US EVs: 50% Target by 2030

In August 2021, President Biden issued an executive order, setting a target to ensure half of all vehicles sold by 2030 in the US were zero-emissions vehicles. To achieve this target, EV production would need to reach 5.8 million units -- ten times that of this year. The auto industry has responded to future market demand in the short few months following this announcement by beginning to shift operations away from traditional internal combustion engines (ICE) towards electric vehicles (EVs). A global automotive executive survey signaled that an overwhelming majority anticipates over half of their new-car sales to be electric by 2030. In fact, US-manufacturer GM has pledged to phase out gasoline-powered cars and trucks entirely by 2035 and introduce 30 new EVs by 2025. Meanwhile, Ford has increased its EV investment to $30 billion through 2025 to ensure that at least 40% of their global sales are EVs by 2030.

As US companies take massive strides in their electrification plans, international automakers are leading the way. Nissan recently announced its intentions to contribute billions toward EV programs with hopes of releasing 23 new EVs by 2030. German automaker Volkswagen is investing $86 billion to ensure that half of all sales by 2030 are EVs while also working towards a larger carbon neutrality goal for 2050. It is evident that President Biden's announcements are already rapidly working to decarbonize the automotive sector.

Catching Up: EVs are Surging in Europe and China

In 2019, Third Way's Dr. Ellen Hughes-Cromwick predicted that gas-powered vehicle sales had already peaked. The data was there: in 2015, as the economy gathered momentum after the Great Recession, US auto sales significantly increased with ICE sales peaking at 17.5 million units in 2016 and declining every year since. Bloomberg predicts that at least two-thirds of global car sales will be EVs by 2040. So, where is this market, and who dominates it?

In 2020, Europe led the world for the highest share of plug-in electric vehicles in new passenger car sales. In France, Belgium, and the UK, plug-in EV sales topped 10% of the market share (this year to date in the UK, market plugin share for now stands at 17.5%). China's EV market is also growing rapidly. In 2021, EV's market share in China nearly tripled from 2020.

Conversely, EVs only comprised 2.3% of new passenger vehicles sold in the US in 2020. To bump that number, the US EV market will need federal support, which is why President Biden set the goal of 50% of new vehicle sales to be EVs by 2030.

Because EV markets in China and Europe are quickly growing, automakers there are racing to capture the EV production market and accompanying battery supply chain. Where China's auto industry is rapidly gaining momentum, industry in the US -- where automakers dominated the gas powered vehicle industry -- is quickly falling behind. By scaling up its EV manufacturing and EV battery production capacity, China has established a significant advantage in production and could easily win Europe's mass market for EVs.

Majority of Consumers Want EVs

President Biden's executive order to reach 50% of EV sales by 2030 was not an arbitrary decision but rather a reflection on both scientific consensus and consumer perception of EVs. With issues of climate change, pollution, and sustainability taking the forefront for everyday Americans, attitudes on EVs are gradually shifting -- accepting them as a necessary standard in the automotive industry to reduce global greenhouse gas emissions. Nearly a third of consumers are indicating their growing interest in purchasing one for their next vehicle. At the same time, an overwhelming majority (71%) would consider buying an EV in the future.

A significant hurdle for consumers remains the cost; 66% of Americans refer to a higher upfront price point as a significant deterrent to purchasing an EV. However, research shows that EV owners save thousands on fuel costs, maintenance, and repairs compared to traditional gas-powered vehicles. As the availability of EVs expands with a burgeoning industry, it is critical that automakers diversify vehicle types, like pickup trucks and SUVs, to cater to a wider set of consumers.

EVs Promise Lower Lifetime Costs

Not only are battery electric vehicles essential to reduce transportation emissions, but they're also cheaper than traditional-gas powered vehicles and can ease the cost burden on American consumers.

The national average cost of fuel for a battery electric vehicle is about 60% less than a traditional gasoline-powered vehicle. Battery electric vehicles also have lower standard maintenance costs than a gas-powered vehicle.

Overall, the lifetime fuel costs for battery electric vehicles are less than half that of gasoline-powered vehicles, which goes for cars, pick-up trucks, and SUVs. That means EVs help Americans save thousands of dollars at the pump while reducing their overall carbon footprint and improving air pollution.

EV RD&D and Production Means American Job Growth

With the auto industry racing towards electrification within the decade, manufacturers are making major investments in EV technology innovation and deployment, creating a gateway for job growth across multiple skill sets. The production of EVs, their smaller components, and charging infrastructure are projected to spur hundreds of thousands of employment opportunities within plant communities across the country, especially in the Midwest and the Great Lakes region.

These projections go hand in hand with real-time investments and job opportunities. For example, funding by Ford to ramp up EV and battery manufacturing will create 11,000 jobs across Kentucky and Tennessee. Subsidiary industries traditionally internationally outsourced will also see a resurgence; GM recently announced intentions to build a plant to manufacture battery cathode materials, not only driving down costs but also shrinking US dependence on foreign supply chain fluctuations. Domestic automakers are not the only manufacturers prompting job growth; Toyota will build a $1.29 billion EV battery plant, producing 200,000 a year and employing 1,750 workers.

Beyond careers in direct EV production, the rapidly expanding industry will support careers in EV maintenance and repair, charging infrastructure deployment -- a project to which GM is allocating $750 million -- and vehicle sales, revolutionizing employment in the automotive industry as we know it.

Federal Funding to Turbo Charge Electric Vehicles

There's been a lot of movement to expand EV and EV parts production in the US in the past year. In fact, between June and October of 2021, six new assembly plants in the US were slated to produce EVs, and 10 additional EV suppliers began producing batteries, E-motors, inverters, or other EV components. In the past few weeks, General Motors announced it would build a new cathode plant in the US and Toyota announced its first US battery plant.

Clearly, the market is moving toward EVs. The mere prospect of federal policy has catalyzed automakers to take action in order to participate in this growing market. But in order to fully transition to clean vehicles, we also need robust federal funding for both EVs and charging infrastructure.

President Biden has already signed one piece of legislation into law -- the Infrastructure Investment and Jobs Act (IIJA). The accompanying budget reconciliation, known as the Build Back Better Act (BBBA), has been passed by the House and is currently under negotiation in the Senate. Together, these two pieces of legislation make significant investments in the future of electric vehicles in the US. Not only do they provide tax incentives and grants to accelerate the adoption of EVs, they make a down payment on charging infrastructure and strive to build US competitiveness in emerging EV parts industries, like lithium ion batteries.

The IIJA, signed into law last month, contains $7.5 billion for alternative refueling infrastructure, including at least $5 billion for EV charging. It also allocates $6 billion for battery materials processing, manufacturing, and recycling. The BBBA creates a $7,500 tax credit for new EV purchases and a $4,000 tax credit for used EV purchases. It also contains tax incentives and grants to help automakers and other manufacturers in the supply chain retool their facilities to produce EVs.

Not only do these bills drive down the cost of EVs for American consumers, but they also invest in charging infrastructure to ensure EV drivers can refuel their vehicles with ease. Moreover, the bills also make an effort to help capture the global market for EVs by investing in domestic battery manufacturing plants, as well as RD&D for EV battery recycling and repurposing.