President Biden's US$174bn EV investment plan, what's it about?
US President Joe Biden has proposed US$174 billion in investments for the electric vehicle (EV) market under the country’s 8-year America Jobs Plan, both of which fall under a US$2.3 trillion infrastructure initiative also known as the America rescue plan.
The EV initiative will enable automakers to spur domestic supply chains from raw materials to parts, retool factories to compete globally, and support American workers to make batteries and EVs, the White House said in a release.
It also said that the plan will give consumers point of sale rebates and tax incentives to buy American-made EVs, all while ensuring that these vehicles are affordable for families and manufactured by workers with good jobs.
Moreover, the plan calls for establishing grant and incentive programs for state and local governments and the private sector to build a national network of at least 500,000 EV chargers by 2030. This alone calls for an investment budget of US$5-6bn, according to market estimates.
The new network would support a vehicle fleet of some 8.5 million, Bloomberg said in a report, adding that this is only about half the current fleet projection for 2030.
The president also intends to replace 50,000 diesel transit vehicles and electrify at least 20% of the country’s yellow school bus fleet through a new Clean Buses for Kids Program at the Environmental Protection Agency. The goal is to eventually achieve a 100% e-bus fleet.
Finally, plans call for electrifying the entire federal fleet. Currently estimated at some 645,000 vehicles, it includes replacing the United States Postal Service and other national fleets with America-made EVs. A timeline for this, however, has not been announced.
Oschosh defence awarded US$482mn contract to build electric postal vehicles (copyright: USPS)
Meanwhile, US Transportation Secretary Pete Buttigieg is currently considering a user-pays principle for road infrastructure projects. Basically, it calls for mileage tax which would tax travellers based on the distance of the journey instead of on how much fuel they consume.
“I’m hearing a lot of appetite to make sure that there are sustainable funding streams, and a mileage tax shows a lot of promise,” says Secretary Buttigieg.
US Transport Secretary Pete Buttigieg (copyright: Shutterstock)
With these initiatives, the US could be seeing annual EV sales in the range of 4mn by 2030, representing 25% of all vehicle sales compared to less than 2% now. This, however, will only result in some 8% of the total passenger vehicle fleet in the country being electric.
The EV sales figures are still far behind Europe and China which are forecasted to see EVs representing 33% and 50% of their sales in 2030.
Meanwhile, as the U.S. market share of plug-in EV sales is only one-third the size of the Chinese EV market, President Biden is focusing on change, calling on congress to invest more than $52 billion in domestic manufacturers.
The president’s plan includes specific support initiatives aimed at modernizing supply chains, including those for the automobile sector such as extending the 48C tax credit program. He will also call for the creation of a new financing program to support debt and equity investments for manufacturing to strengthen the resilience of America’s supply chains.
Last but not least, the federal plan includes a proposition to fix the corporate tax code so that it incentivizes job creation and investment in the United States, stops unfair and wasteful profit shifting to tax havens, and ensures that large corporations are paying their fair share.
With that said, although quite robust in nature, the size of the plan and the corporate-tax hikes that go along with it are not without criticism so expect some bumps along the way.
Top Photo: Joe Biden (source: Reuters)