BY MATT DAUS
The future of electric vehicles (EVs) was unclear a little over a decade ago. The green movement of the early 2000s experienced serious setbacks during the Great Recession, for obvious reasons, although sales have been steadily rising, reaching its zenith in 2018. Other countries around the world continue to make strides well ahead of America on alternative fuel vehicle policy, and we are now at a turning point in U.S. history.
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Plug-in electric vehicles hit a record of 361,315 in sales—approximately 17 percent of global EV sales in 2018. The Tesla Model 3 alone is responsible for almost 40 percent of all EV sales in 2018 and 50 percent in 2019. In terms of market share, Tesla, GM, and Nissan absolutely dominate the U.S. market and its top five models account for nearly 60 percent of all EV sales. That said, EVs account for only 1.3 percent of all cars sold in the U.S., compared to 2.6 percent of global new vehicle sales last year. Sales have obviously been much slower since the pandemic.
The EV market will likely be bumpy over the next few years. Nonetheless, the long-term trajectory has not changed, with price parity between EVs and internal combustion engines (ICEs) expected by the middle of this decade, primarily due to the falling cost of batteries and automakers’ optimization of their manufacturing processes. Increases in the driving range of EVs and the expansion of charging infrastructure may further boost public acceptance, especially for light-duty vehicles—although heavy-duty vehicles aren’t far behind.
Also, it’s likely that the autonomous vehicle movement will be composed of EVs. Beyond passenger cars, delivery vans, two-wheeled vehicles (scooters, mopeds, and motorcycles), and municipal buses are heading for electrification at a relatively fast pace, and will accelerate further over the next ten years. RethinkX published a report predicting that by 2030, 95 percent of U.S. passenger miles traveled will be served by on-demand connected and autonomous electric vehicles owned by fleets, not individuals, in a new business model known as transportation-as-a-service (TaaS).
Factors Affecting EV Adoption
We’re also in the middle of an election year, and where we go with EVs could depend on who wins. Policies enacted at the highest office in the land, whether in favor of fossil fuel or clean energy, will have a broad impact on EVs. This is because the manufacturing process and a plethora of funding for states is available to assist a comprehensive national plan, although many states and cities have already been committed to EV proliferation through policy incentives. If former Vice President Joe Biden becomes president, then there may be a higher likelihood of an EV ramp-up. In July, Biden revealed details of a $2 trillion climate plan, which is projected to create one million jobs in EV manufacturing, bolster charging stations, and offer rebates/incentives to U.S. consumers to swap old, less-efficient vehicles with EVs.
The Trump administration, on the other hand, has made clear of its intent to end the federal tax credit (of up to $7,500) for EVs, which can harm their growth. This administration has also rolled back the federal fuel efficiency standards, which may put U.S. automakers at disadvantage in a global market that is trending towards EVs. Over the past few years, nine countries, including the U.K., France, and China, have announced eventual bans on vehicles with an ICE.
States and cities are also accelerating this trend through EV purchase/lease incentives as well as well as increasing the availability of charging stations. California has led the nation through its Zero-Emission Vehicle (ZEV) mandate, which requires manufacturers to sell a steadily increasing share of EVs annually compared to ICE vehicles. California is joined by 11 other states that have adopted ZEV mandates (Colo., Conn., Maine, Md., Mass., N.J., N.Y., Oregon, R.I., Vt., and Wash.), which represent nearly 40 percent of new vehicle sales in the U.S. Minn., N.M, Ohio, and Nev. are about to do the same.
Private Sector Innovation
The proliferation of charging infrastructure would not be possible without the private sector. In late 2016, Volkswagen created Electrify America with $2 billion in funding as part of its emissions scam settlement with the U.S. and California. It has committed to a goal of building hundreds of stations and installing 2,000 chargers by the end of 2020.
One good example of a public-private partnership (P3) approach is the EV Shared Mobility project. This project is led by the City of Seattle and Atlas Public Policy, and it brings together the U.S. Department of Energy’s Energy Efficient Mobility Systems program and major industry stakeholders with the cities of Seattle, New York, Portland, and Denver to test different options. For example, as part of Seattle’s ride-hail outreach efforts, workshops on the benefits of EVs and the process of acquiring EVs are being held in collaboration with a driver advocacy group called Drive Forward.
Example of State Programs and Incentives
|State (Calif.)||Clean Vehicle Rebate Program (CVRP)||Up to $7,000 to purchase or lease a new plug-in hybrid electric vehicle (PHEV) or battery electric vehicle (BEV)|
|State (N.Y.)||Drive Clean Rebate||Provides up to $2,000 for the purchase or lease of an EV with a battery capacity of at least 4 kWh|
|Clean Pass Program||Allows EVs, PHEVs, and some hybrid vehicles access to HOV lanes on the Long Island Expressway|
|Charge Ready NY||Provides a rebate of $4,000 per charging port for Level 2 charging stations. Stations can be located in public facilities, workplaces, or multi-unit dwellings.|
|NYS Income Tax Credit||Available for 50% of the cost of alternative fueling infrastructure, up to $5,000. Must be for business use and used more than 50% of the time. Unused credits may be carried over into future tax years. The credit expires 12/31/22.|
|Port Authority (N.Y./N.J.)||PEV Toll Discount Program||Provides a discounted toll rate for EVs and hybrid vehicles on all Port Authority off-peak hour crossings, after registering with E-Z Pass New York. Applies to the George Washington Bridge, Lincoln Tunnel, Holland Tunnel, Goethals Bridge, Outerbridge Crossing, and Bayonne Bridge.|
*Source: Alternative Fuels Data Center
Where Do We Go?
EVs are, without a doubt, poised to reach a high degree of mass adoption over the next decade with the onset of technological maturity and substantial commercial applications. Taxicabs, black cars, and TNCs may be prime candidates for electrification given the fact that TNC trip proliferation often replaces less-polluting transportation modes (e.g., biking and mass transit) and has created a congestion crisis in most major U.S. cities. In addition, TNCs account for up to 14 percent of vehicle miles traveled in some cities, and this number is expected to grow rapidly. There does not appear to be any widespread plans by a private company or government regulator to push incentives or mandates in the for-hire vehicle, taxicab, or TNC arena. As cities move toward congestion pricing, EV fleets should be considered exempt to encourage proliferation.
It is undeniable that EVs would not be experiencing the exponential growth over the last decade without government backing. Unfortunately, they have become increasingly controversial—what was once perceived as transitional technology has now taken on distinctly political overtones. However, to blunt the expected impact of increased post-pandemic vehicle surge, state and local governments will need to make key decisions with a multi-tiered policy approach with incentives (with or without federal support or funding), which could have a significant impact. The public-private partnership model is also an effective path for fleet electrification and development of charging infrastructure. All said, the benefits of EVs are undeniable, as they help improve fuel economy, reduce emissions, and increase energy security, so we should not lose sight of this next revolution in transportation. [CD0920]
Matt Daus is a partner with the law firm Windels Marx, president of IATR, and a leading authority on ridesharing apps. He can be reached at firstname.lastname@example.org.