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It isn’t just bad vibes: Electric vehicle sales are slumping in the United States. Fewer than 300,000 EVs were sold nationwide during the first three months of 2024 — although it could be more than 350,000, depending on how you count and whose data you trust. That’s a slight decline from last quarter at a time when EV sales need to be accelerating.
What caused the slump, and what can be done about it? And could hybrids or plug-in hybrids help solve the problem? In this week’s episode, Rob and Jesse chat with Corey Cantor, an EV analyst at BloombergNEF. They talk about Tesla’s spiraling problems, whether Detroit can pull its EV strategy together, and whether plug-in hybrids can co-exist with a climate strategy. Shift Key is hosted by Robinson Meyer, executive editor of Heatmap, and Jesse Jenkins, a Princeton professor of energy systems engineering.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Robinson Meyer: The PHEV story is really interesting here, and the hybrid story is interesting here, because three years ago, four years ago, Toyota was talking about how hybrids and plug-in hybrids were going to be the bridge for consumers. And what we have seen is that plug-in hybrid and hybrid sales have increased.
Now, what’s funny is that Toyota has actually not really been selling those plug-in hybrids. It’s like a Stellantis story, right? It’s Jeep. Ford sells a very expensive plug-in hybrid. Toyota actually doesn’t sell plug-in hybrids. In fact, if Toyota made more plug-in hybrids, if they made more Prius Primes, this amazing-looking recent car for them — it’s a plug-in hybrid — then they would sell them. But they don’t make enough. So Toyota has kind of won this discursive cycle, but not actually made the plug-in hybrids that they were advocating for, you know, two or three years ago.
Jesse Jenkins: Yeah. I mean, if you look at the numbers, about half of all the plug-in hybrids sold are Stellantis vehicles, right? Across the Jeep, Chrysler, Dodge, and Alfa Romeo brands, they don’t sell hybrids. They only sell plug-in hybrids. And they also don’t sell any, BEVs yet, either. They’re coming, later than the end of this year, probably, their first U.S. battery electric vehicle.
So, you know, Stellantis’ only offerings right now are a set of plug-in hybrids, and they’ve been selling them very effectively, partly because I think the tax credits from the Inflation Reduction Act make them very competitively priced relative to the conventional Jeep or, Chrysler Pacifica minivan, or whatever else you’re looking at in the market. Why not get the plug-in hybrid, even if you don’t plug it in?
But if you look at it, so they’ve sold about 46,000 plug-in hybrids in the first quarter of the year. Toyota, who talks about it more than anybody, only sold 11,600. So they sold like a quarter as many as Stellantis did —
Meyer: Which is so crazy because also, the Toyota plug-in hybrids are great. They’re awesome cars. They should be making more of them!
Jenkins: Yes, they should be selling 50,000 of them a quarter.
Meyer: Yeah, exactly. But they treat them — it’s so funny. The Toyota plug-in hybrids are central to the Toyota argument, and then they treat them like compliance cars. They don't make enough, even though they’re like, this is what consumers want.
And it’s funny: They were right. That is seemingly what consumers want. And it does seem like the availability of BEVs has like defanged plug-in hybrids and hybrids for consumers in a way that maybe we didn’t expect. Toyota’s not making them. It’s like they won the discourse cycle, but they’re not actually selling vehicles.
Jenkins: Yeah. I mean, Toyota Group and Honda are really the undisputed kings or queens of hybrid electric vehicles. They sell far more than anybody else. But on the plug-in side, Stellantis is the No. 1 by far. They’re like half of the market, just themselves.
Corey Cantor: I was just going to say, to Rob’s point on just how much better the Toyota plug-in hybrids are, they’re getting 40-mile electric range between the Prius Prime and the RAV4 Prime — which by the way: RAV4, Model Y, you could have a RAV4 Prime-Model Y-off every quarter if Toyota was selling enough of those.
For those Stellantis PHEVs, the other one that’s big is the Chrysler Pacifica minivan, which, I know how much you guys love your minivans, here. Those are in the low 20-mileage. So what you’ve seen policymakers in California advocate for is really going towards a 50-mile minimum to begin to count PHEVs in what's called Advanced Clean Cars II. Which, in the kind of conventional popular media is often referred to as California’s ban of gas cars, which actually isn’t a ban of gas cars because even in 2035, you could sell 20% PHEVs if they meet a 50-mile electric range minimum.
My hope, from a climate standpoint, is if PHEVs are going to be a part of the story — and again, data-wise, they’re just not in the U.S. In some European countries ... or BYD, for example, you see 50-50 split between BEV and PHEV. Here, it’s remained 80-20.
Just better PHEVs — just automakers delivering better PHEVs with 40[-mile] all-electric range, or 50[-mile]. I do think Hyundai and Kia might move in that direction, where they’re delivering those better PHEVs over time. But not to just take the, kind of, spin on them, and just say, wow, because Toyota or whatever automaker says PHEVs are great, that consumers should buy them. The PHEVs now just aren’t as good as they should be, and they can be better, and automakers can still make a profit off of it.
It’s one of those big myths, where it’s like, you see so many people say, “Have you considered a PHEV?” And it’s like, which PHEV? Because it’s really just the Jeep Wrangler and the Pacifica.
This episode of Shift Key is sponsored by…
KORE Power provides the commercial, industrial, and utility markets with functional solutions that advance the clean energy transition worldwide. KORE Power's technology and manufacturing capabilities provide direct access to next generation battery cells, energy storage systems that scale to grid+, EV power & infrastructure, and intuitive asset management to unlock energy strategies across a myriad of applications. Explore more at korepower.com.
Watershed’s climate data engine helps companies measure and reduce their emissions, turning the data they already have into an audit-ready carbon footprint backed by the latest climate science. Get the sustainability data you need in weeks, not months. Learn more at watershed.com.
Music for Shift Key is by Adam Kromelow.
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The data center boom is everywhere you look in U.S. economic and emissions data.
This is an edition of Heatmap Daily, an evening review of the day’s news written by our executive editor. Sign up for it here.
It isn’t exactly a new thought, but I’ve been struck recently by how many trends in America’s economic and environmental data are fundamentally about the data center boom and the return of electricity demand:
First, the Energy Information Administration reported this week that U.S. emissions grew by more than 2% last year, driven by surging electricity demand and an increase in coal-fired generation. What caused that higher power demand? New factories and data centers — as well as record summertime cooling demand.
Second, many of the new factories driving that higher power demand are themselves producing goods that are … let’s say … data center-adjacent. There are the enormous new semiconductor fabs, of course. But Ford and General Motors have also set up new production lines (or repurposed old ones) to manufacture grid-scale batteries to meet power demand.
Third, take a look at the recent U.S. spending on private non-residential construction — in other words, everything American companies are building that is not houses, condos, or apartments.
The construction industry’s spent almost $60 billion on data centers over the past year, which is more than it spent on all other office buildings combined (and more than it spent building warehouses, too). Just a handful of categories — data centers, power plants, electricity infrastructure, and certain kinds of electronics manufacturing — now make up a third of all U.S. private non-residential construction investment. They’ve never made up such a large share of construction spending since data collection began in 2014.
As The New York Times recently noted, the American economy is unusually dependent on the American stock market right now — and the stock market is unusually dependent on artificial intelligence. This week, investors started to balk at the enormous spending hyperscalers are planning to keep building out the AI boom; Alphabet’s shares dropped 8% this week after it boosted its planned 2026 capital expenditure and signaled 2027 will be even bigger. If the data center boom started to slow down in earnest, then more than just that budget will change.
Speaking of which, my colleague Emily Pontecorvo wrote earlier this week about how many businesses are struggling to even estimate their carbon emissions from artificial intelligence. The carbon accounting startup Watershed recently unveiled a new formula to help companies get a sense of their AI-related emissions.
But even that formula is still limited by the amount of data hyperscalers publish — and they don’t publish that much. Google, for instance, is the only AI company that has (laudably) provided estimates of its emissions on a per-prompt basis. Yet no company has published its per-token emissions, or how emissions sync up with particular models or regions.
So Emily asked Google: Why aren’t you — or any other model provider — disclosing this kind of data yet?
The tech company didn’t get back to us until after we’d published Emily’s story. But its response was interesting enough that I wanted to quote some of it here.
The problem is “industry consensus,” Cooper Elsworth, a Google spokesperson, told us. “There is currently very little consensus on how to comprehensively and fairly measure the serving environmental impact of generative AI (such as text generation),” he wrote. “Without standardized, ‘apples-to-apples’ frameworks, it is difficult to compare different providers accurately.”
That’s partly because energy use — and emissions data — can vary from site to site and depend on “custom-built hardware, software compilers, and advanced inference techniques.” And he claimed Google doesn’t always have the measurement hardware in place to provide such specific estimates: “Providing precise, repeatable data requires highly advanced measurement infrastructure,” he said. “For example, software-based energy monitoring tools often suffer from sampling biases. For our study, we had to step away from top-down averages and directly measure actual energy at the physical power supply unit (PSU) level across our deployed fleet. Not all providers have the telemetry or data sets required to benchmark their operations at this level of granularity.”
Read Emily’s story to understand the other reasons why estimating — or even “guesstimating” — AI-related carbon emissions is so challenging.
A conversation with Emma Uridge of the Kansas Health Institute.
This week’s conversation is with Emma Uridge, analyst with the Kansas Health Institute. Uridge spent copious hours analyzing state and local laws on data center development to best understand how policymakers are responding to the potential environmental public health impacts of large AI infrastructure, including power and water. The report, which came out this week, also goes in depth into those health impacts. I reached out to her to discuss what she sees as must-watch territory for our readers on this emerging policy arena.
Our conversation was lightly edited for clarity.
What is actually being done on policy when it comes to data centers — beyond moratoria of course?
So first I’d like to just talk about the point of moratoria. It’s helpful to talk about how these policies emerge in the first place. One area where moratoria are helpful is when a data center is proposed but the county has no approach for how they’d like to potentially regulate them. That’s temporary, most of the time. It lets local governments conduct research on the various impacts and also negotiate community benefits, ones that can mitigate any potential negative impacts — like Lancaster Pennsylvania, which instituted a community benefit agreement that maximized the potential benefits of development while mitigating what large data centers can do. That agreement looked at capping municipal water use at 20,000 gallons per day and requiring 100% clean energy. It had financial penalties for non-compliance. The company also committed $20 million to their local economic development and clean energy fund. There are ways to negotiate with developers.
We also see amendments to existing zoning. Data center proposals are increasingly popping up in rural areas, many of which are unzoned, so there’s no way a county can negotiate unless there’s a moratorium in place.
Other policy solutions include different performance standards or requiring on-site renewable energy, like what Jefferson County, Missouri, looked at. Also setback requirements, mandatory noise buffers, ending by-right zoning.
Where are local governments getting ideas for regulating data centers?
A lot of the technical information comes from developers. That can in cases be seen as a biased source of information. I wouldn’t say there’s a dedicated group providing assistance to local governments when a project is proposed — which is a similar story to wind industry development, where we have only a handful of consultants who provide technical advice. It can be really helpful to get a multi-disciplinary approach to hearing information. It can be helpful to have the utility commission, public health folks, those in academia, as well as the developer.
As of right now, especially in rural areas, local governments have a hard task of balancing pushback while getting the most accurate, evidence-based, neutral information to make decisions. That balance can be contentious.
What is the federal government doing on data center policy? How is the Trump administration approaching it?
A few things there. In the early days, the drive was for AI expansion and to be competitive with foreign adversaries. Now due to the amount of public pushback in red and blue localities and a more cautious approach.
I’m not seeing a lot of actual policy movement at this time.
I know the EPA is looking at the chemicals used in cooling data centers because when that water is cycled through the system, some of it is discharged into the water system, so they’re looking at the Toxic Substances and Control Act for monitoring that.
How much of an impact does this minimal federal role have on industry behavior?
Y’know, this isn’t specific to data centers. This is true for all kinds of large-scale development: there’s a need to require some sort of federal monitoring and regulation.
That’s where I see an emerging role for public health. At the federal level, there could be policy movement towards requiring some sort of environmental monitoring at data centers to make sure they’re operating responsibility. Looking at specific water use relative to water availability and what happens when there’s a time of severe, persistent drought. With air quality too — we’ve seen areas where the grid isn’t as reliable so their diesel generators are kicking on more and affecting air quality for residents.
We’re just not seeing all of that right now. We need corporate disclosure.
What do you see as the most important public health impacts from data center development?
It varies by localities. The most discussed obviously is water usage. One thing I’d note about my conversations with folks enthusiastic around emerging tech is, there are still questions that need to be asked about the capacity of localities to support a data center. Like a small town in Kansas may only be using 40% of their water for their utility needs. If a data center came online, how much of that water goes to the data center?
One area underexplored within the public health discipline is energy poverty and energy security. The ability of a household to meet the needs of everything energy provides in our lives. It’s known we have an aging electric grid but we’re not talking enough about large-scale blackouts when the grid is not sufficient to support some of these new data centers.
Plus more of the week’s big development fights.
1. Laramie County, Wyoming — Meta is fighting the fine it received in the Cheyenne data center water pollution controversy, and the conflict between the tech giant and the city’s small board of public utilities is continuing to spill out into the public.
2. Niagara County, New York — This county just rejected a solar project’s highway work permits in a show of retaliation against the state’s Office of Renewable Energy Siting.
3. Barron County, Wisconsin — The anti-solar protest is the new campaign stop in deep red Wisconsin.
4. Chesapeake, Virginia — A large battery storage project on the Virginia coastline is on the rocks amidst rampant local opposition.
5. Lewis County, West Virginia — West Virginia is now a key battleground in the fight over transmission, as a line spanning all of West Virginia and Maryland — and cutting through Data Center Alley in Virginia — causes compounding consternation.