customer needs and barriers to PEV adoption and then proposes possible government roles in overcoming the barriers described. It concludes with a brief discussion of automobile manufacturers and dealerships and the challenges that they face in promoting the adoption of PEVs. Fleets are discussed in Chapter 3. CUSTOMER NEEDS AND BARRIERS As noted in Chapter 1, PEV ownership has societal and personal benefits. However, widespread adoption of PEVs will require effective communication with customers on how the vehicles work and how they fit into their lives; vehicles that offer safe, comfortable, and reliable transportation at costs that are competitive with those of conventional vehicles (direct costs of purchasing and total costs of owning and operating the vehicle); vehicles that offer an adequate range of travel; and an infrastructure that provides convenient charging and servicing. Those needs shed light on the most important barriers to customer adoption, as discussed below. Lack of Customer Knowledge of and Experience with Plug-in Electric Vehicle Technology Most potential customers have little knowledge of PEVs and almost no experience with them. Surveys indicate that they ask many questions, including, Are these cars powerful enough for freeway driving? Are PEVs safe when going through puddles? How much will PEVs add to my home electricity bill? Are electric vehicles any better for the environment than conventional vehicles? (Kurani et al., 2009; Turrentine et al., 2011). The lack of familiarity is not surprising inasmuch as there are relatively few PEVs on U.S. roads (see Figure 1-1), and these are concentrated in a few regions. Few people even know someone who has practical experience with driving or charging the vehicles. Thus, it is often difficult for people to develop an interest in PEVs, let alone decide to purchase one, even if it might be a suitable option for their transportation needs. Lack of familiarity with the vehicles and their operation and maintenance creates a substantial barrier to widespread PEV deployment; the following sections highlight a few important areas that need to be addressed. 15 

Electricity as a Fuel Few people or businesses in the United States have any experience with using electricity as a fuel for their vehicles, so potential customers do not have an intuitive feel for how much it costs to drive a PEV any given distance, how much it will cost per month or per charge session, or how long it will take to charge the battery. They will not be able to estimate easily how much money they might save compared with the costs of a conventional gasoline vehicle over a year, lease period, or expected period of ownership. Consider, for example, the Ford Focus. At a national average cost of electricity of $0.12/kWh, the electric version of the vehicle would cost about $0.04/mile; in contrast, the gasoline- fueled version would cost about $0.12/mile at a national average regular-gasoline price of $3.65/gal. However, such a comparison does not take into account any differences in purchase price, maintenance costs, or costs for a vehicle charger; and electricity and gasoline costs are going to be regionally and temporally dependent. Moreover, if customers are interested in the environmental benefits of their vehicle, they are unlikely to know whether their electric utility (or the utility supplying power at their workplace or at a publicly accessible charging station) generates electricity from a low-carbon source or from renewable energy. To help customers to understand fuel costs or consumption, the Environmental Protection Agency recently redesigned its window labels to provide information that will be more relevant to new-car buyers. The labels now include the estimated fuel costs for a year and for PEVs the MPGe (miles per gallon equivalent), which is a measure of the energy efficiency of the vehicle and should help customers to understand electricity as a fuel. However, many of the metrics are not intuitive and are not entirely representative of the costs and benefits that a specific owner might encounter; for example, the plug-in hybrid electric vehicle (PHEV) label is generated on the basis of an assumed fraction of electric miles, and a given owner’s fraction of electric miles is likely to vary. Online calculators that are offered by some websites help new-car buyers with such cost-benefit analysis, but taken as a whole, such issues underscore that electricity as a fuel is not as familiar as gasoline. There are differences between PEVs, specifically PHEVs and battery electric vehicles (BEVs). Depending on the vehicle’s energy-use displays, a BEV driver can learn how much it costs to charge a vehicle at home, at work, or at public chargers; how many kilowatt-hours it takes to drive to a desired destination; and how many kilowatt-hours it takes to accelerate. PHEV owners must take more factors into account in projecting their energy costs because the ratio of miles driven on electricity versus gasoline will depend on their driving patterns and on how often they charge their vehicles. Thus, potential customers must consider their own behaviors and vehicle performance to estimate future costs on a monthly basis. The Vehicle Battery and Charging Two issues related to the vehicle battery create confusion. First, potential PEV buyers who are familiar with ordinary car batteries and other consumer batteries that have short lifetimes and contain toxic materials might be concerned about the proper recycling or disposal of PEV batteries. However, lithium-ion batteries can be more safely disposed of in landfills than other battery types because they contain smaller quantities of toxic heavy metals. Analyses also have found that lithium-ion batteries are less toxic than alternative batteries over the full life cycle of production, use, and disposal (NHTSA, 2012a, Section 7.2.2). Furthermore, there are concerted efforts to develop reuse-and-disposal programs for the PEV batteries (UC Davis, 2012). Second, the vehicle requires a charging infrastructure, which can confuse or complicate the vehicle-purchase process. Typically, car buyers are accustomed to a shopping process that includes some Internet research, visits to various local dealerships, and a final vehicle selection at a dealership. The purchase of a conventional vehicle usually can happen quickly with financing and other support possible in a few hours at a dealership. PEVs can add complexity to the process because customers might want to 16 

inspect their homes to ensure proper electric capacity before purchasing a vehicle. Each home will be different in costs and complexity. A process that includes inspecting, costing, permitting, and installing can take days or even weeks and add time, multiple cost factors, and uncertainty to the car-buying process. A customer might also want to research workplace-charging and public-charging options, and this would further lengthen and complicate the purchasing decision. (See Chapter 3 for a further discussion of charging and various requirements and costs.) Driving and Ownership Experience PEVs provide a driving experience that is different from that of a vehicle that has an internal combustion engine. Some of the differences are that electric motors have high torque and thus accelerate faster at lower speeds and produce different sounds—for example, less motor noise on acceleration. Furthermore, most PEVs do not have gears, and most use regenerative braking functions, which vary among PEVs in design and intensity. 1 Combined, those driving characteristics can be unexpected, disliked, or enjoyed by drivers. Owning a PEV will also entail different maintenance and service requirements. A potential customer will typically have little knowledge about exactly what maintenance is required and might have concerns about who can do the necessary maintenance. A need to rely on a dealer for servicing might not be appealing to some who would prefer to use a local mechanic or repair shop. Because of the specialized technical skills required and tool costs (Colias, 2012), local repair shops will most likely lag in obtaining the training and equipment needed to service such vehicles. PEV owners and operators also need to be aware of basic safety practices to avoid risks of electric shock or fire in the installation of home chargers, vehicle charging, and maintenance (ESFI, 2012). The National Highway Traffic Safety Administration has identified safety precautions for vehicle occupants, emergency responders, and towing and repair workers in case a PEV is damaged in a collision or other event (NHTSA, 2012b). Costs The direct cost of the vehicles and uncertainty about the total cost of ownership (fuel savings, maintenance costs, and resale value) are barriers to the adoption of PEVs, which have greater initial upfront costs than comparable conventional vehicles. For example, for the 2013 model year, the plug-in Ford Fusion Energi SE has a starting manufacturer suggested retail price (MSRP) of $39,495 compared with a starting MSRP of $24,495 for the conventional Ford Fusion SE and a starting MSRP of $27,495 for the Ford Fusion Hybrid SE (Ford Motor Company, 2013). There are tax incentives to purchase a PEV, but they offset the cost premium only partially. The committee cautions that such prices are not directly comparable in that there are often differences in interior features and non-power-train technologies between hybrid, plug-in electric, and standard models; furthermore, the MSRP is simply a price point that a manufacturer targets to generate a specific volume of sales and might not be indicative of the real cost of the technology. Such comparisons are, however, illustrative of choices that face a typical consumer. The major contributor to the high upfront costs is the lithium-ion battery; costs are likely to decrease through continued advances in battery technology via research and development and through reductions in manufacturing costs via manufacturers’ learning and increased production volume. For an electric vehicle to be cost-competitive with comparable conventional models, it will need to offer customers substantial fuel savings. Customers who want to estimate their fuel savings need some understanding of electricity costs and what is likely to happen to gasoline prices. Both factors create substantial uncertainty for the customer. Furthermore, because the current generation of PEVs is quite new, it is difficult to estimate the service costs and resale value of the vehicles. 1 Regenerative braking slows a vehicle rapidly without the use of a brake in single-pedal designs. 17 

Although the magnitude of the effect of fuel price on consumer decisions is uncertain, it is reasonable to expect that a higher gasoline price would promote PEV sales. For example, Li et al. (2008) estimated that a 10 percent increase in gasoline price would generate a 2 percent increase in fleet-fuel economy (in miles per gallon) in the long term, and Busse et al. (2013) estimated that the short-term effect of a $1/gal increase in gasoline price is to decrease the market share of currently available car models in the lowest fuel-economy quartile by 6 percent and increase the market share of cars in the highest fuel-economy quartile by 7 percent. The low price of gasoline in the United States compared with Europe and Japan could be regarded as a barrier to PEV adoption here. The price of gasoline could increase in the future as the result of an increase in the world price of petroleum or as a result of the government’s increasing taxes on motor fuels or instituting a broad-based carbon tax. A large body of research indicates that people heavily discount the value of future gains, and this leads to a strong bias toward current-gain maximization and current-cost minimization (Loewenstein and Thaler, 1989; Frederick et al., 2002; Harris and Laibson, 2002; Hughes et al., 2006; Greene, 2011; Allcott and Wozny, 2012). Thus, for individuals, upfront-cost premiums will typically be difficult to overcome with fuel-savings promises. Business customers, such as those for fleets, are much more likely to analyze the cost and gains to estimate total cost of ownership more accurately. Vehicle Range Vehicle range is the most pronounced difference between BEVs and PHEVs. For people who travel primarily short distances or have alternative means of transit for longer trips, the range of BEVs might not pose a concern. For others, however, a small range—or perceptions of a small range or inaccessibility of charging—could be a substantial barrier to the adoption of BEVs. Furthermore, although a driver might not need a vehicle for long-distance travel often, many people see it as advantageous to have the option of such travel. Thus, a vehicle without such capabilities might be valued less by a potential customer because of the loss of utility. Most current models of BEVs have ranges that are smaller than those of conventional vehicles. For example, the range of the 2012 Nissan Leaf is about 73 miles, and the range of its closest conventional counterpart, the 2012 Nissan Versa, is about 300 miles (fueleconomy.gov, 2013). A notable exception is the Tesla Model S, which can have a range of about 265 miles; it has a current starting price of $72,400 even after a $7,500 federal tax credit, so it is priced out of the range of the average customer (Tesla Motors, Inc., 2013). Thus, most BEV drivers will need to plan their trips carefully and will often not have the option of making a last-minute decision to take an unplanned trip. As noted, PHEVs are different from BEVs in that they have internal combustion engines that eliminate the range constraints of being powered only by a battery. However, the restricted range of electric operation of PHEVs might be a dissuading factor for those who drive long distances often because the potential for fuel savings is diminished. Without the promise of substantial fuel savings, PHEVs are considerably less attractive, especially if they are sold at a price premium relative to their conventional-vehicle counterparts. Whether a vehicle is considered an attractive option by a customer is determined by the value proposition, which considers how well the vehicle meets the customer’s needs and how well the vehicle price matches what the customer is willing to pay to satisfy these needs. Because travel patterns, lifestyles, and income levels vary, range is only one component of that value proposition. If someone has access to a second vehicle, the small range of most BEVs might not constitute as substantial a value loss as it will for a household that has only one vehicle. PHEVs have seen a substantial growth in sales over the past year, boosted largely by an increase in the numbers of vehicle and range options available (see Figure 1-1), but BEVs have also seen their shares rise relative to conventional vehicles. Because the market is still evolving, it is difficult to anticipate whether particular vehicle types or battery ranges will emerge as having the best value for customers. As conventional vehicles become more efficient and 18 

0.025 0.020 Fraction of Vehicles 0.015 0.010 0.005 0.000 68% 24% 8% 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Cumulative Daily Travel Distance (miles) FIGURE 2-1 Distribution of daily travel distance. Colored ranges are marked at 40 and 73 miles. SOURCE: FHWA (2011). vehicles powered by other alternative fuels (such as natural gas and hydrogen) appear in the marketplace, the value proposition will continue to change. The committee notes that commuting fueled by electricity stored in vehicles is feasible on a large scale in the United States, at least in principle. Figure 2-1 shows the distribution of daily travel distance for vehicles. According to the 2009 National Highway Transportation Survey; 68 percent of all vehicles traveled less than 40 miles on a given day, and 92 percent of all vehicles traveled less than 73 miles (FHWA, 2011). Although the survey provides a snapshot of all vehicles on the road, it does not indicate the day-to-day variability for a particular vehicle, which is crucial for understanding the applicability of a particular BEV or PHEV for an individual household (Lin et al., 2012; Traut et al., 2012; Tamor et al., 2013). Access to Charging For people in single-family homes that have carports or garages, residential charging should not pose a problem other than the cost and logistics of installing a charger. An exception might be those who rent their homes and, therefore, would not have authority to make structural changes in the property. For the roughly one-third of households that do not have access to a carport or garage (U.S. Census Bureau, 2012), residential charging is problematic. Although many of those households will have access to a common parking garage or lot, they generally will not have the authority to make structural changes; even 19 

if they do, the costs involved might be prohibitive. For households that do not have access to a carport or garage and have only an option of street parking, the ability to access charging overnight is extremely problematic. (Charging options are further discussed in Chapter 3.) OPTIONAL ROLES OF THE FEDERAL GOVERNMENT IN ADDRESSING CUSTOMER NEEDS AND BARRIERS The federal government has several possible roles in educating customers, providing incentives, and supporting research on customer behavior and on the effectiveness of policies. Some might argue that the federal government should play a major role in the adoption of PEVs. Although a person might derive personal benefits from PEV ownership, society has the potential to benefit from PEV adoption in, for example, improvements in local air quality, reductions in greenhouse gas emissions, decreased dependence on petroleum, and greater energy and economic security. Expecting individual customers to bear the brunt of the costs of societal benefits might not be realistic or feasible. Customer Education Customers have many questions about PEV technology and, in many cases, substantial misperceptions. They need information on vehicle costs and performance, operating and maintenance costs, incentives available, and charging infrastructure required. The federal government could consider providing the following: • Public-service announcements that use various communication media—traditional and social media—to showcase current PEV owners, illustrate how a PEV meets various transportation needs, provide information or links to websites (such as fueleconomy.gov) that help customers to understand purchase and operating costs and available incentives, and describe the societal benefits of PEV ownership, such as reductions in petroleum use and greenhouse gas emissions. • Ride-and-drive activities or demonstrations at high-visibility locations—such as football stadiums, large office parks, and retail locations—because evidence suggests that people are more likely to be interested in purchasing PEVs if they have driven them (Kurani et al., 2009; Turrentine et al., 2011), and people often do not want to go to a dealer to see the vehicles. Department of Energy (DOE) programs—such as the Clean Cities program, which is a coalition of stakeholders that seeks to encourage alternative transportation solutions in U.S. communities and often works with local dealerships—could be used for those types of demonstration activities to facilitate customer education outside the dealership environment. • Marketing targeted to audiences that have transportation needs that might fit PEVs, such as commuters in suburban areas who drive regularly to public transportation stations a short distance from home. Those audiences would most likely not need a public charging infrastructure if they have residential charging because they are not likely to travel more than 20 miles to commuter parking lots. • Curriculum so that educators can design instructional units on PEVs that might also include demonstration activities as part of science education. Customer-education activities could increase the public’s familiarity with this relatively unfamiliar technology. Some might then develop an interest in purchasing PEVs, especially once they learn more about various federal, state, and local government incentives. In contrast, the activities would come at a cost, and the efforts would have to be sustained over a relatively long period and be directed at people who are likely to be in the market for PEVs. An improved understanding of customer perceptions, interests, and behavior would be needed to develop targeted marketing campaigns. 20 

Customer Incentives Federal, state, and local governments can offer (or continue to offer) many incentives to encourage potential customers to buy and use PEVs, and the federal government could use its convening power to facilitate coordination of various state and local incentive programs. Incentives that can spur purchases include (1) purchase rebates, income tax credits, or sales-tax reductions or exemptions; (2) subsidies that streamline the permitting process for installing chargers; (3) access to high-occupancy vehicle or carpool lanes; (4) free parking, reduced costs for parking, or greater access to parking; (4) reduced or exempted license or registration fees; and (5) taxes on fuels. Financial customer incentives can offset the uncertainty of costs faced by potential customers, and such assistance will be important in second-generation markets, in which buyers are less adventurous than early market adopters. Research on the effectiveness of past and existing customer incentives to purchasing alternative-fueled vehicles would help to inform the design, cost effectiveness, and creation of new incentives. For example, studies involving hybrid-electric vehicles, such as the Toyota Prius, have suggested that customers respond better to immediate incentives, so using purchase rebates instead of income-tax credits is likely to be much more effective (Gallagher and Muehlegger, 2011). Because some incentives cost the government considerably more than others, it is important to understand their effectiveness. Research on Customer Perceptions, Attitudes, and Behavior Few data on customer perceptions, attitudes, and behavior regarding PEVs are publicly available. Some studies have examined these issues (Axsen and Kurani, 2012; Heffner et al., 2005), but further research could help to determine how to structure programs or policies to maximize investment in PEV adoption. The federal government could support research to learn why potential customers would or would not purchase PEVs and how they respond to government incentives. It could also support research on regional differences—in housing stock, experience with and exposure to technology, electricity prices, availability of alternative transportation options, and customer attitudes—to see how the differences influence purchases of PEVs. The government could require all those who receive government funds to report and share data anonymously about customer adoption and acceptance of and behavior concerning PEVs. That would include charging-service providers, automobile manufacturers, participants in demonstration projects and smart-grid programs, and customers who use tax credits. The government would need to provide the data in a usable format to the public, companies, and scientists to enable research and take privacy issues into account. Research on Policy Effectiveness Little research has been done on the effectiveness of government policies with respect to PEVs to determine which are the most successful and why. Specifically, there has been little research to determine which government incentives are most influential in affecting customer decisions, which public education efforts work, and which kinds of demonstration activities are most helpful. To ensure that investment in PEV adoption is maximized, the federal government could support research on policy effectiveness. Because the development of new automotive technology is a slow, deliberative process that goes through many stages, an adaptive-management approach is crucial for the development of effective policies. The development of the PEV industry is even more complex and dynamic than the development of the original hybrid vehicles, which after a decade have achieved a 17 percent market share in Japan (JAMA, 2012a; 2012b) and a 7 percent market share in California (Edmunds.com, 2012), although the market share in the entire United States remains at just above 3 percent. Those market shares were partly 21 

achieved using an array of tax and other incentives. As battery costs are reduced, new vehicle systems are launched, and charging infrastructure is installed, PEV manufacturing and markets will need to go through at least three stages of vehicle and market-segment development—from first-generation vehicles and early market adopters (about 1 to 3 percent of the U.S. market) to second-generation vehicles and “fast followers” (about 2 to 5 percent of U.S. market), and, finally, to third-generation vehicles and the early majority segment (about 3 to 10 percent of the U.S. market)—if a sustainable industry is to be achieved. An adaptive-management approach to policy development is critical during these early stages of market adoption. That is, there needs to be careful monitoring and continuing measurement of the effects of incentives, technology rollout, and infrastructure design, and the resulting information needs to be used to adapt or change policies and other efforts to make them more effective in achieving widespread PEV adoption. THE AUTOMOBILE MANUFACTURER Automobile manufacturers face many technical challenges in developing and marketing PEVs, and these will be discussed in the committee’s final report. The focus here is on the customer, and the major barriers are the few choices in PEV models offered by automobile manufacturers—mostly compact sedans or subcompact vehicles—and the small number of automobile manufacturers that are offering any choice. 1 Although automobile manufacturers will probably be supplying more choices in electric-drive technology in the near future, the few models now offered do not meet the needs of all customers, especially given that 52.2 percent of the passenger-vehicle market in 2012 in the United States is comprised of light-duty trucks—a category that includes pickups, sport-utility vehicles (SUVs), and minivans (WSJ, 2013). The development of new PEV platforms will require substantial investment, and sales of PEVs must increase to justify that investment. Furthermore, development of PEV light-duty pickup trucks and SUVs presents additional cost and technical challenges because of the capacity, weight, and volume of the batteries required for adequate performance (Cheng et al., 2009). However, some industry experts view electric-drive initiatives by automobile manufacturers as strategic investments because they present an opportunity to develop a standardized drive train that can be used for multiple platforms and thus save on manufacturing and labor costs. If PEV sales increase substantially, automobile manufacturers will be more willing to extend the electric-drive technology to other platforms, and this will lead to greater customer choices in vehicle models. One caveat to that scenario is that electric-drive technology needs to evolve, mature, and become economically producible on a large scale before automobile manufacturers can offer more variety. The federal government has supported basic research on and development of electric-drive technologies, particularly battery development, and continued federal support should help to reduce technology costs and indirectly encourage the use of electric-drive technology in a variety of vehicle models. Other policy options available to the federal government could spur greater development of PEVs by automobile manufacturers, such as raising fuel-economy standards, instituting zero-emission-vehicle mandates, and creating carbon taxes. However, evaluation of those broad-scale options is beyond the committee’s charge for this interim report. DEALERSHIPS AND RETAIL OUTLETS Dealerships are the primary sales and distribution channel for vehicles, so they are the primary interface with customers. This section addresses various aspects of dealerships that create potential barriers for encouraging sales of PEVs. 1 See http://www.hybridcars.com/. 22 

Challenges to Supporting Adoption of Plug-in Electric Vehicles With few exceptions, 1 dealerships are independent franchises that are not owned or operated by automobile manufacturers. Dealerships are governed and protected by state franchise laws that effectively regulate same-brand competition within their market territory. However, secondary delivery channels— which include car-buying services, major membership organizations (such as the American Automobile Association), and retailers (such as Costco)—and direct Internet sales have all become competitive forces and have compressed profit margins for dealers on new car sales (Zettelmeyer et al., 2006). As a result of those trends, dealerships depend more on their other services to generate profits. Their service and parts departments and their financing and insurance and warranty sales are the most important sources for dealer profit. For example, a recent examination of revenue sources and profits at Penske Automotive dealerships, which has operations in the United States and the United Kingdom, showed that service and parts accounted for 13 percent of annual revenues, but 44 percent of gross profits (Henry, 2012). These business factors are important for understanding a dealership’s motivation to sell and support PEVs, particularly when the disincentives are considered. Although it is too early to make definitive statements, some data indicate that maintenance costs will be lower, provided that battery replacement is not required before the end of a vehicle's life. A recent study by the Institute of Automobile Economics (Loveday, 2012) found that maintenance costs of PEVs are estimated to be 35 percent lower than those of comparable gasoline-powered and diesel-powered vehicles. The difference is attributed largely to PEVs’ having fewer mechanical and moving parts and reduced brake wear as a result of regenerative braking, electric motors instead of drive trains with clutches and gearboxes, and no engine exhaust and emissions systems to repair or replace. Furthermore, PEVs do not require regular trips to the dealership for oil changes, which offer prime opportunities for dealers to examine cars for other potential maintenance and repair items. Another disincentive for dealerships to support PEVs is that training and educating personnel— salespersons, mechanics, finance specialists, and managers—is expensive for a franchise. New and potentially confusing technologies require extensive education and training not only about a vehicle itself but about the charging infrastructure, tax benefits and incentives, and warranty terms that are unique to PEVs, such as those concerning the batteries. A recent survey of dealerships (McCutcheon-Schour et al., 2012) indicated that current outlets are not fully prepared to explain and educate customers on PEVs and the charging infrastructure required. Given the comparatively high cost of training and preparing dealership personnel and the comparatively greater needs for customer education on PEVs before they are comfortable in making their purchases, there appears to be a critical information gap at the primary point of sale. Although customers today have unprecedented access to information about vehicles on the Internet, it is questionable whether the available information on the supporting charging infrastructure for PEVs is adequate. Early evidence suggests that customers are not adequately informed about PEV charging requirements before they visit dealerships (McCutcheon-Schour et al., 2012), and this again puts the burden of educating them onto the sales staff. The lack of customer education about PEV charging requirements clearly is a barrier that affects customer preparedness and consumes dealership resources. Because the sales staff is focused on sales volume, the additional time that must be spent in educating customers to encourage them to buy PEVs is a disincentive for selling the vehicles. Overcoming Barriers at the Dealership Research is needed on how to align the needs of dealers with the stated goal of increasing PEV sales. One option is to provide dealer incentives for selling PEV products, and one automobile 1 Tesla, for example, owns showrooms that act as brick-and-mortar points of sale for its cars. 23 

manufacturer has noted such incentives (Colias, 2012). However, a major barrier is the time required to educate customers. Automobile manufacturers, dealerships, and other industry stakeholders could be doing much more to provide test-drive events as customer outreach and educational opportunities. However, because staffing and providing vehicles for such events consume dealership resources, consideration should be given to how to offset the dealer costs or how to provide the opportunities in a manner that does not require dealership resources. As discussed above, the federal government could support demonstration activities through existing federal initiatives, such as the DOE Clean Cities program. If one considered only the goal of increasing PEV adoption, there might be other models of closing the knowledge gap between customers and the PEV technology at the point of sale. Some automobile manufacturers have opted to allow vehicle purchase directly from them. The Toyota Prius was initially purchased directly from the manufacturer rather than through franchise dealerships. When the Nissan Leaf was introduced, it could be purchased only through Internet sales. There might be value in considering alternate sales channels, particularly if they can be used to educate customers more directly about the technology, vehicle requirements, and charging-infrastructure needs. More information is needed about the desirability, opportunities, and drawbacks of alternative sales channels because state franchise laws might impede or act as barriers to alternative delivery channels. By partnering with local utilities, local dealerships might be able to develop a stronger expertise in charging needs at reduced expense. It is in a utility’s interest to determine where PEVs will reside to ensure that distribution capacity is adequate (discussed in further detail in Chapter 4), and some local utilities (such as Portland General Electric, Pacific Gas and Electric, and Southern California Edison) are beginning to develop checklists and guidelines for customers who are considering purchase of PEVs that provide information on power requirements, rate options, and vehicles. By providing such guides to dealerships at the point of sale, utilities might be able to obtain advance notice of PEV load, and dealerships might then reduce some of the burden of the education process. REFERENCES Allcott, H., and N. Wozny. 2012. Gasoline Prices, Fuel Economy, and the Energy Paradox. Working Paper No. 18583. National Bureau of Economic Research, Cambridge, Mass. November. Available at http://www.nber.org/papers/w18583, accessed April 18, 2013. Axsen, J., and K.S. Kurani. 2012. Interpersonal influence within car buyers’ social networks: Applying five perspectives to plug-in hybrid vehicle drivers. Environ. Plann. A 44(5):1047-1065. Busse, M.R., C.R. Knittel, and F. Zettelmeyer. 2013. Are consumers myopic? Evidence from new and used car purchases. Am. Econ. Rev. 103(1):220-256. Cheng, I., M. Martin, Y. Morimoto, A. Poulizac, D. Wong, S. Yao, I. Sidhu, P. Kaminsky, and B. Tenderich. 2009. The Technical and Business Challenges of Building an Electric Vehicle Sport Utility Vehicle. Center for Entrepreneurship and Technology, University of California, Berkeley. December 18. Available at http://gtl.berkeley.edu/dl/Car_Brief_Final.pdf, accessed March 14, 2013. Colias, M. 2012. Dealer cash juices Volt sales boom. Automotive News, September 18. Available at http://www.autonews.com/article/20120918/BLOG06/120919860#axzz2Jg8RwpFs, accessed February 1, 2013. Edmunds.com. 2012. “California Buying Hybrid and Electric Cars at Supercharged Rate.” Edmunds. com, October 31. Available at http://www.edmunds.com/about/press/california-buying-hybrid- and-electric-cars-at-supercharged-rate-reports-edmundscom.html, accessed February 13, 2013. ESFI (Electrical Safety Foundation International). 2012. “Electric Vehicle Safety—What You Should Know Before ‘Going Electric.’” Safety Video, February 23. Available at http://esfi.org/index.cfm/cdid/12442/pid/10272, accessed February 13, 2013. 24 

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