Electric Vehicles Offer Unique Potential for Rural Cooperatives, Communities
Tipping point for EV adoption draws closer as costs and charging time decrease, model options and range improves
DENVER (June 10, 2021)—Electric vehicles could make up 10% of all new car sales by 2025, a five-fold increase from current levels that will create new revenue opportunities for rural electric cooperatives. The anticipated surge in adoption of electric vehicles (EVs) is being fueled by cost reductions, new commitments from car manufacturers, expanded policy initiatives and an ambitious build-out of charging infrastructure.
According to a new report from CoBank’s Knowledge Exchange, 2% to 5% of all new car sales in rural communities could be electric by 2025. The urban-rural adoption gap is expected to tighten further as total ownership savings over the life of most EVs are greater for rural residents, who typically log more miles than urban residents. On average, most consumers can expect to save nearly $8,000 in fuel costs over the useful life of an electric vehicle.
“From a grid management perspective, the amount of electricity the U.S. consumes will certainly increase with greater EV adoption,” said Teri Viswanath, lead energy economist with CoBank. “However, the investment required to accommodate this growth may be smaller than it appears, as many regions already have sufficient generation capacity if vehicles are charged during off-peak hours.”
With 80% or more of charging taking place at home, EV adoption represents a new revenue opportunity for rural electric cooperatives. Rural cooperatives can also play an instrumental role in smoothing the road toward transition for their communities through a variety of initiatives, including building public charging infrastructure, added Viswanath.
According to the Department of Energy’s Alternative Fuels Data Center, there are currently 42,440 U.S. public charging stations, with a third concentrated in California. President Biden has proposed spending at least $15 billion to increase the number of charging stations twelve-fold, with the goal of reaching 500,000 nationwide by 2030.
Previous obstacles to rural adoption of EVs—initial cost of ownership, model availability and limited range—have diminished rapidly and are expected to continue doing so. The unveiling of the new Ford F-150 Lightning has significantly improved the odds that rural Americans might be swayed to acquire their first EV.
A recent study conducted by M.J. Bradley & Associates noted that rural residents tend to spend more of their income on gasoline—which means bigger benefits from adopting an EV. Rural residents are also more likely than urban residents to live in single-family homes, improving their ability to charge their own vehicles.
Electric vehicle sales have steadily increased over the past decade, from nearly non-existent in 2010 to 328,000 in 2020. Notably, while total vehicle sales in the U.S. fell 14.6% in 2020, electric vehicle sales increased 4% from 2019 levels. The positive momentum underway suggests a more accelerated path toward consumer adoption appears to be unfolding. More than half of Americans are now seriously considering EV adoption.
Read the report, Co-op EVolution—Bridging the Rural-Urban Divide on EV Adoption. CoBank is dedicating June as Co-op EVolution month and will be releasing a variety of EV-focused content highlighting the potential for electric cooperatives to capitalize on this trend.
CoBank is a $160 billion cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 75,000 farmers, ranchers and other rural borrowers in 23 states around the country.
CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and maintains an international representative office in Singapore.