Talking Michigan Transportation

Veteran automotive analyst talks EVs, labor negotiations and more

• Michigan Department of Transportation • Season 5 • Episode 155

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On this week’s Talking Michigan Transportation podcast, a conversation with John Peracchio, a veteran strategic consultant in the intelligent transportation systems (ITS) sector and automotive industry. 

Topics include: 

Electric Vehicles

Jeff Cranson

Hello , welcome to the Talking Michigan Transportation podcast . I'm Jeff Cranson . John Perrachio , who has been a visitor to the podcast before , will be on this week to talk about a number of things related to mobility and the auto industry . John is a strategic consultant in the Intelligent Transportation Systems sector , that's ITS and the automotive industry , and his focus is on deployment of mobility solutions across transportation modes , especially those involving connected and highly automated vehicles . John was a charter chairperson of the Michigan Council on Future Mobility and has provided a lot of insight and advice to various state agencies and people working on keeping Michigan in the forefront of everything related to mobility . Really , he has a particular passion for ways to capitalize on technology to help the underserved when it comes to mobility , and we're going to talk about everything from how electric vehicles factor into the ongoing talks between the UAW and the big automakers .

Jeff Cranson

As we record , on Thursday September 14th , we are facing a looming deadline for United Auto Workers to strike the big three , that's Stellantis , Ford and GM still hopeful at this hour that something can be averted . But there's some things related to EVs that factor into that and we're going to talk about that . And we're going to talk about legislation making its way through the Michigan legislature for HOV lanes on the segment of I-75 in Oakland County . We've talked about that before and he has some background and insight on towing and just a number of things related to mobility . John , thank you again for being here . I always appreciate your insights and you taking time to talk about things .

Jeff Cranson

Let's start off with , you know , the biggest issue of the day , obviously what's going on with the UAW . And as we record this , you know the deadline is fast approaching , pretty much just a minute before midnight on Friday . But one thing I've been interested in I've read several stories about this just the past couple of days . It seems like it took for a while for this to really come to the forefront is how the big three going all in on electric vehicles factors into these talks . Give me your thoughts on that .

John Perrachio

Sure . Well , first of all , I'll just observe , you know , the negotiations up into the deadline today . It reminds me of , you know , watching two freight trains slowly coming toward each other to collide , you know , in a perfect train wreck , because the strike doesn't help either side . It just crystallizes the areas where they disagree and magnifies it . With respect to the investment in electric vehicles , it almost seemed like the car companies didn't have much of a choice because of the political will behind addressing climate change and the need to transition from a carbon rich fueled transportation environment to something that isn't so . That's on the one side .

John Perrachio

On the other side of the equation , though , the UAW has a valid point in that it seems right now that jobs associated with the production of batteries and electric vehicles will , you know , wind up requiring fewer people . Certainly , and as you look at the landscape beyond Michigan and where the jobs in the United States are now located , those jobs are going to command lower salaries . So it is something that I think we as a society , as a country , need to deal with in terms of the transition , because the rest of the story , with the labor negotiations underway right now , is , you know , these people fuel our economy , again , not just in Michigan , but throughout the country . So I think it , as I said before , it crystallizes a lot of the disagreement and then , you know , highlights the challenges as we transition to a lower carbon environment .

Jeff Cranson

Yeah , I you know that that dovetails with everything I'm reading . But I mean , what can you do ? You can't put the genie back in the bottle , right ? I mean , this is like you said . The federal government is heavily incentivized this and incentivized both consumers and the industry . I don't know , do you see a balance that could be worked out long term ?

John Perrachio

Well , if I didn't , I guess I'd be very , very depressed .

John Perrachio

So I absolutely I believe fundamentally that there is an appropriate balance . I think that the the challenge may be political here , because in 2024 we may see another party in control of the White House potentially both houses of Congress and if the , that administration and that legislative change results in a backing away from the incentives or the regulatory requirements , now the car companies are going to be sitting there with a lot of song sunk , investment in something that they think is Very immediate and it could be political leadership is saying no , we're going to take a little bit more time , and maybe that goes to the essence of your question about balance . You know , I believe this is just my personal opinion we are going to get to an all low or zero emission world in surface transportation . We're going to get there . It just might take a lot longer than people think and perhaps we'll deal with this in another question of yours , but I just want to highlight the challenges associated with building out electric vehicle charging infrastructure , and that is an impediment to popular acceptance of electric vehicles .

Jeff Cranson

Well , as you know , former governor of Michigan Jennifer Granholm , who is now the secretary of energy , ran into a bit of a kerfluffle in the south when her team used a combustible engine vehicle to block a charging station so that when she arrived with her caravan of EVs they could charge and move on . I you know I've heard some people comment on this on various podcasts I listen to , and you know one thing I think that really resonates with me is that they should have turned that into a moment to say this is exactly why the Biden administration is spending so much on charging infrastructure , so nobody has to wait . This is what we need to do . So along those lines , you know Malcolm Gladwell , smart guy , observer of many things . I've read his books . I'm sure you have to; tweet it today from the auto show that he's optimistic about the future of EVs . He said it's a technology problem masquerading as a human problem . So where do you think we're going with EV charging infrastructure and how quickly can we move ?

John Perrachio

Well , we have some very serious challenges . As you know , the national electric vehicle infrastructure charging program , the NEVI program that's administered by the Federal Highway Administration , has very specific rules about how the federal funding is to be deployed every 50 miles along alternative fuel corridors no farther than one mile from those corridors , and they are direct current fast charging units . Those units require 480 volts . Well , the problem is we don't have 480 volts everywhere along those out fuel corridors and certainly not every 50 miles . So we've got this regulatory requirement .

Jeff Cranson

I'm sorry , this is a mandate , really yeah .

John Perrachio

Yeah right , it's a mandate and we're struggling to get the power to where we need it . And I think the other challenge is and it's not just here in Michigan but it's throughout the United States is that we don't have a good idea of what's called a hosting capacity that utilities have . So basically , what that is is knowing where they have power . Well , you'd think they would know , and they know to a certain extent , but when it boils down to putting four charging units off of an all fuel corridor or at an intersection and you need that service , that electrical service , there , it could be a challenge for the local utility to tell you even what it's going to cost . So the NEVI funds just pay for the charging units , but you may have to spend hundreds of thousands of dollars to run the necessary transforming infrastructure and power to that location .

John Perrachio

So that's just an example of the kinds of things that I think we're struggling with in terms of building out EV charging infrastructure . And then , something that just well came to light for me , because I sort of thought it was taken care of , is that in Michigan and again in many jurisdictions across the United States , it is illegal to resell electricity within the service area of a public utility . Okay , now here in Michigan there is a waiver granted by the Public Service Commission for the service areas of DTE and Consumers . So in those two areas you can actually establish your charging business if you will and you can recharge for electricity . But that's just in those two areas .

Jeff Cranson

That doesn't apply to co-ops and municipally owned utilities is that what you're saying ?

John Perrachio

Exactly so . There's no waiver there . Oh , by the way , the waiver seems to be on somewhat shaky legal ground , and so we need the legislature to act on it . What we need the legislature to do is exempt the charging business from being regulated as a public utility in Michigan , and that's the legislative solution that's being contemplated in other jurisdictions .

Jeff Cranson

So do we have ? I mean , this gets into a whole thing of price and competition , obviously , but do we do we have too many utilities ? Would this be easier ?

John Perrachio

So that's really out of my realm , Jeff . I mean , I struggle to understand . You know the utility business in general , so I'm not prepared to comment on whether I think we've got too many of them . What I do know is we've got to carve out an exception for private entities that get the NEVI funds to establish a business associated with charging Electric vehicles . So they're going to , you know , charge on a per kilowatt hour because they have to according to the newly adopted handbook of weights and measures in Michigan and many other jurisdictions . So you have to have a digital readout of the price per kilowatt hour . So there's transparency . A consumer will know how much they're paying for so much electricity . But of course that price is subject to the utilities demand charges . So it could fluctuate greatly and right now again outside of the service areas of those two utilities , it is not technically permitted in Michigan .

Jeff Cranson

Yeah , well , okay , fair enough on that question , but I just want you to know that if you want any kind of future in social media , you'll have to learn that you don't necessarily have to know what you're talking about to comment on something .

John Perrachio

That's good to know . I'll keep that in mind .

Jeff Cranson

Well , let's move on from that then talk a little bit about EV , growth and what we're seeing . I'm sure you've seen the stories just in the last few weeks with a lot of experts , analysts like yourself , saying that we've kind of plateaued and that we're not going to see that sustained growth , at least in the you know , nearer term , I guess . What do you think about that ?

John Perrachio

So I actually agree with that . There seems to be a bit of a buildup of inventory of electric vehicles in terms of day supply in North America .

EV Accessibility Challenges and Solutions

John Perrachio

I will say that the major issue is associated with having lower priced electric vehicles available to the public , because right now , you know , these things are very , very expensive , and I've seen a lot of different data on , or just assertions , excuse me , in terms of the average price of a new ice vehicle versus an EV . But a new ice vehicle , the average new car price is approximately 45 to 50,000 US dollars . An electric vehicle usually you have to add another 10 . The truth is , when you look out there to see what's really available in in terms of electric vehicles , they're much more expensive than that , and so for the vast majority of folks on you know , ownership at those price points is a huge challenge . And I'll just , you know , offer one other you know point on this , and that is affordability . Or new ice or electric vehicles is a huge issue . I mean , even at , you know , 45 or $50,000 . That is a tough nut to crack for folks who , you know , may be struggling to make ends meet and in a very high interest rate environment . So it depends upon incentives on the part of the original equipment manufacturers and , and you know , discounting at the dealership level , and it's just a tough environment for all vehicles . So yeah , I agree that we've seemed to have plateaued .

John Perrachio

With respect to electric vehicles , I think the experience of secretary Granholm and an others you know , sort of highlights the difficulty a lot of times . And I think was JD power did a study where they said 20% of all publicly available charging units don't actually work . They're inoperable . So you know , if you're considering buying an electric vehicle , and even if it , if you show the location on an app or whatever , that there's a , there's a charging unit existing at a location , it doesn't mean it works . And that's another challenge for folks thinking about buying an electric vehicle and not to be positive at all .

John Perrachio

But I I read about something that I think is actually very good for electric vehicle sales in , that is wrapping the price of the charging of the home charging unit in the total financing package when you buy a new vehicle . So lenders are starting to acknowledge that , yeah , this is an important part of a new vehicle transaction . Much the way if you detail your new vehicle with running boards or add extra features . All of that , that cost , can be bundled into the financing package . So I think adding the level one or level two charging unit to the price of the vehicle in terms of its financing is a good thing . You're talking not just about outfitting your home with the charger , but probably having to upgrade your service to do that .

John Perrachio

Well , that's true , so that that part you may or may not be able to finance . But you're exactly right , and that's another , you know , a pressure point here it's it could cost you quite a bit of money to have that two forty service run from your you know your washing machine to your garage where you need the level two charging unit .

Jeff Cranson

Yeah , stick around . There's more to come right after this short message .

John Perrachio

Know, before you go head on over to my drive to check out the latest on road construction and possible delays along your route . For a detailed map head over to michigan . gov/ drive .

Jeff Cranson

So let's talk a little bit about something else that I know is a real passion of yours your work with , with Feonix and the mobility solutions and access for all things that that I think you've been forward thinking on this , and your work on the Michigan Council of Future Mobility . And talking to my good friend and now yours , Dave Bukowski , of disability advocates in Kent County , yeah , talk about why that's so important and why that means so much to you .

John Perrachio

It's critically important and building on a comment I made about the affordability of new vehicles . You know , Jeff , in the city of Detroit there are a hundred thousand people who would otherwise qualify to have a driver's license , but they don't have one , and the reason is they can't afford to buy a new vehicle and indeed , in many neighborhoods there is no physical way out in terms of public transit or alternative , reliable personal transportation . And that's where Feonix Mobility Rising comes into play , because what we do is we partner with communities , we use volunteer drivers , sometimes we use employee drivers , but many times we use volunteer drivers and we partner with organizations such as Dave's disability advocates of Kent County , veterans groups and others to get people to Healthy food access , access to health care providers , access to employment , training and employment . So workforce training and employment . So a lot of these folks can't get to a job , they can't get to anything , and this is where Feonix , working with community groups and transit agencies around the country , can fill in that gap for folks that that really have no other alternative .

Auto Industry and Road Usage Charging in Michigan

Jeff Cranson

And how did you get here from your earliest days as a , you know , as a consultant kind of analyst , now delving into so much of the auto industry and and what it does ? Is this just something that's that you've kind of evolved as you've seen the need for these solutions over time ?

John Perrachio

It's kind of not that interesting a story of running into the , the current executive director and CEO of Feonix Mobility Rising at APTA the American Public Transportation Association , and but it was a very a fruitful meeting because she was looking for organizational help , she was looking for additional funding and it's something , it's an organization that I have not seen anything comparable to it in my thirty five plus years of being involved in the auto and transportation world , and so , yeah , I seized upon it because it was something , you know , I always thought about it , because how can you not write anytime you start talking about transit and you realize how challenging it is to get the right balance of , you know , microtransit , regular fixed drive transit , all of that for folks that can't afford anything else , and you realize there are huge gaps in the system . And that's where Feonix , as I said , comes into play .

Jeff Cranson

Yeah , well said . Well , they're really doing good work , and I will definitely be talking about it more , so , probably . Lastly , I'd like to talk to you about something else that you've got some experience in . You've worked in tolling and know some things about that . This isn't directly tolling , but sort of related that Michigan's legislation is finally moving . We had a committee hearing this week in the Senate and it looks like they'll vote it out next week and seems fairly positive for our first high-acupancy vehicle lanes in Oakland County . I don't want to be too dour about it , but I kind of feel like we're just now jumping into the 20th century , let alone the 21st . Why has this been so hard in Michigan , do you think ?

John Perrachio

So we don't have a history of tolling in Michigan , other than some bridges and a tunnel , and I think that it's just like popular perception is . I'm not used to this . And then you have the folks who think roads are free . They don't understand the road funding gap between what the fuel tax provides at the federal level or the fuel sales tax at the state level , and the gap that exists just for road funding , let alone the rest of transportation . And so I think it's just something that folks are going to have to grapple with , because , I'll tell you , the gas taxes we know it today is going the way of the Dodo bird . It's going to happen . We've got to face that fact .

John Perrachio

Managed lanes are interesting from a revenue generation as well as a congestion management perspective . So you pay to try to avoid some congestion . But I'll tell you , Jeff , my own view is that we need to have a road user charging policy in Michigan so that you pay based upon vehicle miles traveled and not tolling . Technology has evolved to the point where we don't need the ugly gantries and the RFID tags and all that paraphernalia . We have alternatives . We need to pilot something , a serious pilot , and implement a road usage charging program here in Michigan . And again , my personal opinion is those revenues should be split between taking care of our roads and providing for other forms of transportation . And yes , that includes transit , particularly in southeastern Michigan , where it is absolutely needed .

Jeff Cranson

Yeah , no , I think you make a really good point there . I just want to clarify that for now , what this legislation would enable is just a high occupancy vehicle lane with no managed lane , no extra fee , no toll for it . But you've got to walk before you run , right .

John Perrachio

Exactly and , by the way , a high occupancy vehicle you're exactly right is not high occupancy toll , hot lanes . Personally , I guess I'd skip the high occupancy toll and pay the so-called Lexus lanes that they have in some jurisdictions where you pay to use a lane . I would skip all that and just go right to road usage charging for everyone . However , I would also be careful to put some progressive elements there . So , in other words , for lower income folks , we qualify people for all kinds of government benefits . There's no reason why we couldn't qualify lower income people for a different road usage charge rate , and we can have other incentives for low or zero emission vehicles . All of that could be baked into your policy .

Jeff Cranson

And there's a debate about these terms and you're using what I think is the best term , and that's road user charges , as opposed to mileage-based user fee , which is MBUF another acronym vehicle miles traveled another acronym and I think road user charges is the easiest to understand and sums it up best . So I'm with you on that . So , John , thank you so much as always for taking time to talk about these

Transportation and Michigan's Technological Developments

Jeff Cranson

things . I know we could talk forever . There's always so much going on in transportation , like it touches us all every day , from the minute we leave our house until we get home , and I really , as always , appreciate not just your knowledge but your passion for equity and making sure that you're doing what you can to make sure that everybody has a mobility option .

John Perrachio

Well , Jeff , it was my pleasure . I think Michigan remains at the forefront front of many technological developments in transportation , and we just need to kind of get organized on a number of fronts to make it even better .

Jeff Cranson

Yeah , amen . I'd like to thank you once more for tuning in to Talking Michigan Transportation . You can find show notes and more on Apple Podcasts or Buzzsprout . I also want to acknowledge the talented people who helped make this a reality each week , starting with Randy Debler , who skillfully edits the audio , Jesse Ball , who proofs the content , Courtney Bates , who posts the podcast of various platforms , and Jacke Salinas , who transcribes the audio to make it accessible to all .