Economic Shocker: Electric Cars May Create 1.9 Million Jobs

Last Updated Apr 9, 2010 2:20 PM EDT

The electrics are coming, the electrics are coming! And that's a good thing from the point of view of the Electrification Coalition, a group of business leaders (including Nissan, Cisco Systems, PG&E and Johnson Controls) that came together last year. The coalition predicts that by 2040, 75 percent of U.S. passenger vehicle miles traveled will be "electric miles." But there will be winners and losers, something advocates are sometimes reluctant to admit.

The coalition's projections are usually among the rosiest out there, and that's certainly true of its latest economic forecast, prepared by the University of Maryland's Infoforum and Keybridge Research. If the Coalition's policy recommendations are implemented, it predicts:

  • A net increase of 1.9 million jobs because of the electrification of the automobile, including 560,000 manufacturing positions, 276,000 in travel and tourism, and 73,000 in professional services. The report says motor vehicle employment (including parts supply) would be 106,000 more than if EVs weren't part of the equation.
  • The average American household, by 2030, will spend $3,687 (in 2008 dollars) less on transportation annually, and have that money left over for other things (including travel and tourism).
  • The federal budget deficit will improve by $336 billion between 2010 and 2030. The trade deficit will improve by $127 billion by 2030.
  • U.S. crude oil imports will fall by 3.2 million barrels daily by 2030, and between 2010 and 2030 the U.S. would import 11.9 billion fewer barrels of imported oil. Worldwide, the price of oil will be seven percent lower than it would be without electrification.
I talked to Coalition Policy Director Sam Ori about all this. Since there will undoubtedly be many jobs lost as well -- I was thinking specifically of auto suppliers, since EVs have fewer moving parts -- does the group conclude that there will still be such a strong positive impact?

"Yes," Ori said. "The 1.9 million is a net figure, using mainstream forecasts of GDP and other factors as the reference case scenario. We layer on a scenario that includes penetration of EVs." The travel and tourism jobs, he said, will result from people "having more disposable income that they will spend on a range of things."

Ori acknowledged that parts suppliers would be affected. "Employment in certain sectors of the traditional internal-combustion supply chain will no longer exist," he said, "but they will be replaced with jobs making components for electric vehicles. There will also be less need for petroleum-related jobs, but we still think the jobs created will be more than the jobs lost."

The Coalition doesn't see EVs completely replacing internal combution anytime soon. By 2030, it sees perhaps 75 percent penetration. "There will always be a need for internal-combustion engine parts and a complete supply chain," said Ori.

I called the Specialty Equipment Market Association (SEMA) for some reaction to this, and spokeswoman Della Domingo told me the group believes that there will be a need for parts and customization of electric cars. "All vehicles can be accessorized to a certain extent," she said.

John Waraniak, SEMA's vice president of vehicle technology, sees a big challenge to parts suppliers, but one it can meet. "Hybrid and electric vehicles represent blank canvases for SEMA-member companies," he said. "SEMA is uniquely positioned to demonstrate that horsepower and green power can coexist without sacrificing performance or the cool factor."

A SEMA article reports, based on an internal survey, that 72 percent of auto enthusiasts won't buy alternative-fuel vehicles unless gas hits $4 a gallon. And, sadly for SEMA, $4 a gallon gas also means that 35 percent of its customers would cut spending on specialty parts and equipment. Some 15 percent of the auto buffs surveyed said they'd never own an alternative-fueled vehicle, and 23 percent said they wouldn't even buy a fuel-efficient one.

The Coalition does see some speedbumps in fast-track to EV success. These include, said Ori:

  • The current state of battery technology and the high cost of batteries. "Cost is still a major hurdle," Ori said.
  • The technical limitations of EVs, specifically their limited range (generally around 100 miles). The lack of a public charging infrastructure is also an initial hurdle.
  • The electric grid, in some areas, is not yet EV-ready, and will require upgrades to transformers and distribution systems.
  • Finally, there's the issue of market psychology and consumer acceptance. Ori said that the case for EVs "has to be compelling from both a performance and an economic standpoint."
On the latter issue, Ori and Waraniak are firmly in agreement. Waraniak says, "Hybrids and electric vehicles have to connect with consumers' lifestyles and experiences. Consumers will not adopt a new technology unless it's better in every way than what it's replacing, and anecdotal evidence of emerging markets does not drive consumer acceptance."

Photo: Flickr/Bisgovuk