The United States’ Electric Vehicle Market Is (Finally) On The Move

The United States has historically been slow to embrace transportation electrification, but the electric vehicle (EV) movement is finally gaining momentum. All 50 states are now moving forward to build-out a national EV charging infrastructure network with funding from the Infrastructure Investment and Jobs Act (IIJA).

The auto industry is investing millions to create high-paying U.S. jobs and build new EV manufacturing plants alongside battery production and EV component processing– all spurred by Inflation Reduction Act (IRA) incentives. The U.S. Environmental Protection Agency (EPA) also recently proposed vehicle emission standards for nearly all vehicle classes, setting the stage for long-term market transformation.

While this increasingly favorable policy landscape is changing the game for EVs, the hard work to mainstream electrification and ensure a smooth transition is only just beginning. And getting the implementation details right is imperative for success.

Energy Innovation’s Senior Director of Electrification, Sara Baldwin, spoke with the Zero Emission Transportation Association (ZETA)’s Regulatory Director Thomas Boylan on the Electrify This! podcast to explore the latest actions shaping the U.S. EV market, why they matter, and the priorities for the EV industry. Tune in to Electrify This! for the full discussion wherever you listen to podcasts.

Q: What are you and ZETA most focused on right now?

A: It is a very interesting, exciting, and dynamic time right now in the transportation sector. I think we are looking at the beginning of an absolute change in the way we go about how we move people and goods to and from places.

ZETA members cover the entire EV supply chain, so we’re focused on issues that affect vehicle manufacturing, charging equipment, battery manufacturing, critical minerals development, and the electricity providers that are going to fuel this transition.

Right now, we’re focused on implementation of the IIJA and IRA. Many new programs were created or changed with these laws, so as new programs get designed and built out, we want to make sure that they're implemented in the best way possible.

We're also interested in permitting reform and ensuring a stable supply chain to support the EV transition. We are working to make sure that projects are built in a responsible way but in a way that meets the demands that we're going to be placing on the sector.

And then there is baseline regulatory work, such as responding to the EPA’s recent greenhouse gas emission standards, which we’ll talk about later.

The diversity of ZETA’s membership enables us to play in a lot of different policy arenas.

Q: What do the EPA’s new proposed tailpipe emission rules do, why do they matter, and what will these regulations do for the U.S. EV market?

A: There are two separate rulemakings happening on a similar timeframe. The first are light- and medium-duty vehicle standards, which cover vehicle classes one through three, based on vehicle weight—so passenger vehicles, light trucks, and some of the smaller delivery trucks.

EPA has proposed a set of pollution controls (or tailpipe emission standards) for greenhouse gas emissions, set in terms of grams of carbon dioxide per mile, and other tailpipe pollutants, such as nitrogen oxides, carbon monoxide, and sulfur dioxide. For each standard, the EPA has proposed different thresholds for model years 2027 through 2032.

The second set of proposed EPA rules target the heavy-duty sector. That’s everything from tow trucks and concrete haulers to school buses, transit buses, and long-haul 18-wheeler cabs. Since there are a variety of vocational applications for these vehicles, they operate under different conditions and have different charging needs. So that presents a different set of challenges, as compared with the light- and medium-duty sectors.

At the end of the day, these EPA rules are about reducing emissions in communities where people breathe the air near these vehicles.

I think the EPA really met the moment, so to speak, in terms of tackling the challenges that we’re facing when it comes to climate change and air quality. We think there are some areas where they can maybe go a little bit further, but the top line numbers from their proposal are a big deal.

For the light- and medium-duty proposal, for example, they are projecting that 67% of new sales in 2032 would be EVs. That's a really big number, and we look at that very optimistically.

We recognize that it’s going to be a huge challenge and there is a long way to go and a lot of work still to be done to get us there. That is what’s so critical about these standards: they paint this target 10 years into the future, which gives the entire supply chain a sense of certainty. They can make investments and de-risk those investments today because they have a sense of what their demand will look like in the coming years.

The EPA emissions standards really work in tandem with the BIL and IRA, which are creating the demand side drivers in the form of tax credits, consumer-oriented incentives, and grant-funding.

Q: How are your members responding to the IRA? And what challenges to implementation lie ahead?

A: The IRA is much an economic policy as it is a transportation policy as it is the environmental policy. Ten years from now, the U.S. will have built up domestic capacity to move this industry forward.

Right now, our members are looking at their own individual supply chains and what they need to do to meet these requirements in the IRA—where they can be strategic in making their investments and shore up those supply chains to ensure that their vehicles are eligible for these tax credits at the end of the day.

There is still work to be done there so we're going to need a lot more manufacturing capacity in the coming years.  

Even though we have great incentives now in place and we've got all this momentum, I think right now the biggest thing is permitting reform. As you turn the screws on these requirements and they ramp up, it’s a matter of how much of the critical mineral content in the battery needs to be domestically sourced.

I think the only way to offset that pressure is to reform the way that we permit new critical mineral development projects. As these requirements ramp up in the next few years, we must provide the ability to build new projects in a timely way. It takes up to 14 years to permit and complete from a ground discovery to production of a new, critical minerals facility or production facility. That's not going to be fast enough to meet the demands of this moment and the challenges that we face.

I think there's an opportunity to reform the system in a way that speeds it up, but still upholds the same environmental and social safeguards that we've put in place.

Q: What are your overall thoughts on the state of the U.S. EV market?

A: What an exciting time this is. The IIJA was signed a year and a half ago, and the IRA not even a year ago. We are just at the beginning, and I think we're going to see the impact of these policies for years to come. We all have a sense of what these policies can do, and we're at the stage of making sure we maximize their potential.

We're just starting to see this threshold being crossed where we're going to tip into this new generation of transportation. There’s more to come, and there's a lot happening already. Exciting–I think that's the word of the day.

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