On Wednesday of this week, 50 companies led by clean transportation nonprofit CALSTART, including my company, Volta, signed a letter urging Congress to keep a tax credit that boosts U.S. job creation and EV leadership.
Yesterday, several sources revealed that the final version of the GOP tax bill will preserve a $7,500 electric vehicle (EV) tax credit that was once at risk of being removed, according to Reuters.
Keeping the incentive protects not only thousands of American jobs and sales for automakers introducing their own EV models but also the U.S. economy at large. The Department of Energy estimates there are over 215,000 American jobs devoted to electric vehicle drive train and component manufacturing.
In addition to creating jobs, the EV sector is also tackling one of the biggest health hazards we face today: air pollution.
But despite the GOP’s retention of the EV tax credit, the U.S. is still lagging behind the rest of the world due to a lack of direct action when it comes to gearing up for an electric future.
So it’s up to individual states and companies to pick up the slack.
California is, of course, leading the way. While the federal administration considers weakening fuel economy standards, California Assemblymember Phil Ting is putting forth a 2018 bill to ban gas powered cars by 2040.
“There’s already legislation in place to incentivize electric vehicles,” said Ting. “But having two pieces of legislation coupled together — one’s a carrot, the other is a deadline to push toward the carrot. With cars, California’s influence extends far beyond state lines. The largest car-buying market in the United States, California, has historically set air quality standards that surpass the Environmental Protection Agency’s. The state’s regulations also have a magnifying power, since more than a dozen states have adopted California’s rules as their own. Those rules are poised to remain in place regardless of any policy changes in Washington.”
Against this backdrop, we see daily announcements on how China is fostering EV innovation by ramping up production and instituting wide-reaching regulations. The country also vowed to cap carbon emissions and curb worsening air pollution by 2030, dictating priorities for a huge portion of the global auto market. It should be the U.S. setting those standards for the world, and the U.S. leading investment in new transportation technology.
Statistics show that moving towards cleaner transportation, clean energy, clean building, and investing in related technologies creates good jobs for American workers. In California, the EV charging supplier industry alone has created thousands of new jobs, according to the EVCA State of the Charge report. Right now, we have a federal government that talks about creating more jobs, while the rest of the world is capitalizing on it.
However, states do not need to wait for the federal government in order to take action. Companies, both inside the Valley and out have a responsibility to tackle this issue, namely in four key ways:
- Innovating by building best-in-class solutions for EV tech, infrastructure, and services that benefit customers and end users.
- Investing in the transportation shift, whether that means building free EV charging stations on campuses to encourage adoption, or offering employees incentives for choosing cleaner transportation options during their commute.
- Driving behavior change and educating the masses on clean energy transportation and ways to take a personal stake in fighting climate disruption.
- Continuing to improve infrastructure and sustainable business models to support the massive ecosystem shift.
Ultimately, the tax credit puts EVs into a price-point that’s appealing to a mass market a few years sooner. EVs already save consumers on maintenance and slash fuel costs by more than half. Regardless of subsidy, total cost of ownership for EVs will fall below that of gas cars by 2020, and a Bloomberg report claims that initial EV purchase cost will drop below that of gas cars by 2025.
So what are the dangers of China or other countries having a head start in the EV regulations race? What repercussions could the U.S. face for failing to adopt stricter standards or nationwide EV investment sooner rather than later?
The danger is that the U.S. will fall so far behind that by the time we wake up, American automotive companies will have a huge upward battle to fight as they try to compete in the global market. We won’t stop the EV curve, we’ll just put ourselves at the back of it.
Our one short-term federal subsidy is not enough for the U.S. to stay in the running as the EV revolution takes off and the world looks towards an electric future. We must reconsider taxpayer subsidies for coal, oil, and gas. American taxpayers have already lost out on billions due to loopholes that allow fossil fuel companies to get out of paying royalties for oil extracted from our taxpayer-owned land. At some point we need to turn those dials — to turn down the subsidy on oil and gas and to turn up the subsidy on EVs to accelerate innovation. It’s about aligning incentives to speed change.
We need to stop making foolhardy decisions that will put the country further behind by subsidizing the past and not preparing our country for the future. We are (luckily) beyond the point where U.S. policies truly matter to the adoption of the electric vehicle. We are now at the point where these things matter in terms of the country’s ability to compete.
To reclaim the U.S.’s global standing, states and companies need to lead by example to drive forward innovation and set the standard for the rest of the world.
Scott Mercer is founder and CEO of electric car charging network Volta.