EV adoption poised to surge if Congress OKs $100B in purchase incentives, experts say

EV adoption poised to surge if Congress OKs $100B in purchase incentives, experts say


There are potentially more than $200 billion in electric transportation investments contained in President Joe Biden’s jobs and infrastructure plans, including purchase incentives that could immediately accelerate the United States’ electrification plans, according to electrification advocates watching negotiations in Congress.

The EV-related proposals include more than $100 billion in tax credits that could knock up to $12,500 off the sticker price of a new electric car or truck, depending on where and how it is produced. Used electric vehicle (EV) buyers could get up to $4,000 back.

If lawmakers pass those credits, “you’ll see an immediate leap forward in demand for EVs,” Joel Levin, executive director of Plug in America, said. But whether they pass remains an “open question,” he said.

The level of investment in EVs and charging infrastructure now being debated on Capitol Hill is sufficient to create a tipping point for EV adoption and a major leap forward in reducing emissions from the transportation sector, experts say.

The big question now is whether politics — and potentially labor disputes — get in the way. Provisions to provide additional benefits to domestic and unionized automakers have drawn criticism both domestically and internationally.

The infrastructure bill also includes $13.6 billion for school bus funding and other electrification, according to Ben Prochazka, executive director of the Electrification Coalition. The bulk of the purchase incentives and other EV-related provisions are in the Build Back Better (BBB) budget package.

According to Atlas Public Policy, a policy and data firm, BBB includes more than $106 billion for tax credits, and another $122 billion for dedicated and potential funding including to help replace fleets, install charging equipment and make investments to reduce emissions in disadvantaged communities.

Prochazka called it “a good first step.”

Credits can help US catch up 

“The rest of the world has prioritized transportation electrification,” Prochazka said, pointing to news that in Norway more than three-quarters of car sales are now electric. “It’s clear that we’re running to catch the rest, and we can, and I think we will. But it’s going to take some real leaning in, to do so.”

Globally, China remains the largest EV market and more than 10% of new sales there are electric. Experts say the United States could hit 5% sales this year.

While the level of spending is still being debated in Congress, EV advocates appear confident. However, Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona have indicated a reluctance to support higher levels of spending.

“There have been a number of things in this bill that people are fighting about, and [Manchin and Sinema] don’t like, and they’ve been kind of going back and forth and a bunch of stuff. But not these credits. The credits seem to have a lot of support,” said Levin.

Prochazka was also cautiously optimistic.

“It does seem like Congress and the administration are starting to coalesce around a set of things that feel like they are going to happen,” Prochazka said. “But anything can change. … Right now we continue to believe [they] are going to prioritize transportation electrification as part of the bipartisan infrastructure bill and reconciliation.”

The electrification measures also support the Biden administration’s focus in environmental justice, and attempts to make EVs accessible to all income levels. According to analysis from non-profit group Climate Nexus, the combined infrastructure and BBB package will provide support for charging in marginalized communities along with the purchase credits.

The measures create an EV charging equity program to direct $1 billion to increase EV charging in underserved communities, and provide $7.5 billion in state grants for charging in low and moderate income communities. And $5 billion in grants and rebates would help replace heavy duty trucks with electric versions, while also supporting charging infrastructure.

The bills being debated include a 10-year extension of automaker purchase credits as well as the 30C Alternative Fuel Infrastructure Tax Credit, said Katherine Stainken, senior director of EV policy at the Electrification Coalition. That’s “fantastic, and sufficient” to incentivize purchases and build out the necessary charging stations, she said.

“The long term extension is something to be excited about,” said Stainken. “We’re looking forward to how that moves the market, because it gives certainty that this is the future of transportation.”

There are also credits for commercial vehicles, said Stainken, which will support growth among the medium and heavy duty sector. “That is an area that is really booming right now, with lots of different makes and models coming out.”

Labor issues a potential stumbling block 

The structure of the EV purchase credits, which favor domestic production and union labor, have created controversy. The bills being considered provide an additional $4,500 credit for vehicles assembled in union workplaces in the United States. 

Tesla, Volkswagon and Toyota have all opposed the credit structure. Republican South Carolina Gov. Henry McMaster and 10 other Republican governors have urged Congress not to pass tax breaks that would benefit union workplaces over others.

“We are deeply concerned that Congress is considering legislation that gives union labor a competitive advantage over non-union labor in the electric vehicle market,” the Republican governors wrote in an Oct. 26 letter to House and Senate leaders. “We cannot support any proposal that creates a discriminatory environment in our states by punishing autoworkers and car companies because the workers in their plants chose not to unionize.”

The issue has drawn international concern as well. Canada Trade Minister Mary Ng in an October letter also petitioned lawmakers to “pass legislation that does not discriminate against Canada, your most trusted and reliable partner.”

EV advocates have largely remained neutral on labor issues.

There is “tension” associated with the issue, said Prochazka, but the most vital thing is ensuring an electrified future for the United States. The tax credits are “critical,” he said, while also acknowledging “a need to make sure we’re prioritizing U.S. manufacturing jobs.” 

The additional $4,500 credit is “a big chunk of money,” said Levin, noting it gives union automakers “a very significant advantage”

“We’ve chosen to not really weigh into that particular issue,” Levin said. “I recognize that this is a package deal. And there are a lot of different interests that had to come to the table to make this happen.”



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