What happens when a car company with a checkered record on the environment hires a climate scientist
It was 2018, three years into Volkswagen Group’s dieselgate scandal, and things were about to go from bad to worse for the German automotive giant. More monster fines, criminal charges, and heaps of reputational damage were just around the corner for the then No. 1 automaker worldwide.
That didn’t faze Spencer Reeder, a climate scientist who’d spent much of the previous decade working with lawmakers and green-tech entrepreneurs to make America’s cities and roads cleaner and greener. In the summer of 2018, Reeder felt it was time for a career change. He saw a jump to the private sector as a more promising way to influence climate policy on a national level—and made one, to the embattled German automobile giant’s Audi brand.
Now Audi of America’s director of government affairs and sustainability, Reeder spoke to Fortune this month about the challenge of upselling Americans on electric vehicles, and the role policymakers play in jump-starting the country’s laggard EV adoption rates. He also offers tips on starting a carbon-pricing initiative inside a company, and how to win over lawmakers with science.
This interview has been edited for clarity and brevity.
Fortune: Your background is really varied: aerospace engineer at Boeing, materials science, an author of the 2014 U.S. National Climate Assessment report, and later working for the administration of then–Washington Gov. Christine Gregoire on climate change policy. What drew you to the automotive industry?
Reeder: I was talking to a colleague and philanthropist, maybe six or seven years ago. She was just sort of speculating, it’d be really interesting to go and work for an automotive company now because in the U.S., at least at the national level, transportation had just emerged as the number one source of greenhouse gases. It had surpassed electricity at the time. And so, transportation is number one, persona non grata. I hadn’t thought much about going back into the private sector, not in that way. But I started to contemplate, how many more papers will I write on the impacts of climate change, you know, where I just feel like we’re not making the progress we need to make? Maybe this is the time to go back into the private sector, I thought.
Okay, but Audi? In 2018? It’s hard to think of a car brand that was more reviled by environmentalists at the time.
It was precisely because they were [so tarnished], and they had to recover. Or they would be in for a tough, tough go. I sat down with the president of Audi of America, Scott Keogh, at the time—he’s running Volkswagen Group of America and the Volkswagen brand in the U.S. now. I said, “How are you guys going to make this pivot? Are you just looking to somehow recover from a marketing standpoint? Or are you really fundamentally going to change who you are as a company.” We talked at length about the product portfolio, and how they were going electric. I got the sense that he was personally and professionally committed, as was the company. Because they had no other choice.
The company announced your hire by saying you’d be “responsible for leading the Audi U.S. public policy voice on zero-emissions vehicles.” At the time, Audi hadn’t sold even a single EV.
Shortly after I joined, I took a trip to Germany, and got a sense of what was going on. I got a tour of the facility in Brussels which had been completely gutted and converted to an all-electric-vehicle factory. So there was no turning back at that point. When I joined, they had essentially gone all in on electric. And then they made a public commitment, in the fall of 2018, that 30% of sales by 2025 was going to be electric. In fact, they’ve only made it more ambitious. Now the goal is 40%. And the last internal combustion engine vehicle will occur in 2025. Tesla’s outselling everybody. But in terms of the number of available models out, Audi will have more EV models available than anybody in the U.S. by Q4 this year.
And yet, the EV sales data continues to show the U.S. trailing Europe and China in adoption.
EV market share in the U.S. was 4% last year, something like that. People get excited about 4% or 5%. That’s great. But that means 95% [of U.S. car sales] are still internal combustion engines. So for a big company like Audi to say we’re stepping away from that technology is certainly still a risk.
Looking at the data, EV sales are strongest in places like California, the East Coast, and parts of Texas and Florida. How do you persuade the rest of the country to buy an EV?
It’s absolutely the right question. It’s not a homogenous situation in the U.S., and every week, less and less so. So how does this come to pass across the country? I mean, I have no doubt the West Coast is going to hit 30%, 40% sales—like a lot of things, that first 50% is going to be challenging, but not impossible. It’s the last 50% that’s going to be the hardest, even in a place like California…[To boost EV sales elsewhere] I think it is going to follow similar technology adoption trends. It’s word of mouth. It’s experiential. It’s, you know, how many of your neighbors, or friends, or family members got an electric vehicle. And if the cost of electricity doesn’t start spiking, it’ll be considerably cheaper. And then the economics will drive a lot of people to EVs. I already get people looking at me in an electric vehicle, and saying, “Oh, boy. I bet you’re really happy to have that now with the price of gas the way it is.”
The Biden administration is committing billions to the EV market, aiming for it to grow to 50% of the car market by 2030. How important is public-private collaboration in spurring this marketplace?
Oh, it’s fundamental. I mean, California could get away without the federal government doing much, because it’s California. But to get wide-scale national adoption, you have to have the federal government put in investment, but also set standards.
So high-speed charging, in our view, is fundamental to getting this to a mass market. Someone’s got to be able to pull into [a charging station] and, in 15 or 20 minutes, no more, essentially, fill up their tank…And we can do that. We lobbied pretty hard, and successfully, for 150-kilowatt charging to be the minimum threshold for federal investment in [charging] infrastructure…Three or four years [ago], 50-kilowatt charging was still very prominent. But there’s just no way that people are going to tolerate 50-kilowatt charging in the future. So the federal government has, through the Build Back Better infrastructure bill that was just passed—and through the U.S. DOT [Department of Transportation] and the Department of Energy—established standards for federal investment, where it’s going to be 150-kilowatt charging. That’s crucial, right? So you don’t have stranded assets.
You’re in conversation with policymakers almost every day. What would you say is your biggest win so far?
The most prominent one involved something called the California framework. This is when the Trump administration was intimating that they were going to rollback fuel economy standards, and the EPA [Environmental Protection Agency] was going to reduce the greenhouse gas rule. I was part of some of the very first conversations with the California Air Resources Board, representing Audi as part of the Volkswagen Group. I think it was probably the most important thing we did over the last three years in terms of signaling our intentions, as a company [to put the climate first]. We were one of the four automakers—a fifth joined later—willing to continue to work with California, and adhere to their more ambitious [clean-air objectives].
This is a column about innovation. What technology excites you?
Just talking about raw materials, Audi was the first automaker on the planet to introduce a CO2-free smelting process in partnership with Alcoa to make an aluminum alloy we used on wheels—on the Audi e-tron GT. Hopefully, the entire industry will move over to this method of smelting aluminum. We will continue to work with Alcoa and others on the input side to decarbonize this part of what we do.
You also were responsible for developing a carbon-pricing scheme at Audi. Any advice for others who might be interested in starting a similar program at their company?
The key thing was getting our chief financial officer at Audi of America involved. That sent a price signal to the organization: “Hey, don’t just get on a plane and fly to Munich, because we’re going to charge you an additional fee for that.” And it’s not a shadow price. It’s an actual [expense], and then that money goes into a sustainability fund. We’re going to use that for good things, to further reduce our CO2 greenhouse gas footprint. In creating this higher price for corporate travel we wanted to see would that affect change. Whenever we emerge from COVID, we’ll be able to compare the carbon price impact on travel behaviors of our staff to the post carbon price effect on travel behaviors. I don’t think we’re ever going back to the old ways of doing business.
Each week, Fortune covers the world of innovation in Breakthrough. You can read previous Breakthrough columns here.