What President Biden’s $ 174 billion electrical automobile funding means to the market – Robb Report

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Then-Vice President Joe Biden in a Chevy Corvette in 2014

President Joe Biden wants the electric revolution to go mainstream, and he is ready to dedicate $ 174 billion to it.

On Wednesday evening, the president announced a $ 2 trillion spending plan aimed at rebuilding infrastructure in the US and giving the economy much-needed boost. The proposal, which is to be funded through a corporate tax rate hike, includes a $ 174 billion investment that Biden hopes will advance the development and adoption of battery-powered vehicles.

How exactly does Biden plan to make electric vehicles more attractive to American drivers? By addressing two recurring problems: affordability and fear of fees.

2021 Tesla Model S.

Tesla

Make electric vehicles less expensive

Despite a huge surge in popularity, electric vehicles are still a niche product. Battery-powered cars only make up 2 percent of sales and 1 percent of all vehicles on the road. One of the main reasons for this is the price. The Biden administration believes they have a solution to this in the form of large customer incentives.

A cursory look at the automotive market reveals that, by and large, electric vehicles cost significantly more than their gas-powered counterparts. The reason is simple: electric car batteries are expensive, costing up to $ 15,000 for a midsize sedan. Although the cost of lithium batteries is slowly falling, the president wants to offset that premium by offering large tax credits, discounts and incentives to individuals, companies and governments that buy electric vehicles, as reported in the New York Times.

Ford's Mach-E crossover in front of the Petersen Automotive Museum in Los Angeles.

2021 Ford Mach-E electric crossover

Photo: Courtesy of Ford Motor Company.

Offering customer incentives for electric vehicles is of course nothing new. Drivers purchasing a new electric vehicle currently receive a tax credit of $ 7,500 on their purchase. However, that credit expires after an automaker sold 200,000 electric vehicles. That said, you won’t get one if you buy a Tesla or a General Motors electric car today. The administration has not disclosed what the new incentives will be or what vehicles they will apply to, but it is fair to assume that they will be larger and with much more generous exit limits.

Will these incentives be enough to encourage consumers to buy more electric vehicles and automakers to increase production? That’s an open question, especially since we don’t know how big they will be. It is clear, however, that the administration does not believe that current loans are nowhere near enough to keep the needle moving.

End the loading fear

Cost isn’t the only barrier to buying an electric vehicle. The fear of charging is also an issue, especially since dedicated EV chargers are nowhere near as common as gas stations. Just look at how much attention is paid to the driving range among the top electric vehicles in the market.

2022 GMC Hummer EV Edition 1

2022 GMC Hummer EV Edition 1

GMC

The Biden administration’s solution to this problem is simple: Build more charging stations. By the end of the decade, 500,000 stations are slated to be built across the country – that would be 10,000 per state if they were evenly divided, reports CNBC. That is an enormous increase compared to the current state of affairs. There are currently 41,400 dedicated EV chargers in the U.S. compared to 136,400 gas stations.

While more chargers are definitely a good thing, their success in alleviating consumer anxiety depends on what type of chargers they are. A little more than 10 percent of today’s chargers are DC fast chargers. You can refill an EV to 80 percent in 20 to 30 minutes. Most charging stations, however, supply alternating current, which is then converted into direct current by the electric vehicle itself. A full charge with AC chargers can take hours, depending on the electric vehicle. If the Biden administration didn’t prioritize the creation of DC fast chargers, potential EV consumers would have to wait hours for their vehicles to charge, which is sure to impact sales.

However, adding 500,000 stations will go a long way towards allaying concerns about the flow of sap from electric vehicles on the road – and countering the notion that electric cars are just lightning bolts.

Keep a campaign promise

Biden has wired Wednesday’s announcement since he was on the campaign. In the run-up to the November elections, he said repeatedly that he planned to increase customer incentives to buy battery-powered cars and invest billions in improving the country’s charging infrastructure. Then in January, during his first week in office, he said he wanted to replace the government’s fleet of vehicles – which reportedly consists of over 645,000 cars – with American-made electric vehicles.

And the response was quick. Days after Biden’s announcement, GM announced that it would phase out global sales of all gas and diesel-powered vehicles by 2035. Similar announcements from Volvo and Audi followed. Wednesday’s mammoth spending plan still has a few hurdles before it becomes law, but it could be the jolt both consumers and automakers need to make electric vehicles the street standard rather than the exception.