Congressional Democrats have released the legislative text of what will likely be the most comprehensive climate package ever passed in the United States. Crucially, the $555 billion of climate provisions in the package includes funding to cut emissions from transportation – America’s largest-emitting sector. Overall, transport is responsible for 29 percent of all U.S. emissions, with most of those coming from cars, vans, and trucks. To avoid the worst impacts of climate change, we need to reduce these emissions as quickly as possible – and in doing so, we can realize opportunities to create jobs and grow the U.S. economy.
Many drivers have options to replace their internal combustion engine vehicle with zero-emission vehicles (ZEVs) like battery electric (BEV), plug-in hybrid electric (PHEV), or even hydrogen fuel cell electric (FCEV) vehicles, all of which produce no harmful tailpipe emissions like the greenhouse gases, particulate matter, ozone, and nitrous oxides emitted by gasoline-powered engines that contribute to climate change, create smog, and harm human health.
ZEVs have been growing quickly in popularity in recent years, with EVs making up 5 percent of all light-duty vehicle sales in July 2021. With demand growing, prices have fallen over the past decade, while automakers have ramped up commitments to developing and producing batteries and ZEVs. Now, EV customers can now choose from sedans, SUVs, and pickup trucks in a range of makes and models, with even more rolling off the lines in the coming years.
However, while costs continue to fall, ZEV purchase prices remain higher than their internal combustion counterparts. Up-front cost is still a major barrier to American drivers’ choosing to switch to ZEVs, although lifetime total costs of ownership can be as much as $10,000 lower. Additionally, drivers remain concerned about the availability of charging/refueling infrastructure, particularly public infrastructure that can be accessible to drivers who are unable to install home charging systems or who often make long drives. Concerns that an EV’s battery range will be insufficient to make it to the next charger are diminishing as new models’ battery range grows and charging infrastructure networks are built-out, but remain an ever-present consideration.
The reconciliation package Congress is considering would include tax credits for individual purchasers of electric vehicles (EVs) and commercial operators electrifying their fleets, alongside provisions to support development and deployment of medium- and heavy-duty ZEVs. Additionally, the package would provide grants for publicly accessible charging and refueling infrastructure.
Consumer incentives like these that lower the initial cost of the vehicle or support the build out of charging infrastructure can be tremendously effective at encouraging this switch. A 2018 study found that every $1,000 in EV purchase rebates corresponds to a 2.6 percent increase in sales. Building out home and public charging infrastructure is crucial to clearing the way to long-term EV growth. As incentives grow consumer demand and help more drivers purchase ZEVs, they encourage automakers to scale up production, creating good paying jobs in manufacturing communities across the country.
Already, automakers are demonstrating the transformational opportunity of large-scale EV production, with recent announcements from Ford, GM, Toyota, Stellantis, and others of multi-billion dollar commitments to build new battery production and vehicle assembly plants in the United States. Many of these new facilities will create thousands of new jobs in communities that are already skilled in manufacturing, including in Kentucky, Tennessee, and Michigan. As we learned from a recent roundtable conversation in Morgantown, West Virginia, these investments create additional job opportunities for communities that manufacture the component parts used to build EVs.
At the same time, throughout the pandemic, automakers have grappled with supply-chain challenges and a global semiconductor shortage. As automakers look to reduce risks of such supply-chain disruptions, incentives that grow domestic demand for EVs can enable automakers to bring production of both parts and final assembly onshore. With the global EV market valued at around $120 billion in 2020 and growing at an estimated 30 percent per year, U.S. automakers are on the precipice of a tremendous opportunity to bring the benefits of production to communities around the nation.
No community has been untouched by the ever-increasing and severe impacts of climate change, so it’s now more important than ever to pursue measures to reduce emissions as quickly as possible, particularly from transportation. The global automotive industry is shifting into the next gear of a transformation that will deliver significant public health benefits, cost savings to drivers, and emissions reductions. With support from Congress in this critical moment, a thriving domestic market for ZEVs can help not only reduce emissions, but also create a robust ZEV manufacturing industry in the United States, and the jobs that come with it.