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:
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:
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. 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.
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 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.