Auto Innovation Academy Helps Legislators Frame EV Policy Challenges
Key Takeaways:
The Institute for State Policy Leaders’ Auto Innovation Academy hosted dozens of state legislators and private sector leaders in its inaugural Electric Vehicle Seminar to address the challenges and policy options relating to the electric vehicle transformation.
The Infrastructure Investment and Jobs Act (IIJA) is indicative of the country’s commitment to improving EV infrastructure, but greater investments will be necessary to secure an electrified future.
The transition to electric vehicles has underscored major gaps in American infrastructure and accessibility, as limited availability of charging stations and high costs are deterring factors for consumers.
California’s aggressive Zero Emission Vehicle (ZEV) program attempts to set a precedent for EV regulation, but states have a plethora of policy options to experiment with and can work with the private sector to ensure a smooth transition.
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In June, state legislators from across the country attended the Institute for State Policy Leaders’ (ISPL) Auto Innovation Academy, Electric Vehicle Seminar in Nashville, Tennessee to learn about the basics of electric vehicle policy. Legislators heard firsthand from industry and technology experts about the transition to electric vehicles (EV). Attendees were provided balanced programming and engaged in fruitful deliberation to gain an overview of the EV policy landscape. With the enactment of the bipartisan Infrastructure Investment and Jobs Act (IIJA) in November, it is vital that lawmakers are equipped to address the emerging policy issues that come with electrification. The Auto Innovation Academy helped inform legislators’ policy decisions and frame the various challenges that states may face during the EV transition. The ISPL acknowledges the support of the Alliance for Automotive Innovations for the support of its educational programming.
Major Investments Are Indicative of U.S. Commitment to the EV Transformation
The proliferation of electric vehicles in the United States within the last decade has sparked an enormous transformation in the automotive industry. Rapid advancements in battery technology as well as the push toward zero carbon emissions have led to significant economic investments into the EV industry. The U.S. has invested $92 billion into EVs and boasts 79 electrified models to date, with more than 4 million EVs expected to be produced by 2023.
This major transformation poses various challenges in terms of infrastructure, raw material supply, and market readiness. Moreover, current EV policies can vary among the states, with many just beginning to address issues such as battery charging infrastructure, declining road funding revenue, and end-of-life battery recycling. Public and private sector cooperation will be instrumental in securing a harmonious policy landscape and a prosperous electrified future.
Charging Infrastructure Gap Poses a Challenge to the EV Transition
Arguably the largest obstacle amidst the EV transformation is insufficient charging infrastructure. An estimated $39 billion will be required for publicly-available charging by 2030 in order to reach 100% EV sales by 2035. The IIJA’s $7.5 billion investment in charging infrastructure is a good “down payment” but ultimately highlights the country’s major infrastructure gap.
An early 2022 Consumer Reports survey found that the top reason consumers put off purchasing EVs is charging logistics as a result of the limited availability of charging stations. Furthermore, 80% of charging occurs either at home or work, so it is imperative that new homes and office buildings are EV-ready to alleviate charging and range anxiety.
States Take Action to Incentivize EV Purchases
Another major challenge in the electrification transformation is the high cost of electric vehicles. Although charging an electric vehicle costs far less than fueling a gas-powered vehicle on a per-mile basis, the cost of the electric vehicle itself is still more expensive than its gas-powered counterpart. Average EV prices are already high and increasing, and the rising prices of raw battery material will further increase costs. Accelerating regulations from bellwether states such as California will also likely raise EV prices.
California’s Zero Emission Vehicle (ZEV) program requires automakers to maintain ZEV credits equal to a set percentage of gas-powered vehicle sales. The mandate requires 35% of all automotive sales to be from electric vehicles by 2026. ZEV requirements intensify each year, with the end goal of being 100% electric by 2035. California is by no means the only state pushing the transformation forward. To combat high costs and spur EV purchases, tax credits are offered at the federal level, though those credits were significantly altered by the recent enactment of the Inflation Reduction Act, resulting in a reduced pool of eligible EVs for the remainder of 2022 and an almost complete elimination of the credit in 2023 based upon current eligibility requirements in the law. Almost every state has implemented its own incentives like rebates on EVs and charging stations.