President Biden has signed an executive order setting a target for electric vehicles, hydrogen-fuel cell and plug-in hybrid vehicles to make up 50 percent of U.S. vehicle sales by 2030—a voluntary goal, but federal support will be needed for vehicle charging stations and consumer tax incentives, according to automakers. Along with Biden’s goal, the Environmental Protection Agency (EPA) proposed new rules requiring auto makers to achieve a fleet-wide average fuel-efficiency equivalent of 52 miles per gallon by the 2026 model year. In 2020, the Trump administration set the requirement for that model year to be 43.3 miles per gallon. The Biden administration next plans to draft even more stringent rules for both passenger vehicles and heavy-duty trucks that are designed to make automakers increase sales of electric vehicles.
To comply, automakers want the full suite of electrification policies and subsidies that are in the $1.2 trillion infrastructure plan the Senate has put forth. The Senate infrastructure bill allots $7.5 billion in grants for states and municipalities to build electric-vehicle charging stations, which is half the amount that President Biden wanted in March for his goal of 500,000 public chargers by 2030. The United States has about 110,000 public charging outlets, of which over 30 percent are in California. The Senate infrastructure proposal also includes over $6 billion in grants for battery production, development and recycling and provides $73 billion to expand and update the electricity grid, which would be needed to carry the additional power for the new charging stations. The Senate proposal does not include additional tax credits to subsidize the purchase of an electric vehicle that automakers want, but the Biden administration claims it is working on it with Congress.
Biden has a long way to go to reach his 50 percent goal by 2030. In each of the past three years, electric vehicles accounted for about 2 percent of the U.S. new-car market. The Wall Street Journal reports that electric-vehicle sales made up about 3 percent of the total U.S. market in May and June.
Some Issues
First, raising the Corporate Average Fuel Economy (CAFE) standards as Mr. Biden proposed will raise the cost of cars and trucks and reduce automobile safety. For those reasons, President Trump had lowered the Obama administration standard (51 miles per gallon by 2025) that the Biden administration is bringing back. Higher CAFE standards result in higher production costs for cars to meet the more stringent standards. According to the Trump administration, the best way to reduce emissions is to help put newer cars on the road by reducing prices. Lowering the CAFE standards also makes cars safer by discouraging the production of very light vehicles, which may not be as resilient to crash impacts. The average American car is about 12 years old and does not have the features of many of the newer vehicles that have increased vehicle safety.
Second, the cost and difficulties of creating an entirely new infrastructure are massive and the minerals and materials that go into electric power batteries and new electric grids are not readily available in the United States. China makes about 70 percent of the world’s electric vehicle batteries because they have the upper hand in the material needed: rare earths, nickel, cobalt, lithium and copper, or the processing of those minerals. More than 80 percent of rare earth mining and processing is in China. About 50 percent of the world’s supply of polysilicon, needed to build solar panels, is also in China. China and the Republic of the Congo, which has the lion’s share of cobalt mines that are partially owned by China, both employ slave or child labor.
Third, experts say it will not be possible for electric vehicles to go from niche to mainstream without making electric charging stations as available as corner gas stations. In fact, about 20 percent of electric vehicle owners in California replaced their cars with gasoline vehicles because of the inconvenience of charging. The International Council on Clean Transportation concluded:
“To support an electric vehicle stock of 26 million in the United States in 2030, public and workplace charging will need to grow from approximately 216,000 chargers in 2020 to 2.4 million by 2030, including 1.3 million workplace, 900,000 public Level 2, and 180,000 direct current fast chargers. The charging infrastructure network will also need to provide greater coverage for a broader set of drivers. About a million chargers will be needed at multiunit dwellings to support apartment residents and charging will need to grow at greater rates in many rural areas and across the Midwest and South. Lower-income communities will need persistent investments, amounting to about 30% of chargers and charging investments through 2030, to ensure equitable infrastructure access.”
Fourth, labor unions are uneasy about a transition to electric vehicles because they require about one-third fewer workers to assemble than gasoline-powered cars or trucks. In the electric vehicle market, the battery and the software represent over half the value of the car—a market that China dominates. Despite that, auto companies are committed to go electric. General Motors, for example, has said it will sell only zero-emission vehicles by 2035. According to Ray Curry, president of the United Auto Workers, “While the U.A.W. notes that the companies have made voluntary commitments on electric vehicles, the U.A.W. focus is not on hard deadlines or percentages, but on preserving the wages and benefits that have been the heart and soul of the American middle class.” This may be hard to do when over half the value of auto production is products where China controls market share.
Electric vehicle sales are most abundant In Norway, where they total 60 percent of all vehicle sales. In Norway, however, electric vehicle owners have many incentives: they are exempt from the value added tax (VAT) and receive a 50 percent discount on toll roads and parking fees. Internal combustion engine (ICE) vehicles in Norway are subject to a 25 percent VAT, a carbon dioxide tax, a nitrogen oxide tax and a weight tax, making them more expensive to buy than electric vehicles and 75 percent more expensive to operate. Norway’s electricity is mainly produced by hydropower (97 percent) and its electricity prices are 40 to 70 percent less than European levels as a consequence. Even then, many Norwegian families buy electric vehicles only as a second family vehicle. The incentives for electric vehicles are so high in Norway that a full conversion to them would make electric vehicle subsidies the second-largest government expenditure behind pensions.
Conclusion
President Biden and his administration are pushing the United States into a whole new transportation infrastructure that will be difficult to achieve and costly. He is also attempting to change American culture by not allowing Americans to choose what is best for them, but forcing electric vehicles upon them. It is literally, “Government Knows Best.” Further, the Biden administration is planning new standards not only for “light-duty vehicles” like cars, SUVs, and pickup trucks, but also to “medium and heavy-duty vehicles,” where few models are currently on the market. Automakers have agreed to Biden’s goal to cut gasoline-based car sales by half in less than 10 years, but only if Biden supplies government-supported purchase incentives, charging networks, investment in continued research, and incentives for the expansion of electric vehicle manufacturing and supply chains. Biden has a tough mandate, which will be even tougher as Americans learn of the ramifications.
