Electric Vehicles

United States

By Simon Johns - Nov 22, 2023

President Joe Biden’s administration has come out strongly in favor of zero-emissions transport, in stark contrast with the rollback during the Trump era, which has itself been reversed. On the table is millions of dollars in funding to get the public onboard and close gaps in charging infrastructure, especially in rural areas. 

President Biden has set a target of a 50% share of electric vehicles by 2030 as part of what is known as the Build Back Better Aagenda and to advance smart fuel efficiency and emission standards. The drivers of Biden’s policy are not just the environment but also job creation and competition with China, a concern he shares with his predecessor. 

According to a U.S. government statement of intent, the Build Back Better agenda includes:
Installing the first-ever national network of EV charging stations,
Delivering point-of-sale consumer incentives to spur U.S. manufacturing and union jobs,
Financing the retooling and expansion of the full domestic manufacturing supply chain,
And innovating the next generation of clean technologies to maintain our competitive edge.

To achieve this goal, the President lobbied the Detroit establishment at a White House summit to throw their weight behind the plan. Critics pointed out that newcomers were left off the invitation list, including Tesla, Rivian, Fisker, Faraday, Bollinger, Arrival, Lucid and Lordstown. A number of the companies are not unionized, while the attendees – Ford, GM and Stellantis, are the biggest three employers of United Auto Workers members.

In the U.S., the federal government under the Obama administration enacted several policies to promote EVs. Efforts have also been proposed to support advanced-technology vehicle adoption through improvements to tax credits in current law, investments in research and development and competitive programs to encourage communities to invest in infrastructure supporting these vehicles.

The biggest boost Congress gave to EVs was the American Recovery and Reinvestment Act of 2009, which established tax credits for purchasing EVs of between U.S. $2,500 and $7,500 per vehicle, depending on the battery capacity, and conversion kits to retrofit conventionally powered vehicles with EV capability ($4,000 per vehicle, maximum). However, a majority of those credits have expired, but proponents of EVs said they were the cornerstone of the growing demand for such vehicles.

The credit phases out when 200,000 qualified vehicles are produced by each manufacturer and are sold in the U.S., a limit that has been met by two companies so far: Tesla and GM. According to EV website My EV, BMW and Volkswagen will keep full credits until 2023.

The first mandate in the U.S. for EV purchases took effect in 2018 under California’s Zero Emission Vehicle Program. The program, part of a policy that dates to 1990, had previously promoted EV sales in a variety of ways but now requires any automaker selling passenger cars or trucks in the state to ensure that a portion of them be BEVs, PHEVs or hydrogen fuel-cell vehicles. For each unit falling into those categories, automakers receive a credit based on the range of each vehicle, and the number of credits is required to reach a certain percent of total units sold in the state.

The percentage increases every year. It was 4.5% in 2018, 7% in 2019 and is scheduled to reach 22% in 2025. Automakers failing to comply will be fined $5,000 per credit short of the requirement. Credits earned in excess of the requirement in any year may be banked for future use or sold to other automakers.

Thirteen other states – Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington, plus the District of Columbia – have adopted California’s ZEV program.

Those mandates were challenged 2019 when the Trump administration revoked California’s ability to set its own automotive emission and fuel economy standards. The federal Environmental Protection Agency and the Department of Transportation contended that consumers would benefit from lower prices if the country had one set of national automotive standards.

The Department of Justice investigated whether Ford, Volkswagen, Nissan and BMW violated antitrust rules when they agreed not to challenge California’s standards, but the probe was dropped in 2020.

The new Biden administration quickly moved to repeal the rollbacks enacted by the previous administration. Almost two dozen states had filed suits to block the rollbacks in court.

Many states have adopted other types of policies encouraging purchases of EVs. California offers rebates of up to $7,000 on purchases of EVs depending on the applicant’s income and is building an extensive charging network. Thirty-nine other states also provide tax benefits or rebates for EV purchases. 

California Governor Gavin Newsom also signed an executive order in September 2020 setting targets to transition the state’s transportation sector to zero emissions.

A U.S. Senate committee is currently advancing legislation that would bump up EV tax credits to as much as $12,500. The maximum credit would apply to EVs assembled in the U.S. by union workers. It would also limit any credits to EVs with a retail price below $80,000.

The bill would also eliminate the existing EV cap, and the new credit would phase-out the three years following 50% of passenger vehicle sales being EVs in the country.

President Biden made it a campaign promise to enact more ambitious fuel economy standards. This year, he proposed $174 billion for electric vehicles and charging stations.

“EVs are rapidly growing, but policies still play a really important role in sending signals to the private sector that a state or city is excited to support EVs and will help the private sector,” Cassie Powers, senior program director at the National Association of State Energy Officials, told Utility Drive.

Up north, Canada had set targets to increase sales across the country, similar to those in California. It starts small, 10% of vehicle sales to be zero-emission by 2025, eventually reaching 100% by 2040. To achieve these goals, the government has introduced incentives for purchasing EVs. Currently, EVs cost between $29,000 and $135,500. Now, the government proposes a rebate of $5,000 for battery electric or hydrogen fuel-cell vehicles costing less than $45,000. 

Over the next three years, the country will dedicate $300 million to implement the program. The government also promised to spend $130 million for EV charging and hydrogen stations across the vast country over the next five years. 

A federal report in late 2020, however, found that the country wasn’t on track to hit even the first target of 10% vehicle sales to be ZEVs by 2025. The committee that authored the report recommended such measures as a national ZEV standard that would require manufacturers to sell a certain amount of EVs, and a program offering money for trade-ins of older vehicles that could be used to purchase EVs.

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