The Environmental Protection Agency (EPA) has proposed a new set of historically strict tailpipe emissions standards which would provide a massive boost to electric vehicle (EV) sales in coming months and years. The new proposed standards, which were introduced last week, would require that more than half and at least two-thirds of vehicle sales will need to be EVs by just 2032 – less than a decade from now.
This is a massive shift; last year, EVs made up just 5.8 percent of the total auto market in the United States. While it’s an extremely ambitious target, it’s also a vital one from a climate perspective. Transportation currently represents the single-biggest source of carbon dioxide emissions in the United States. This matters on a global scale, as the U.S. is the country with the second-biggest carbon footprint, behind China.
If these standards are adopted, it will require massive shifts at nearly every node of the EV supply and value chains. For one thing, it will require a massive scaling up and out of EV infrastructure. For one thing, the installation of EV chargers will have to increase more than eightfold by 2030. At present, the grand total of EV chargers in the entire country stands at just 130,000. A massive increase to this infrastructure will be essential to changing the country’s favor toward EVs and alleviating “plug-in paranoia.”
Another major infrastructure hurdle will be the massive increase in electricity demand from the grid. For years now, critics have been warning that the U.S. power grid is old, outdated, and entirely unprepared for the EV revolution. Over in Europe, increased adoption of EVs has driven advances in local power grids and in the expansion of the renewable energy sources that feed them, but we still have a lot of catching up to do on this side of the Atlantic.
In addition, reaching the kind of EV uptake proposed by the EPA will necessitate much lower prices on EVs so that more Americans will be able and willing to get on board and get behind the wheel of an electric car. Currently, the average EV costs around $60,000 – $11,000 more than the average gas-powered vehicle. That price average will have to drop dramatically and more mass-market EV models will need to be introduced in order for EVs to represent the majority of sales. Luckily prices are already falling, but they will need to continue their downward trend, and they’ll need to do it quickly. Tesla has cut prices for some of its models a few times already, but more will need to be done to but EVs within reach of the average U.S. consumer.
There will also need to be a lot more clarity and consistency for consumers looking to cash in on EV incentives. The Inflation Reduction Act has offered up huge amounts of cash to encourage the increased adoption of EVs (up to $7,500 per purchase), but it also introduced major and disruptive provisions about how much of EV supply chains need to take place within the United States. This means that the criteria for qualifying for those incentives and tax breaks is changing rapidly as rules about how much of an EV has to be domestically made are changing.
Finally, raw materials will present a major challenge, especially with the increased push to bring supply chains back to the United States. At present, the cobalt, lithium, and other key materials used in EV batteries are almost entirely controlled by Chinese companies. Moving away from those established supply chains won’t be cheap, but the United States is already on track to massively increase domestic lithium production. Luckily, the country has massive lithium reserves, it just needs the capacity to extract and refine it at a breakneck pace in order to keep up with targeted EV demand.
There are no shortage of headwinds for the EV revolution in the United States, but the current state of the world and the economy demands drastic change. This kind of dramatic policymaking is exactly what climate advocates have been demanding for decades, and with the right strategy and support from the private sector it could be one of the most successful climate programs the U.S. has ever seen. It’s certain to have trade-offs, but the potential gains from electrifying the U.S. auto fleet will certainly outweigh them. Plus, as gasoline prices (not to mention the costs of its externalities) continue to rise, cutting ties to the pumps could ultimately help the bottom line for drivers everywhere.
By Haley Zaremba for Oilprice.com
More Top Reads From Oilprice.com:
- Gold And A New Crude Benchmark: A New Dawn For The Petroyuan?
- Germany Moves To Ban Most Oil And Gas Heating Systems From 2024
- Sudan Descends Into Chaos As Military Factions Fight For Control