Craig Farrand, Zondits guest, 10/6/2022
By the second decade of the new century, the success of Tesla had lit a fire under the butts of U.S. European and Asian automakers. Ford, BMW, Audi, Volvo, Toyota, Nissan, and others have all introduced fully electric vehicles (EV) and plug-in hybrids. In addition, new firms such as Rivian and Nio have entered the market.
For all intents and purposes, today’s EV experiment was launched in 2009 – with the production of the Tesla Roadster – more than 100 years after the last great experiments with battery-powered vehicles. And as was the case a century ago, the challenge remains one of battery life, and therefore the range of an EV on a full charge.
That’s why, by 2010, the U.S. Department of Energy began investing in a nationwide network of charging stations – in homes, at businesses, and on the road. The initial investment? 18,000 total chargers. Which was in the nick of time: That same year Chevy rolled out its Volt plug-in hybrid, using battery technology developed by the DOE, and Nissan rolled out its all-electric LEAF. (The DOE was involved there, too, helping finance production of the LEAF in Tennessee.)
From there, the race has been going full bore to improve the design and capabilities of batteries that would move these EVs across town and across the country. Again, thanks to DOE investment, battery costs dropped “by 50% in just four years.” At the same time, automakers were designing and delivering a variety of hybrids, plug-in and all-electric vehicles – in all shapes and sizes, from compacts to SUVs and full-sized trucks.
Which could be a good thing. According to the DOE, if every light-duty vehicle in the U.S. was converted to hybrids or plug-ins, “we could reduce our dependence on foreign oil by 30-60% while lowering the carbon pollution from the transportation sector by as much as 20%.”
Since 2010, the EV news has been fast and furious, and Planet Earth must be delighted. And now with the newly enacted Inflation Reduction Act (IRA), things are moving even faster, with new and expanded tax credits for new and used EVs — and with California deciding to require all new cars and light trucks sold by 2035 to be “zero-emission vehicles.” GM has also announced a target of 2035 for converting to all EV production.
This is “a huge day not only for California but the entire world,” said Lauren Sanchez, California Gov. Gavin Newsom’s climate adviser.
These developments come on the heels of President Biden’s 2021 executive order setting an ambitious target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles.
And both the IRA and the 2021 “Infrastructure Investment and Jobs Act (IIJA)” are also funding the development of expanded charging networks, especially across rural America.
So, the question, of course, is how do we get from “here” to “there?”
Yes, there are EVs available – and more coming – to meet nearly every lifestyle. But price, inventory and the status of tax credits and other incentives may restrict progress. And as other states follow California’s lead, the systematic rollout of new EV models could be disrupted.
So, let’s take a look at what’s already here and what’s on the drawing board (er, computer screen) for tomorrow – starting with Detroit’s Big Three. And Tesla. (One caveat: every announcement is open to revision by the carmakers.)
- General Motors: By the end of 2023, GM plans to have launched three new EVs powered by its new “Ultium”. GM’s long-range plans are even more ambitious: its lineup would be all-electric by the early- to mid-2030s (except for full-size pickups and SUVs); no more internal combustion engines for its light-duty fleet after that.
- Ford: Also by the end of 2023, Ford’s plans call for ramping up its production of EVS in order to reach an announced target of building 600,000 EVs and eventually boosting production to more than 2 million EVs a year by the end of 2026. It’s long-range goal? Achieving carbon neutrality by 2050. Plans also include an all-new electric SUV in Europe.
- Chrysler: This final member of the original American Big Three has announced plans to be all-electric by 2028. That move began with the unveiling of a new crossover concept car called the “Airflow” at the CES consumer technology show in Las Vegas earlier this year. According to company officials, the Airflow will be followed by at least two or three new all-electric vehicles, including a minivan that’s planned to be out in 2028.
- Tesla: This producer exclusively of EVs already has a strong presence in the U.S., starting with its original Roadster (which is no longer in production) and now offering four different models. Looking ahead, Tesla’s Elon Musk has announced ambitious plans for a “Cybertruck,” a semi-truck, a revised Roadster, an electric ATV, and a van.
Unlike the 1970s, today’s American landscape of the 2020s boasts eight foreign car manufacturers with domestic assembly plants. As a result, they’re all jockeying for not only a share of the U.S. market, but also a piece of the Inflation Reduction Act pie. However, timing is everything.
The just-enacted law provides tax credits with two components for the purchase of EVs ($7,500 total tax credit at the point of sale for new EVs and $4,000 for used EVs), but a new car initially must meet specific American-made criteria: It must be assembled in North America, the majority of battery components need to come from North America and a certain percentage of “critical minerals” must come from North America or countries with free trade agreements with the U.S. Vehicles that meet both the critical mineral and the battery component requirements are eligible for a total tax credit of up to $7,500. Vehicles that meet only one of the two requirements are eligible for $3,750 tax credit.
What’s important to note is that the tax credits don’t exist until next year. Starting in January, credits will be capped to an income level of $150,000 for a single filing taxpayer and $300,000 for joint filers. Likewise, the purchase price limit to qualify for the tax credit will be $55,000 for new cars and $80,000 for pickup trucks, SUVs, and vans.
Remember, though, that “extras” can drive up the price of any vehicle – and it’s the final price that’s relevant. And since the list of already-eligible EVs is short, and inventory is tight, buyers shouldn’t be surprised that prices are already up from just a few months ago.
There are also conditions surrounding used EVs and the $4,000 tax credit: it must be purchased at a dealership (no private sales), and only joint tax-filing households making less than $150,000 are eligible. In addition, if the car is a hybrid, it needs to have a battery capacity of more than 7 kilowatts. And the credit is either $4,000 or 30% of the value of the vehicle, whichever is less.
Currently the list of eligible new EVs that meet the requirements is short. Of course, every automaker with a U.S. factory is offering its own lines of EVs. But which ones will be built here and take advantage of the tax credit has yet to be announced by most manufacturers.
When considering California’s unprecedented step – and the potential impact of the IRA – those who worry about the climate are no doubt cheered. But those interested in purchasing that next generation EV (or even a used EV) may have a long, winding, and confusing road ahead when it comes to selecting a vehicle.
Stay tuned for the last post in the series: 200 years later, batteries remain the weak link of EVs.
Read more about electric vehicles:
- Automotive News: GM to flood heart of the market with EVs in 2023
- Car and Driver: Ford Targets 600,000 EVs by Late 2023, Announces Major Battery Plans
- Detroit News: Ford Flat Rock plant shifts to electric vehicles, Mustang
- CNBC: Chrysler kicks off plans to go all-electric by 2028 with debut of Airflow EV concept car
- Bloomberg: The Only Electric Car Worth Buying Right Now Is Used
- The Drive: Toyota Has a New EV Strategy. Here’s Where We Think It’s Headed
- Business Insider: Tesla’s Cybertruck could finally hit streets in 2022 — here’s what we know about Elon Musk’s 6 future vehicles
- Brookings: The moment for EVs: Strategies to transform American roads
- The Verge: Yes, the new electric vehicle tax credits are really confusing, but we can help
- Quartz: Does California have enough electricity to ban gas cars?