ELECTRIC VEHICLES

Palo Alto is living the electric dream

PALO ALTO, Calif. — When Becky and Ted Baer, who are in their 70s, pull their sparkling blue Tesla up to the public chargers downtown, they're in a jovial mood. And why wouldn't they be?

They are enjoying the fruits of two prescient decisions. Years ago, they bought Tesla stock at $19 a share. Then, much more recently, they got in line early and nabbed one of the first reservations for the Model 3, the electric car with the price of a basic luxury sedan but the acceleration of a rocket.

In May, Tesla delivered for the Baers. Their Model 3 arrived, and they got to parade their hot new gadget down the palm-lined streets. They earned some ecological cred. And — here's the kicker — they paid for it with their Tesla stock, at that point selling for nearly $300 a share.

The Baers, retirees in their comfortable shoes and untucked shirts, are clearly in love with their new electric steed. Becky leans down and caresses the headlight.

"I named it Tess," she says. "I come out and dust it."

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Theirs is a common sentiment in Palo Alto. In this city of 67,000, one of the wealthiest in wealthy Silicon Valley, 30 percent of all new cars purchased last year were electric vehicles, according to data from the International Council on Clean Transportation (ICCT). That's the highest adoption rate in California, which is home to half of the nation's EVs. Per capita, Palo Alto is America's electric car capital.

Palo Alto drivers are acquiring a taste for cars that are oddly quiet and fast, that don't visit gas stations, and that rarely see the repair shop. The city government shares their enthusiasm. The people buy the cars, the city creates the policies and Silicon Valley's big employers install the chargers, and each keeps one-upping the other, creating an EV ecosystem more evolved than anywhere in the country.

The question is whether the rest of the United States wants the electric Kool-Aid that Palo Alto is drinking.

The answer is of tremendous consequence to the auto industry and the planet. Virtually every automaker has committed to bringing electric models to American showrooms by 2025, the biggest change to automotive engineering since the days of Henry Ford. Tailpipe emissions from vehicles have surpassed the electric grid as the largest source of U.S. carbon emissions. States from California to New York say they can't fight climate change without mass adoption of electric cars.

But there is dauntingly little evidence that Americans want them.

Most Americans have never driven an electric car, don't know anyone who has one and haven't seen one in a dealership. Even in California, only 5 percent of the population has seriously considered buying one.

And the decisionmakers who would enable the electric revolution aren't much different. Thousands of cities need to reimagine the parking space; thousands of electric utilities need to start thinking like gas stations.

So what does it look like when a city goes all in on electric cars? Palo Alto, weird as it is, might be showing the way.

The drivers

The public lot where the Baers get their electric fill-up is a sweet place to park. Just off the main drag of University Avenue, the Webster Street garage is 7 stories tall and clad in rough-hewn timber, with wide openings that catch the afternoon breeze.

On the top floor, a black SUV parks. Two businessmen in suits emerge, speaking Chinese. Above their heads, rows of solar panels let through gentle shafts of light; below, the city is invisible under a lush canopy of spruce, palms and oaks.

The Baers are down on the entry floor, in the row of six electric vehicle chargers, which occupy the most convenient spaces in the whole garage. They fill up here because their home charger hasn't been installed yet.

All around them, and on every level, are electric and hybrid gas-electric cars. One can spot the bargain Hyundai Ioniq and Prius Prime, the sporty but tiny Fiat 500, lots of Chevrolet Volts and a couple of the new Chevy Bolts, and a sprinkling of the hyphenated models: the Audi A3 e-tron, the VW e-Golf, the BMW i3.

But what can be seen most, in literally every row, are Teslas.

Most are the Model S sedan, with a base price of $74,000. Others are Model X, an SUV that can cost $140,000 fully loaded (and, if it's white, has a front end that resembles the mask of a "Star Wars" stormtrooper). According to ICCT, 62 percent of the EVs sold in Palo Alto are Teslas. No other city comes close.

"There's lots of Teslas in our neighborhood. I had Tesla envy," says Becky Baer.

"Besides," she adds, "I wanted to support him." Him being Elon Musk, the CEO of Tesla Inc., famous for building the first viable American car company outside Detroit, infamous for smoking weed on a podcast, recently penalized by the Securities and Exchange Commission on charges of manipulating the company's stock price with a tweet.

Palo Alto is loyal to Tesla for the same reason that Detroit is loyal to Ford and General Motors: It's a company town.

Musk made his fortune as a founder of PayPal, which began in Palo Alto, and many of Tesla's first employees were lured from Stanford University, which is also in Palo Alto. Tesla's corporate headquarters is here, up in the golden hills, near the offices of the country's richest venture capitalists and across the street from a horse pasture.

Another reason that Palo Alto has so many Teslas, in case it isn't obvious, is the money.

"It's a given you have the means if you live here," says Umed, a 40-year-old in a green Patagonia jacket who declined to give his last name. He had just docked his black BMW 530e hybrid into the same row of chargers where the Baers had parked. Palo Alto's median income is $137,000 a year, twice what most Americans make, and the median home sells for more than $3 million.

"People in Palo Alto don't talk about money or our stuff. It's kind of taboo," continues Umed, who like so many people works at a startup. "If you say you're driving electric, it's more of a conversation-starter than a status symbol."

The uncomfortable fact of America's early EV adopters is that they skew wealthy. EVs are still more expensive than equivalent gas cars. A rich person can pay for that, install a charger in the garage and keep a second gas-powered car for road trips that exceed an EV's range.

But to conclude that Palo Alto loves electric cars because it can afford them is to miss the point. For Umed, the electric car is like the rectangle in his pocket.

The techies

"It is like charging your phone," he says of his fueling experience. He initiated the charging session with his phone; he would pay with his phone. Try doing that at a gas station.

"I hate going to gas stations. It takes a lot of time, you know," he says.

Many Silicon Valley drivers think their electric cars are like the iPhone in 2007. After its debut, the iPhone had more hoopla than users. Nobody made a living developing apps or even knew what an app was, and many critics swore they'd stick to their BlackBerrys.

Then the iPhone went on to become the world's most popular consumer device. Its creator, Apple Inc., based nearby in Cupertino, just became the first company in history to exceed $1 trillion in market valuation, larger than all the world's major automakers combined. The BlackBerry, meanwhile, can be found in museums.

Which explains why the drivers of Palo Alto believe that their electric cars are the amazing and inevitable future, and that it's only a matter of time before the rest of the world figures it out.

Everyone marvels at the speed. Physics dictates that an electric motor, which delivers instant torque to the wheels, will out-accelerate an internal-combustion engine, which after a certain point can't suck in enough oxygen to make its combustions. That is why a fully loaded Tesla Model S can take off faster than any BMW, Mercedes or Lamborghini that the world has ever seen.

But in that speed is something alien to the American driver. It snaps your head against the headrest with a polite electric hum. There is no roar of gears, no pelvis-trembling vibration that for a century has been the essence of slamming the gas pedal.

What a Tesla lacks in sound and fury it makes up for with experiences and conveniences that make an iPhone user swoon. Over-the-air upgrades, which allow Tesla to tweak machinery without a visit to a repair garage. Retractable door handles. The Model X's falcon-wing doors. First-day reservation holders, like the Baers, found a surprise waiting for them in the center console: a tiny, die-cast Tesla Model 3, an exact replica in their exact color, a customized Hot Wheels just for them.

One feature got Ted Baer so excited that he waved his phone in the air. When his adult sons took the new Model 3 on a joyride, Ted surveilled their highway route on his iPhone.

"I'm watching them, and it's doing 110 mph," he said, shaking his head and grinning. "Our two boys!"

The government

Palo Alto's City Hall used to be as ignorant of EVs as any other. Then came a series of jolts, like the charging station that magically appeared outside Sven Thesen's house in 2011. It was one of the first curbside EV chargers in the United States, and it was illegal.

"Some gnomes one Sunday, when we were putting in electrical in the house, happened to tunnel a path underneath the sidewalk," Thesen says with mock astonishment. "I don't know how it happened."

Thesen is a trim and clean-cut 54-year-old who grew up in North Carolina. He used to run a quality-control group at Pacific Gas & Electric Co., the Northern California utility, where he was once assigned to evaluate how much carbon emissions would be negated if farmers switched their water pumps from diesel to electric. The emissions savings were huge. "It became a career-changing moment," he says. He went on to head an alternate-transportation group at PG&E, where he hacked open the battery of a Toyota Prius and connected it to the grid.

City officials were unamused by Thesen's curbside stunt and sent emails ordering him to remove it. He had unintentionally veered into the world of heavy construction. He hadn't gotten a permit from Public Works to burrow under the sidewalk or an electrical permit to install the charger.

But instead of relenting, Thesen did the opposite: He called City Hall and asked for a retroactive permit.

The desk officer was silent for a moment. Then, Thesen related, the man said quietly, "There are a number of people who are in full support of what you're doing." Several months after this deep-state moment, the city issued him the permits, including one from Public Works scribbled by hand.

Many such struggles have occurred at City Hall since EVs began to populate the streets. They opened a Pandora's box of questions.

Can the local grid handle a fleet of EVs? Why does a homeowner installing a garage charger need to fill out so many forms? Do stations belong in public lots? If so, who pays for the electricity? Where are people in apartment buildings supposed to fill up? The municipal code had no ready answers.

The parking lots in particular were tricky. At first, the city offered charging for free.

Then, like a case study in supply and demand, it received "a constant stream of complaints that they were always full," says Ed Shikada, the general manager of the city-owned utility, which provides electricity, water and gas. Last August, the city changed tack. It started charging 23 cents per kilowatt-hour, with a $2-per-hour charge after the battery was full. Now occupancy of the spaces is about 40 percent.

"As long as chargers are available and the charges aren't so high that people aren't deterred, then it's a success," Shikada says.

Other solutions emerged. In 2014, Palo Alto wrote a first-in-the-nation law requiring all new homes, apartments, office buildings and hotels to be wired for EV charging, which became the template for other cities in the San Francisco Bay Area. Last year, it enticed office and residential complexes to install chargers with a rebate of up to $30,000. Permits for residential charging stations have been streamlined.

Now it has a charging ecosystem that any EV-curious city would envy.

On the go? The city has issued over 500 permits for chargers, most of them at businesses, and will have 80 charging points on public property by the end of the year. Going to work? The valley's biggest employers provide charging for free. Facebook Inc., nearby in Menlo Park, already has 300 charging points. Too busy to unplug? Facebook employs a squad of "EV valets" to swap cars in and out of charging spaces.

And this is just the beginning. "The utility focuses on how to scale it from individual transactions to facilitation of a groundswell," says Shikada, who was just promoted to city manager.

Palo Alto's plan is to have 6,000 residential EVs by 2020. Ten years after that, it wants 19,000, which is about 90 percent of its residents, Shikada says. The goal is entwined with an aggressive climate policy. Palo Alto's electricity supply has been carbon-neutral for years — the city was one of the first to reach that milestone — but is still well short of its stretch goal, which is to cut emissions 80 percent below 1990 emissions levels by 2025. To get there, it will have to electrify its cars.

"Even contemplating that level of penetration means we need to do things very differently," says Shikada.

When EVs someday dominate Palo Alto's roads, electricity demand may rise 6 or 7 percent, Shikada says. The city hopes to offset that by leaps in efficiency.

One such leap is what the utility internally calls the "concierge" service. Any Palo Alto resident can have a house call from an expert on how to save electricity, gas or water while having "an above and beyond customer experience," according to Jeff Strauss. He is a program manager for CLEAResult, the contractor that runs the service with money from an efficiency fund. Requests for help installing EV chargers are coming thick and fast.

Thesen's curb charging station is still there, now decorated with repurposed redwood planks, and demonstrates that the Bay Area's groovy collectivism hasn't yet vanished under the avalanche of money.

Once a day, sometimes more, somebody pulls up and fills their car battery on Thesen's dime. He estimates it costs him $500 in electric bills a year. A few users have left him envelopes of cash; a guy who commutes from San Luis Obispo always brings a bottle of wine.

Has this new arrival, this lightning-fast iPhone on wheels, changed the culture of Palo Alto?

"Nah," Thesen says. "It's just a car."

The dealers

Doug Kopf's Boardwalk Nissan dealership is just north of Palo Alto, on a noisy frontage road by U.S. Route 101 in Menlo Park. He was doing good business selling gas-powered cars until a few years ago, when the balance sheet began to be engulfed by the Nissan Leaf.

Leaf customers arrive incredibly well-informed. They can rattle off the car's range, its rate of charge and its zero-to-60 speed as fast as the salesmen. Kopf says, "They might as well be electrical engineers when they come in looking for a car."

And contrary to Silicon Valley's free-spending reputation, they are "looking for anything to be free," as Kopf puts it. They know what they will save buying watts instead of gallons. They know they don't need oil changes or brake pads. They know where to charge for free (mostly at work). And most of all, they want the coveted California high-occupancy vehicle sticker, which allows low-emission cars to travel in the fast lane.

But for being one of the top dealerships for one of the top-selling electric cars in the country, Kopf seems a little circumspect.

"It was a high-volume car, but it became a low-profitability car pretty quickly," he says.

The average dealer in the U.S. grossed about $1.75 million in profits last year from selling new cars, according to the National Automobile Dealers Association. Those profits are generally declining. That same dealer made about $3.3 million on service and parts, a figure that has been rising. In other words, dealers are making less and less money selling cars, and more and more from maintaining them.

Therein lies a problem for Kopf. It is also a problem for Ben Kaupp, the sales manager of Boardwalk Chevrolet, next door to the Nissan shop and with the same ownership. He sells lots of the hybrid-electric Chevy Volt, as well as the all-electric Bolt, which sell out the moment they arrive.

"We just have to explain that it has as much maintenance as their toaster," Kaupp says.

Electric models are nearly absent from the GM service bays. Strangely, they are also scarce on the showroom floor. It is crowded with Corvettes, Camaros and Cruzes, but only a single red Chevy Volt.

Say you want an electric car, and Kaupp or one of his salesmen walks you back to a white, nearly featureless garage. "It is filled with Volts, and only Volts, because those are the people who come in and say, 'I just need to pick my color,'" Kaupp says.

The showroom, in short, is not for eco-warriors. "The Corvettes, the Camaros, the things you see on the showroom floor, that's something that's a more emotional buying decision," says Kaupp. "You want them to be able to look at it, drool on it."

Kaupp himself owns a dozen cars and loves speed. One of the fastest he's ever had is the Chevy Spark, a wedge-shaped little electric hatchback that, "before they figured out that they really shouldn't give them that much power," could out-accelerate the 600-horsepower Corvette Z06, one of the fastest production cars GM has ever made.

And yet.

"I absolutely love my internal-combustion engines. I love the complex mechanism of a gasoline engine, I always have, it's why I like cars, it's all the stuff and the tinkering that makes it work," Kaupp says, citing attributes that don't stir the blood of his new customers.

He adds, with a hint of resignation, "And I know for a fact that I am pretty unlikely to buy a pure gasoline engine ever again, at least a new one."

Electrics will make up an ever-larger portion of Kopf's and Kaupp's pies. Nissan wants to increase EV sales sixfold by 2022; Chevy plans two larger EV models by 2020, and there's rumors of an electric Corvette.

Kopf, the Nissan salesman, wants to show off the solar panels on the roof. He climbs up to where they can be seen stretching across four buildings. They offset 40 percent of the mega-dealership's electricity use, including 10 chargers between the Nissan and Chevy shops.

They're not solar panels, exactly — they're cylinders. They were bought at auction from Solyndra, the California solar manufacturer that had hundreds of millions of dollars in government support and a confident clean-energy future. Then it all came tumbling down.

From this vantage point, one can see all of the cars parked in the service lot for repairs. There's plenty of Chevys, Volkswagens, Jeeps, Dodges and Rams, but not a single Leaf, Volt or Bolt.

"These electric cars, they're not breaking," Kopf says as the traffic of Route 101 rumbles by. "There's nothing to break. It really hurts. It hurts big time."

The words hang in the air, like the tailpipe exhaust drifting over from Route 101. Silicon Valley's EVs and their lack of tailpipes preserve the climate and are making a winner of Tesla and its headquarters by the horses in the hills. What's less clear, down here in the gritty flats, is whether the rest of motor-loving America is along for the ride.

Twitter: @DavidFerris Email: dferris@eenews.net

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