For-profit

Electrify America

Website:

www.electrifyamerica.com

Formation:

February 2017

Type:

Electric Car Charging Station Manufacturer

Subsidiary of:

Volkswagen Group of America

Electrify America is a company created by Volkswagen Group of America to develop a national advanced network of near-universal electric car chargers. The subsidiary was founded as part of a court settlement after Volkswagen was found to have used what the Environmental Protection Agency and California Air Resources Board called “defeat devices” to allegedly violate emissions rules. [1][2]

The chargers are developed to be used with both electric cars produced by Volkswagen and its brands and by those of other manufacturers. [3] Electrify America has been developing charging stations in demographic-specific areas with high travel volume and has partnered with companies that will garner high volume of business, such as Walmart. [4]

Leadership

Giovanni Palazzo is the president and CEO of Electrify America. Palazzo has been with VW since 2011 and more recently helmed the firm’s “e-mobility” initiative. Palazzo assumed his position after Electrify America’s first president and CEO, Mark McNabb, resigned in 2018. McNabb began his tenure with VW in 2011 and held the position of COO of Volkswagen Group of America’s COO before leading Electrify America. [5]

Dieselgate

In September 2015, Volkswagen was found to have programmed many of the company’s vehicles in such a way that they would perform differently while in government emissions testing than while in normal operating condition. The programming was such that the vehicle’s software would detect when the vehicle was being operated in a test scenario, at which point the software would switch the vehicle into a temporary status where its performance would fall within federal emissions standards. Once the vehicle returned to the road, the software would detect the normal operations and would perform normally outside of federal regulations. Following the custom of adding the “-gate” suffix to denote scandals, the allegations became known as “Dieselgate.” [6]

The United States Environmental Protection Agency issued a notice of violation to Volkswagen Group once this modification, informally called a “defeat device,” was discovered. [7] The scandal among others, ultimately led to major lawsuits, indictments, leadership turnover, Congressional testimonies, and recalls of nearly 11 million vehicles. [8] The scandal has garnered the attention of Hollywood, with Leonardo DiCaprio planning to produce a motion picture, with Charles Randolph as a secured writer for the film. [9]

The CAA 2.0 Liter Partial Settlement

Volkswagen and the EPA reached a three-part settlement. One of these components, The CAA 2.0 Liter Partial Settlement, required Volkswagen to invest $2 billion into environmental advancements with the purpose of offsetting the pollution produced by the recalled vehicles.

An excerpt from the settlement reads: [10]

The CAA 2.0 liter partial settlement requires Volkswagen to invest $2 billion in ZEV charging infrastructure and in the promotion of ZEVs.  The ZEV investments required by the CAA 2.0 liter partial settlement are intended to address the fact that consumers purchased these illegal vehicles under the mistaken belief that such vehicles were lower-emitting than others. Electrify America, LLC, was created by Volkswagen Group of America to implement this requirement.

This $2 billion investment manifested into Electrify America. [11]

Timeline of completion

The $2 billion amount will be near-evenly divided into a national investment and an investment into the State of California. California will see $800 million invested into its zero-emission vehicle (ZEV) infrastructure since the state holds a high level of EV ownership. [12] The national plan will see four 30-month cycles, each budgeted with $300 million for a total amount of $1.2 billion.

National ZEV Investment Plan: Cycle 1

For cycle 1, which spans from Q1 2017 through Q2 2019, the $300 million budget will divided into three primary areas of focus: (1) ~$250 million towards the installation of charging infrastructure, (2) ~$25 million towards Public Education initiatives, and (3) ~$25 million towards operating costs for Electrify America. All costs are approximate. [13]

National ZEV Investment Plan: Cycle 2

Cycle 2, which spans from Q3 2019 through Q4 2021, includes a primary focus on infrastructure and marketing and awareness. The budget for infrastructure is allotted towards four components: (1) ~$145-$165 million towards Metro Community charging, (2) ~$65-$85 million in Highways and Regional Routes, (3) ~$2-$4 million towards Autonomous Vehicle Charging, and (4) Renewable Generation. The last category is in an exploratory status and is not expected to exceed $5 million. The budget for marketing and awareness is ~$35 million with the remaining ~$30 million in miscellaneous operating costs. [14]

Cycles three and four of the National ZEV Investment Plan are yet to be established as of February 2020.

California ZEV Investment Plan

The California plan will also see four 30-month cycles in conjunction with the national investment plan’s timeline. The California initiative includes a smaller total budget, $800 million, which results in $200 million per cycle versus $300 million per cycle in the national plan.

Cycle 1 includes four primary areas of focus: (1) ~$75M towards highway fast charging, (2) ~$45M towards community charging, workplaces, depots, (3) ~$44M towards ZEV access initiatives, and (4) ~$20M towards public education and awareness. [15]

Cycle 2 includes similar breakdowns as the other cycles, primarily divided into infrastructure and public education and marketing. A low estimation puts the infrastructure costs at ~$135M and public education and marketing receiving a low estimate of ~$27M. [16]

References

  1. “Laws and Regulations Related to Volkswagen Violations.” EPA. Environmental Protection Agency, December 13, 2016. https://www.epa.gov/vw/laws-and-regulations-related-volkswagen-violations#authorities. ^
  2. DetroitBureau. “VW’s $2 Billion Penalty for Diesel Scam, Electrify America, Builds Electric Charging Network across US to Boost EV Market.” CNBC. CNBC, May 10, 2019. https://www.cnbc.com/2019/05/10/vws-2-billion-penalty-for-diesel-scam-builds-ev-charging-network-across-us.html. ^
  3. DetroitBureau. “VW’s $2 Billion Penalty for Diesel Scam, Electrify America, Builds Electric Charging Network across US to Boost EV Market.” CNBC. CNBC, May 10, 2019. https://www.cnbc.com/2019/05/10/vws-2-billion-penalty-for-diesel-scam-builds-ev-charging-network-across-us.html. ^
  4. Carey, Nick, and Reuters. “VW’s Electrify America to Build More EV Chargers at Walmarts.” Automotive News, June 6, 2019. https://www.autonews.com/retail/vws-electrify-america-build-more-ev-chargers-walmarts. ^
  5. Vellequette, Larry P. “VW’s Electrify America Subsidiary Replaces McNabb as CEO.” Automotive News, May 2, 2018. https://www.autonews.com/article/20180502/OEM02/180509947/vw-s-electrify-america-subsidiary-replaces-mcnabb-as-ceo. ^
  6. Hotten, Russell. “Volkswagen: The Scandal Explained.” BBC News. BBC, December 10, 2015. https://www.bbc.com/news/business-34324772. ^
  7. “Former CEO of Volkswagen AG Charged with Conspiracy and Wire Fraud in Diesel Emissions Scandal.” EPA. Environmental Protection Agency, December 16, 2019. https://www.epa.gov/newsreleases/former-ceo-volkswagen-ag-charged-conspiracy-and-wire-fraud-diesel-emissions-scandal-0. ^
  8. Hotten, Russell. “Volkswagen: The Scandal Explained.” BBC News. BBC, December 10, 2015. https://www.bbc.com/news/business-34324772. ^
  9. Kiley, David. “Volkswagen Diesel Scandal Coming To A TV Screen and Movie Theater Near You.” Forbes. Forbes Magazine, May 16, 2018. https://www.forbes.com/sites/davidkiley5/2018/05/16/volkswagen-diesel-scandal-coming-to-a-tv-screen-and-movie-theater-near-you/#1fcf8bca2ec3. ^
  10. “Volkswagen Clean Air Act Civil Settlement.” EPA. Environmental Protection Agency, October 31, 2019. https://www.epa.gov/enforcement/volkswagen-clean-air-act-civil-settlement. ^
  11. “Volkswagen Clean Air Act Civil Settlement.” EPA. Environmental Protection Agency, October 31, 2019. https://www.epa.gov/enforcement/volkswagen-clean-air-act-civil-settlement. ^
  12. DetroitBureau. “VW’s $2 Billion Penalty for Diesel Scam, Electrify America, Builds Electric Charging Network across US to Boost EV Market.” CNBC. CNBC, May 10, 2019. https://www.cnbc.com/2019/05/10/vws-2-billion-penalty-for-diesel-scam-builds-ev-charging-network-across-us.html. ^
  13. “National ZEV Investment Plan: Cycle 1.” Volkswagen Group of America, April 9, 2017. https://elam-cms-assets.s3.amazonaws.com/inline-files/National ZEV Investment Plan.pdf. ^
  14. “National ZEV Investment Plan: Cycle 2 .” Volkswagen Group of America, February 4, 2019. https://elam-cms-assets.s3.amazonaws.com/inline-files/Cycle 2 National ZEV Investment Plan – Public Version vF.pdf. ^
  15. “California ZEV Investment Plan: Cycle 1.” Volkswagen Group of America, March 8, 2017. https://elam-cms-assets.s3.amazonaws.com/inline-files/California ZEV Investment Plan Cycle 1.pdf. ^
  16. “California ZEV Investment Plan: Cycle 2.” Volkswagen, October 3, 2018. https://elam-cms-assets.s3.amazonaws.com/inline-files/Cycle 2 California ZEV Investment Plan.pdf. ^
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