Editor's Note: This article is part of Area Development's Auto/Aero Special Report in the Q3 2024 issue. It was commissioned and edited by Dennis Cuneo who served as guest editor for this special coverage.
The Biden administration has set forth ambitious goals for electric vehicle (EV) adoption and infrastructure buildout, targeting 50% of new passenger vehicle and light-truck sales to be EVs by 2030, supported by a network of 500,000 EV charging stations. Achieving these goals is important for reducing the U.S.'s carbon footprint, establishing the nation as a climate leader on the international stage, and reducing energy dependency on foreign nations. While investments in technology, production capacity, and consumer incentives are required to meet the 2030 goals, the single largest obstacle to near- and medium-term EV adoption is infrastructure buildout.Infrastructure buildout comes in two forms: the construction of charging stations to support the range and convenience needs of consumers and the shoring up of the electrical grid to enable reliable EV charging and other emerging demands, notably those related to data centers supporting AI. On both issues, current approaches fall short of a nationally scalable, sufficiently funded solution to achieve the 2030 goals.
Most legislation to date has focused on the first issue, with mixed results. While the federal government has committed $7.5 billion in funding to support EV charging infrastructure buildout, the process for states to access these funds is often onerous, driving uneven adoption. States like California have had EV charging legislation in place since 2013 with requirements like those set forth in the Electric Vehicle Charging Stations Open Access Act (Senate Bill 454; Statutes of 2013) and Assembly Bill 841 (2020), intended to serve as model legislation to be adopted across multiple jurisdictions. With over 10 years of groundwork laid, California has been a leader in deploying federal funds available through programs like the National Electric Vehicle Infrastructure (NEVI) Formula Program. However, in acknowledging California’s success, one must ask why there aren’t more EV chargers available nationally if this legislation has been around for so long.
Reasons for uneven adoption vary across states and municipalities; however, differing needs for infrastructure funding in different states are some of the largest reasons other states have made little investment in EV infrastructure. For example, they may need to use that money to repair major roads after floods, mitigate road closures in snowstorms, or reinforce bridges and seawalls. Moreover, differing priorities across political parties further exacerbate varying investments in charging accessibility.
The key challenge we face is scaling this infrastructure nationally in a way that meets the evolving needs of consumers and the energy grid. Real estate developers have a unique opportunity to lead this charge by fostering public-private partnerships. Emily McLachlan, Vice President of Sustainability, Federal Realty Finding a solution that transcends jurisdictional lines and meets consumer needs requires looking beyond state and local actors to address EV charging infrastructure challenges. Public-private partnerships may instead prove a more effective model. In particular, real estate developers—both residential and commercial—who are seeking new ways to attract customers are uniquely positioned to drive the buildout of EV charging infrastructure.
Retail stores are expected to see the biggest potential benefits from investment in EV chargers, with EV drivers spending about three times as long in stores while charging and spending $50 per visit more than an average customer. Developers such as Federal Realty have already installed over 300 EV charging stations, and Simon Property Group is expanding its network of stations, which currently totals 1,189 at 124 locations in 26 states. “The integration of nearly 440 charging stations across our properties demonstrates our proactive approach to infrastructure development. This isn't just an investment in technology; it's an investment in the customer experience and the resilience of our retail spaces,” says Emily McLachlan, vice president of sustainability at Federal Realty. “The key challenge we face is scaling this infrastructure nationally in a way that meets the evolving needs of consumers and the energy grid. Real estate developers have a unique opportunity to lead this charge by fostering public-private partnerships, where we can create a cohesive network of EV chargers that spans the country, providing convenience for drivers and encouraging more sustainable choices.”
McLachlan adds, “Moreover, as AI and other technologies increase demand on our electrical grids, it's crucial that we develop solutions that are both forward-thinking and resilient. Our role as developers places us at the intersection of these innovations, allowing us to drive significant progress in both EV adoption and energy management. It's not just about keeping pace with change; it's about leading it.”
The broad reach of private actors, coupled with their individually aligned financial incentives, provides a unique and necessary avenue for cross-state infrastructure buildout. Beyond the issue of building the EV chargers is the challenge of supplying them with sufficient, reliable electricity. The emergence and widespread adoption of artificial intelligence (AI) make this challenge exponentially more difficult and expensive than current legislation provides for due to the increased need for data centers across the country.
$75-125 billion --- the estimated cost of the infrastructure buildout required to support the 2030 EV goals. Today, seven states comprise half of new car sales: California, Texas, Florida, New York, Illinois, Pennsylvania, and Ohio. These states will be critical in achieving the goal of 50% of new car sales being EVs by 2030. However, the top four already experience frequent reliability issues with their electric grids; for the first three, this is mostly due to strain from heatwaves and storms, while New York struggles with aging infrastructure. To further compound this issue, California, Texas, and New York are among the top five states expected to see the most significant increases in demand on their electrical grids due to the data center buildouts required to support projected AI demands.
Experts estimate the infrastructure buildout required to support the 2030 EV goals alone is $75-125 billion, compared to approximately $40 billion allocated for this purpose through the Infrastructure Investment and Jobs Act and similar bills. The demands from AI players are expected to rapidly dwarf any increases in energy required to meet EV charging requirements.
As AI begins to permeate more and more of everyday life and an increasing number of families rely on EVs to buy food, commute to work, or escape natural disasters, a strategic private-public partnership will be not just a creative solution but a critical one.