After Biden’s words, U.S. must now take action on EVs
President Biden’s recent statement on the need for the U.S. to electrify its vehicles was welcome and necessary, but it was short on specifics. Here’s what America must do to join the global EV race.
Joined at the White House by representatives of America’s Big Three automakers (Ford, GM and Chrysler), Biden last month announced plans to improve the fuel economy of vehicles with an internal combustion engine (ICEs) and to expand the sales of EVs.
Contrasting with the previous administration’s reluctance to tackle the subject of electrification, Biden’s announcement felt like a milestone. But little was actually achieved. The fuel standards were Obama’s, reinstated; and the EV sales targets - up to 50% EVs by 2030 – had been previously announced by the OEMs themselves, and remain non-binding.
Also, Tesla was notable by its absence from the event, despite being the only EV manufacturer of scale among U.S. automakers – perhaps because of the company’s hostility towards trade unions, which were present at the White House.
So, it was a largely symbolic occasion. But symbolism matters – if it is followed up by action. And when it comes to the electrification of mobility in the U.S., action is urgently needed, on three fronts: tax credits for EVs, funding for charging infrastructure, and electrification of government fleets.
Biden Tax Plan
Since 2010, all electric and plug-in hybrid vehicles purchased new may be eligible for a federal income tax credit of up to $7,500. On top of that, Biden’s Tax Plan foresees a significant shift, away from subsidies for fossil fuel companies towards clean energy incentives.
Announced by Treasury Secretary Janet Yellen, the plan – part of a package that raises corporate income tax from 21% to 28% - would cut federal subsidies for fossil fuel companies by more than $35 billion over the next decade.
The reason: these tax breaks undermine America’s long-term energy independence as well as the fight against climate change – not to mention they harm the environment. Instead, the Biden plan extends existing tax credits for production of and investment in clean energy generation and energy storage.
Perhaps the biggest challenge for the U.S. is charging infrastructure. The U.S. currently has 107,000 petrol stations, each of which can fill several cars in under 10 minutes. By contrast, there are just 43,000 public EV charging stations, with a total of about 106,000 outlets – each of which recharges much slower than a conventional pump refuels. Plus, the relatively few chargers there are, are unevenly distributed: almost a third are in California alone.
In short: range anxiety is definitely a live issue in the States, where long trips across sparsely populated areas are more common than in Europe. That certainly helps explain why EVs still make up less than 1% of light vehicle stock in the U.S.
So, how much would it cost to switch from the current system of petrol stations to a sufficiently public network of EV chargers? According to the 2020 Net-Zero America study by Princeton University: $600 billion, by 2030. While the current budget plan provides some funding for infrastructure initiatives, and Biden has pledged to build 550,000 charging stations, those federal efforts come nowhere near what is required, according to the study.
Perhaps it will be up to state governments to come up with the difference. This risks creating a two-tier infrastructure landscape in America, with progressive states like California highly electrified, while more conservative ones still stuck on fossil fuels.
Governments keen to promote EVs should lead by example, and Biden aims to do just that. Already in January, he pledged to replace the U.S. government vehicle fleet – comprising roughly 650,000 vehicles – with American-made EVs as soon as possible.
In 2019, the U.S. government fleet drove 4.5 billion miles (7.2 million km), consuming 375 million gallons (1.4 billion litres) of petrol and diesel, at a total fleet cost of $4.4 billion. By mid-2020, the U.S. government had just 3,215 EVs in its fleet. Turning the whole fleet electric would cost upward of $20 billion. No specific plan or timeframe for that change has yet been specified.
In short: the challenges are huge, but at least they’re known. If America can learn from previous electrification efforts in Europe and China, it could catch up sooner rather than later.