Don’t Be Shocked By The All-Electric Future

Adaptation of new technologies for apartment leasing and management is driven largely by residents’ habits, preferences, and lifestyles.  Today’s residents are also, quite literally, driving technology as more and more consumers are opting for the purchase or lease of an all-electric vehicle.  These cars, while lower in emissions, place increased demands on the community’s infrastructure—as their paradigm for re-fueling is not to visit the local gas station, but to plug in at home and “fill up” in the evenings.  Now is the time to begin to consider how to plan your multifamily residential community to maintain resilience as the world changes around us, to strategize ways to avoid becoming less desirable as a resident option long before the useful life of the building has reached an end.  It is necessary to plan for a gradual, then rapid shift to all-electric vehicles, which means the criteria by which residents will choose homes will include the availability of charging facilities that exceed the capacity of a 110 plug.  Planning ahead now to anticipate and accommodate this increased demand will help avert the need for an extraordinarily expensive and disruptive renovation down the road.

California is leading the way nationally to a less fossil-fuel-reliant/lower greenhouse gas future.  Governor Gavin Newsom recently issued an executive order requiring that by 2035, all new cars and passenger trucks sold in the state must be zero-emission vehicles (the corollary here, of course, is that electric vehicles must be using clean power / green energy so we are not trading one problem for another).  While that theoretically includes fuel cell vehicles, they still account for only a tiny percentage of current ZEVs.  This target date, only roughly as far in the future as the 2008 recession is in the past, demands some serious consideration of what this trajectory implies.

Californians purchase nearly 900,000 personal vehicles in a typical year; the state has about 27.7 million registered vehicles, of which approximately 1,300,000 are “retired” every year—so roughly 1,000,000 units are cycled through annually, equal to about 3.5% of the existing stock.  Today the common lifespan of a car is estimated to be about 8 years or 150,000 miles.  Gratefully, advances in automotive engineering have expanded that timeframe over the last couple of decades, to give cars a longer life; furthermore, it is estimated that electric vehicles can be expected to last around 12 years or about 200,000 miles.  For the sake of simplifying the math, let’s just take the average of those spans and declare that the typical reliable life of a car in the sunshine state is about 10 years.  So, every year about a million go away, and another million are added to the fleet—out with the old, in with the new.  At these numbers, the complete cycling out of the system of all the cars on the road today would take about 28 years.  Mark your calendars:  by about 2048, there will be virtually no combustion engine vehicles on California’s roads.  While it might be anticipated that sales of gas-powered vehicles may surge in the couple years leading up to 2035, after that it will be only electrical vehicles replenishing the fleet at a million units/year, leading to a tremendous acceleration of the statewide conversion.

If you were to begin planning today to develop and construct a denser, urban infill residential building with structured parking in Los Angeles, the total length of the entitlement/drawing/construction phase could easily amount to 5 years, plus perhaps another year to lease-up and stabilize.  Your sparkling new property might be up and running by 2026.  Before it celebrates its tenth year of operation, sales of combustion engine vehicles in California will have ceased.  Another ten million or so older, mostly combustion engine vehicles will have been retired.  Meanwhile, the sales growth of EVs has been continuous; perhaps even logarithmic.  A reasonable estimate of the EV share of the total California fleet in 2036 would be perhaps around 25%, or nearly seven million cars.

Not all of these environmentally-friendly vehicles will be parked in suburban garages; an increasing number will also populate denser urban residential communities, and they’re going to want to charge up at home, even if their overnight parking space is in a structure.  So, conservatively, one might speculate that by 2036, fifteen years from now, any urban community could have up to 15% EVs.  Do you see where I’m going with this?  That’s not very long from now, and the building will be perhaps 15% into its projected useful life.  As the community matures, the demand for vehicle charging stations will continue to increase.  Those communities with insufficient charging facilities for the growing electric fleet will begin to be “unchosen” by discriminating renters.

Luxury apartment buildings coming online in the very near future may debut with up to 5-10% of their parking spaces equipped with charging stations; many have pre-wired for a larger number, even up to 20%.  I believe it is time to ramp up the consideration of what may need to be provided in the not-so-distant future as the percentage of EVs grows, and the demand for charging stations right along with it.  What’s a reasonable number to aim for?  How about pre-wired for 50%, with an initial buildout of 15-20%?  Having the infrastructure in place is really the backbone to avoid painful and costly future renovations; maybe the smart move is to go all in and pre-wire for 100% of the spaces.  No matter what, you won’t want to have to install the infrastructure as a renovation project; it will be outrageously expensive.  Better to overreach now and have a cushion than to go back tomorrow and tear things apart to re-tool.

Incidentally, to allay concerns about how this many EV charging stations will swell the anticipated electrical loads of the building, there are software applications that cleverly gauge the demand and distribute charging in a managed manner so that the fundamental electrical service of the building doesn’t need to increase beyond reason.  Besides that, there are third-party providers who coordinate with building owners to supply and manage the stations, collect the fees, and return an income stream to the property, usually with low to no start-up costs to the building owner.  The vendor can even make recommendations for the number of chargers to be installed at the time of the project’s grand opening and will drive the build-out of additional charging stations as the demonstrated need increases.

So, please anticipate the all-electric future, and design the infrastructure into your projects today.  Your future investment committee will thank you.