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Exploring V2H and V2G Technologies in the Automotive Industry

In the rapidly evolving landscape of automotive technology, the integration
of Electric Vehicles (EVs) with home energy systems marks a pivotal shift
towards a more interconnected and sustainable future. To delve deeper into
this paradigm shift, Automotive Industries sat down with KC Boyce, Vice
President of Automotive, Mobility & Energy, and Nikki Stern, Senior Insights
Manager for Automotive & Mobility at Escalent. Drawing from their expertise,
the discussion revolved around the findings of the 2023 EVForwardT Charging
Experience DeepDive report, shedding light on the consumer awareness and
perception of Vehicle-to-Home (V2H) and Vehicle-to-Grid (V2G) capabilities.

Nikki Stern initiated the conversation by highlighting a significant
revelation from the report: the prevalent lack of consumer awareness
regarding V2H and V2G technologies. Stern articulated how despite the
potential of EVs to revolutionize the energy landscape, over half of new car
buyers surveyed confessed to being unfamiliar with V2G, while 42% were
unaware of V2H. This stark reality underscored the pressing need for
bridging the gap between technological innovation and consumer
understanding.

KC Boyce echoed Stern’s sentiments, attributing the disconnect between
utility companies’ and automakers’ enthusiasm for V2X programs to an
oversight in consumer-centricity. Boyce emphasized the necessity for
stakeholders to align their strategies with consumer needs and preferences,
emphasizing that consumers must first gain confidence in EVs as viable
replacements for traditional vehicles before considering their broader
energy potential.

Delving deeper into consumer perceptions, the discussion pivoted towards
addressing apprehensions surrounding battery life and upfront costs
associated with V2H and V2G integration. Stern elucidated the importance of
transparent communication from automakers regarding battery warranties and
operational capabilities to assuage consumer concerns. Additionally, Boyce
proposed innovative strategies such as bundling integration systems with EV
purchases and offering incentives to offset upfront costs, thereby enhancing
consumer receptivity.
As the conversation unfolded, the focus shifted towards elucidating the key
value propositions that could sway consumer attitudes towards V2H and V2G
programs. Stern outlined the potential for cost savings through off-peak
charging and backup power provision, emphasizing the need for clear
messaging to underscore these benefits. Boyce reiterated the significance of
tailored messaging and seamless integration of home energy systems by
automakers to augment the EV ownership experience.

Looking ahead, both Boyce and Stern projected a gradual but steady evolution
in consumer awareness and adoption of V2H and V2G technologies. While
acknowledging existing barriers such as price premiums, they envisaged a
future where advancements in technology and concerted industry efforts would
drive widespread integration. Regional dynamics, such as California’s
propensity for rapid adoption due to environmental concerns, were also
highlighted as potential catalysts for change.

In conclusion, the dialogue underscored the transformative potential of V2H
and V2G technologies in reshaping the automotive and energy sectors. By
prioritizing consumer education, addressing concerns, and fostering
innovation, stakeholders can pave the way for a more sustainable and
interconnected future, where Electric Vehicles serve not only as
transportation modes but as integral components of a dynamic energy
ecosystem.

Automotive Industries Interview with KC Boyce, VP, Automotive, Mobility &
Energy, Escalent and Nikki Stern, Senior Insights Manager, Automotive &
Mobility, Escalent

Automotive Industries: Hi Nikki, can you provide an overview of the key
findings from the 2023 Charging Experience DeepDive report, particularly
regarding consumer awareness of Vehicle-to-Home (V2H) and Vehicle-to-Grid
(V2G) capabilities?

Stern: While EVs have the potential to be a foundational part of the energy
system of the future, it’s not clear yet that they actually will be. Over
half of new car buyers say they’ve never heard of V2G, and 42% have never
heard of V2H. Only low single-digit percentages (4-5%) say they’re familiar
with these technologies. Moreover, while EV owners and intenders have a
pretty strong interest in related energy technologies like rooftop solar and
home battery storage, automakers aren’t really part of their consideration
set for those technologies – outside of Tesla, which enjoys very high
awareness and consideration for home energy products.

Automotive Industries: What surprised you the most about the levels of
consumer awareness regarding V2H and V2G technologies, as revealed in the
EVForwardT report?

Stern: The low levels of awareness about V2G and V2H as technologies weren’t
really that surprising – we’ve been tracking this for several years and knew
we wouldn’t see very many consumers who knew a lot about these technologies.
With that said, it was very interesting to see how people put their “spin”
on the programs when we gave them a brief description. People could
immediately see the opportunity for backup power and financial savings
provided by V2X. At the same time, they had very reasonable concerns about
how long the vehicle’s battery would last in those applications and what the
impact to the vehicle itself would be – things like “would I have enough
range left to drive it?” and “would it degrade the battery?”
Automotive Industries: Hi KC, how do you interpret the disconnect between
utility companies and automakers’ enthusiasm for V2X programs and the
limited awareness among consumers?

Boyce: At its root, I think this is an example of the industry falling in
love with a technology without considering the people who will actually use
the technology. As I said before, I think EVs do have a place in the energy
system of the future, but we need to help consumers understand how they can
benefit from the technologies and also address questions they have that
serve as barriers to adoption. I think it’s also an issue of bringing
consumers along on a journey that utilities and automakers are further along
on: right now, many consumers are simply asking whether an EV can work for
them as a replacement for their current vehicle. They need to get to a
confident “yes” on that question before they can even start thinking about
what else an EV can do to make their life better.

Automotive Industries: In your opinion, what are the key value propositions
that utility companies and automakers should focus on to make consumers more
receptive to the idea of using their BEVs as energy assets in V2H and V2G
programs?

Stern: V2H is perhaps the simpler of the two, because buyers intuitively
grasp the idea of the EV serving as backup power when there’s a grid outage.
In addition to that, helping them understand how they can save money by
charging off-peak on a time-of-use rate and powering their home through V2H
during peak times is compelling. V2G is extremely dependent on program
design – while the potential for a consumer to save money by using their EV
in V2G is certainly there, people need to see a pretty significant price
premium for exported power to justify the up-front expense of the
bidirectional EVSE. Alternately, a program that “buys down” that initial
bidirectional EVSE cost could get away with a lower price premium for
exported power.

For both technologies, consumers need to see straightforward information
about some of their questions on the impact to the vehicle. For example, an
automaker saying that their battery warranty isn’t impacted by using the car
in a V2H or V2G application, or noting that a fully-charged EV could power a
house for up to two days in the event of a power outage.

Automotive Industries: The report mentions concerns about battery life and
replacement costs. How can automakers address these concerns and reassure
potential BEV buyers about the longevity of their batteries? What strategies
do you suggest for overcoming the trepidation expressed by buyers regarding
the upfront costs of home integration systems for V2H and V2G?

Boyce: We’ve been conditioned by consumer electronics that batteries have a
very short shelf life, and consumers have reasonable concerns about whether
that’s true of EV batteries. In fact, it’s the second-biggest barrier to
buying an EV, cited by a third of buyers. What we’ve seen in our work is
that simply informing buyers that their vehicle has an 8-year / 100,000 mile
battery warranty (with some automakers offering even better terms) does
wonders to assuage concerns about battery longevity.

In terms of addressing the upfront costs, I think the easiest answer is to
just bundle the equipment with the vehicle. We’ve seen a number of
automakers implement that strategy when it comes to normal home charging
equipment, and consumers have been very receptive to those programs.
Alternately, or perhaps in conjunction with an automaker’s program,
utilities could offer point-of-purchase rebates for the equipment and
installation, much as they do today for standard EVSEs. These strategies
necessarily put the onus on the automaker or utility to figure out how to
make the business model work – would Kia, for example, be able to sell
enough additional EV9s at a higher price point if they included the
bidirectional EVSE and installation with the vehicle?

Automotive Industries: How do the concerns about the expense of BEV
charging, mentioned in the report, impact consumer perceptions of V2H and
V2G programs?

Boyce: V2H and V2G provide a way to lower consumers’ overall cost of energy,
so as I noted when discussing value propositions for these technologies, we
need to feature “savings” as a key benefit for the technologies.

Automotive Industries: Can you share insights on how utility-led efforts to
limit BEV charging costs could influence consumer behavior and adoption?

Stern: One of the most-expected benefits of buying an EV is cost savings.
Utility programs like time-of-use rates, demand response, and V2G can be
very effective in delivering on those expectations. What we saw in the
research is that people really just want to feel confident that buying an EV
will actually help them save money. As a result, utilities not only need to
offer these programs, but also to provide guidance (and perhaps interactive
tools for consumers) about what the tradeoff will be in a slightly increased
electric bill versus eliminating gas station expenses.

Automotive Industries: Given the mixed feelings expressed by buyers, what
kind of messaging do you believe would be most effective in promoting the
benefits of V2H and V2G programs?

Stern: As I mentioned before, wWe really need to emphasize the benefits of
these programs while addressing concerns that consumers reasonably have
about the programs. We’ve seen that EV owners and intenders like to dig into
the details, so we also need to think in “tiers” where there’s high-level
benefits messaging but also more detailed information available about how,
specifically a program works. For V2H, for example, that could include
things like what appliances could be run off of the EV battery, for how
long, and how buyers could make sure that their vehicle has enough range
left to serve their mobility needs.

Automotive Industries: How can automakers and utility companies effectively
communicate the advantages of these programs and address potential
misconceptions?

Boyce: Start with where consumers are. Like I said, mMany utilities and
automakers are further along on this journey than consumers. They
understand, for example, that EV battery chemistry and battery management
systems are very different from that in our phones. But most consumers don’t
understand that, and frankly, they don’t need to. They just need assurance
that they won’t end up with a really expensive battery replacement bill
while they own their vehicle. And while automakers and utilities certainly
need to figure out the right business case on their end, they can’t neglect
the financial calculus potential buyers go through. People are pretty savvy
and they’re going to see right through programs that are designed just to
benefit the utility and not the end user.

Automotive Industries: The report highlights the interest of consumers,
especially BEV owners, in technologies like solar panels and home battery
backup. How can OEMs expand their role in the BEV ownership experience by
supporting home energy systems? What steps can automakers take to build
awareness of their home energy products and differentiate themselves in this
space?

Boyce: I think you hit on it in your question – outside of Tesla, which has
very high awareness that it offers rooftop solar and home batteries,
automakers need to focus on the very top of the marketing funnel: awareness.
In terms of differentiation, there is opportunity to provide buyers with an
integrated and high-quality customer experience. In contrast to the current
model, where you might have different contractors installing solar and the
home battery or EVSE, you have one entity that’s handling the entire
installation and commissioning process. If done well, that can make
consumers’ adoption journey much more pleasant!

Automotive Industries: The report also mentions that 56% of buyers are
somewhat likely to opt into a V2G program. What factors do you think are
critical in influencing this decision, and how can automakers and utility
companies leverage them? What role do you see clear and concise messaging
playing in encouraging V2G program adoption?

Stern: The first factor is giving consumers a clear financial incentive, and
as I mentioned before, that’s a balance between the incremental cost of the
bidirectional EVSE (and related V2G equipment) and how much the participant
is compensated for exporting power to the grid. Beyond that, clear and
concise messaging is critical for getting initial consumer interest. Many
buyers may be interested in learning more about the details of the program
or technology – and automakers and utilities need to be prepared to provide
that information – but if you start by explaining all of the technical
details you’re going to lose the majority of consumers before they even give
reasoned consideration to participation.

Automotive Industries: Looking ahead, how do you foresee the landscape
evolving for V2H and V2G technologies? What changes or advancements do you
anticipate in consumer awareness and adoption over the next few years?

Boyce: While we currently see price as a pretty significant barrier to
adoption, that will diminish over time. That’s a function of automakers and
suppliers working to bring down the cost of equipment and the fact that once
you’ve installed the system on the home, there’s no incremental cost for an
additional or replacement EV. Eventually – and I’m speaking in decades here
– most people will have the necessary equipment installed at their home.

We’ll likely see increased consumer awareness of these technologies as more
automakers bring V2H and V2G capable vehicles to market and include that as
part of their marketing. At the same time, because of the significant price
premium versus a standard home charger, we’ll likely see relatively low
adoption in most places and the people who adopt will be the “early
adopters” who like to try things first. There will, however, be some
geographic exceptions to this – for example, I expect adoption in California
will happen relatively quickly given the high rate of EV adoption and
concerns about wildfires and utilities’ “public safety power shutoffs.” We
may see a similar dynamic in other storm-prone areas of the country like
Florida.

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