‘An enormous lift’: Biden’s goal of 50% EV sales by 2030 will test supply chains, utilities, experts say

‘An enormous lift’: Biden’s goal of 50% EV sales by 2030 will test supply chains, utilities, experts say

President Joe Biden’s goal for half of all new passenger vehicle sales in the United States to be electric vehicles by 2030 is achievable, transportation experts say, but it will require industry and government to develop supply chains for raw materials and grow investment in charging infrastructure.

“Anything is feasible if the plan is designed well enough and there is follow through, but there are many hurdles,” said Lewis Black, CEO of Almonty Industries, an international raw materials development company focused on tungsten, which has uses in electric vehicles (EVs) and other electrocnics.

Biden on Thursday signed an executive order outlining the target, with the support of major U.S. automakers and the United Auto Workers union. Tesla, the largest EV manufacturer in the world in 2020, was not invited to the event at the White House, due to its labor policies, leading some industry watchers to worry about the politics of clean transportation and the ability to meet the goal.

Tesla absence a ‘glaring omission’ 

Tesla was not invited to the White House announcement, which caught many in the EV industry by surprise, as the company sold more emissions-free vehicles in 2020 than any other and has pioneered the industry globally and in the United States.

Yeah, seems odd that Tesla wasn’t invited,” CEO Elon Musk said in a tweet. The White House later confirmed Tesla was not invited because the event focused on unionized automakers.

Black called Tesla’s absence “a glaring omission” and said the focus on unionized EV manufacturers leads to “fears this becomes overly politicized.”

But experts say the snub is unlikely to have a real impact on the growth of U.S. EVs, particularly as the infrastructure bill Congress is now considering contains $7.5 billion for charging infrastructure and other provisions aimed at the industry generally. That’s a small fraction of Biden’s initial $174 billion EV ask, which also included $100 billion for purchase incentives that have since been cut from the infrastructure bill, but experts say it appears momentum is building and investment in the sector is rising.

House Democrats press for more EV charging investment 

“I think any dollars of the magnitude we’re talking in the infrastructure bill, even if those were to be reduced along the way — and they have — any level of investment beyond what we’ve seen to date is going to have a real impact,” said Stacy Noblet, senior director of transportation electrification and the ICF Climate Center at consulting firm ICF.

There is some enthusiasm for increasing the EV funding in the version of the infrastructure bill being considered in the Senate. On Monday, more than two dozen House Democrats expressed their support for a much larger charging investment.

“By making an $85 billion investment in zero-emission charging infrastructure that will last decades, we can employ tens of thousands of Americans, all while supporting the massive adoption of clean transportation options,” the lawmakers, led by Michigan Rep. Debbie Dingell, said in a letter to House Speaker Nancy Peolsi, D-Calif., and Senate Majority Leader Chuck Schumer, D-N.Y. 

The United States badly lags China when it comes to electric vehicle infrastructure, and more investment is needed broadly, said Andrew Dillon, innovation fellow of the energy and utilities practice at consulting firm West Monroe. But he also said the $7.5 billion included in the infrastructure bill is “ample.”

“There’s a feeling that this is the direction everybody is heading,” Dillon said. “There is confidence in the vehicle technology, the economics are lining up, and large research firms are saying EVs will be at cost parity or lower in the next five years” relative to internal combustion engine vehicles.

According to the White House, the 2030 target is “calibrated to provide time for existing manufacturing facilities to upgrade without stranding assets,” and those upgrades that will be undertaken as part of a jobs and infrastructure plan will “lean into a path that expands domestic U.S. manufacturing with union workers.”

In a joint statement, automakers  General Motors Co., Ford Motor Co. and Stellantis NV, the parent company of Chrysler, announced their “shared aspiration” to reach the 50% goal.

“Our recent product, technology, and investment announcements highlight our collective commitment to be leaders in the U.S. transition to electric vehicles,” the companies said. “This represents a dramatic shift from the U.S. market today that can be achieved only with the timely deployment of the full suite of electrification policies” the Biden administration proposed in its Build Back Better plan, including purchase incentives, a more robust charging network, R&D investments, and incentives to expand the U.S. EV manufacturing and supply chains.

The White House announcement “sends a strong message,” Dillon said. But he also warned that the U.S. will need to address supply-chain constraints to support the manufacturing of EVs, the batteries they require, and charging infrastructure.

“It’s unfortunately a perfect storm,” Dillon said, as global supply chains shut down due to COVID-19 at the same time interest in vehicle electrification is growing.

Resolving supply-chain issues is key to EV uptake 

The global pandemic caused industries around the globe to slow, including those that produce materials and parts the EV industry needs. “All industries are suffering, and so the EV industry wanting to accelerate now … puts an additional challenge on manufacturers,” Dillon said.

But this is likely “just a temporary bottleneck,” he added, and markets “tend to catch up quickly.”

Just returning raw material supply chains to their pre-pandemic levels will not be sufficient, warned Almonty’s Black. He sees a growing focus on lofty goals but not the back-end work needed to achieve them.

“There is in no way, shape or form, the availability of the raw materials to produce these vehicles,” he said. “The conversation has moved away from the fragility of supply chains, and now, politically, everyone is just sort of headed for the much more glamorous end of these proclamations,” Black said.

With investors now clamoring for greater environmental, social and corporate governance (ESG) disclosure, there is growing pressure to source raw materials from areas without human rights or labor violations, said Black.

The level of ESG performance now being asked for “is not available in China,” he warned, where many battery materials are mined. “It’s a Catch-22. There is demand by politicians to move to the green side, but companies have to conform to standards that are going to add significant amounts of time to put together supply chains.”

Are utilities up to the task? 

Currently, Black said, EV sales in the United States are around 3% of passenger vehicle sales, so reaching the Biden administration’s 50% goal is “an enormous lift.” Policies can offer vehicle subsidies, tax incentives and cheap electricity to boost EV adoption, he added, “but you still have to address the problem, can your electric grid actually keep up?”

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