Laboratories of Democracy: State Experimentation with EV Policy
Key Takeaways:
Nearly every state has enacted its own program of incentives to boost EV sales and bridge the cost gap with conventional gas-powered vehicles.
Road usage charging (RUC) is just one option being considered for replacing gas tax revenue that is lost as the number of more fuel-efficient vehicles and EVs on the road increase. RUC charges a fee based on distance traveled, but policymakers and drivers both share concerns relating to privacy and data security.
End-of-life battery recycling has become another major policy area of interest as national sustainability goals become increasingly solidified. Developing safe and properly managed recycling infrastructure will be crucial in meeting these goals.
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The electric vehicle transformation presents considerable challenges to lawmakers, as the emerging technology can be difficult to navigate without a clear precedent. Legislators can greatly benefit from working with stakeholders to establish resilient EV policies that can also adapt alongside the automotive transformation.
Finding Harmonization Across Diverse State Policies
There are 16 existing states that have adopted California’s Zero Emission Vehicle (ZEV) Program, all with varying standards but the common goal of expanding electrification. Other “carrot states” have taken different approaches, experimenting with various incentives to help bridge the cost gap between electric vehicles and their gas-powered counterparts. Such incentives include tax credits for EVs and rebates on charging infrastructure. States also differ widely in terms of charging fees. Most states charge by the kilowatt hour (kWh), but 11 states currently charge by the minute, which can be up to four times more expensive. Lawmakers can consider shaping policy to ensure affordable and accessible EV adoption for all. At the same time, legislators can benefit from working with colleagues from other states as well as the EV industry to harmonize regulations.
Road Usage Charging to Support Highway Infrastructure
America’s highway system is largely dependent on the gas tax revenue generated by gas-powered vehicles. In 2019, 82 percent of the Highway Trust Fund’s revenue came from excise taxes on motor vehicles. The trust fund is facing declining revenues due to the rise of EVs, and the increased efficiency of gas-powered vehicles as well as the increased cost of construction and infrastructure buildout. Lawmakers can consider a variety of policy options to ensure sufficient funding for crucial highway infrastructure. Road usage charging (RUC) is one of a number of options that has garnered considerable attention for addressing the revenue shortfall. RUC would charge a fee based on the distance traveled by the vehicle, typically around 1 cent to 2.4 cents per mile. Several states are currently studying RUC via pilot programs funded by federal grants. Although RUC is a revenue-neutral solution to the gas tax revenue problem, it does not come without its challenges. Major concerns shared by policymakers and drivers include privacy and data security, cost, and equity by geography.
Increasing Awareness Sparks Conversation Around End-of-Life Battery Recycling
The level of national awareness around batteries has risen to an unprecedented level in the last five years. As a result, the conversations surrounding electric vehicles have become increasingly focused on end-of-life battery recycling. As the EV transformation accelerates, end-of-life batteries and manufacturing scrap are viable sources of reusable material. Developing a collection and recycling infrastructure that is properly managed is crucial to reaching national and global sustainability goals. EV battery policy should be flexible and not hinder battery innovation.
It is clear that the future of the automotive industry is electric. The role of the federal government can help support and build the capacity in the states for the electric transformation. Ultimately, state policymakers are responsible for enacting policies that will be crucial to a successful EV transition while protecting the general well-being of their constituents. The Institute for State Policy Leaders, with the support of the Alliance of Automotive Innovation, will continue to educate state lawmakers about the intricacies of the EV industry and related policy issues so that they can facilitate a seamless and harmonized EV transition.