Electric vehicles have long been a cornerstone of efforts to phase out fossil fuels and resulting greenhouse emissions.
It's no surprise, then, that the Biden administration has made increased adoption of EVs a priority in its plans to combat climate change.
However, the U.S. lags woefully behind Europe and China when it comes to incentivizing EVs. Plagued by inadequate infrastructure, misaligned government incentives and significant consumer hurdles, the U.S. EV industry continues to struggle to win market share.
U.S. EV policy has long centered on tax incentives as a pillar, which reduces the price premium. But tax incentives don't overcome customer hesitation to change or help build out the associated infrastructure and technology developments needed.
If the U.S. is to be a leader in producing and driving EVs, we propose a three-pronged approach.
1. Practical incentives. Under current policy, tax incentives run up against hard caps. Already, industry leaders General Motors and Tesla have faced a phase-out on incentives for their vehicles after 200,000 were sold.
In February, Democrats proposed a reintroduction of the GREEN Act, which would extend the caps on vehicles sold beyond 200,000. This is wise policy but comes with the caveat that tax incentives to consumers would drop by $500.
Although the extension of caps is good for auto manufacturers, the proposal does less to change the final purchase calculus of the consumer.
Accordingly, we need to make it easier to own an EV and fully realize the benefits of the technology. This can be done at every level of government.
For instance, we recommend using federal funds to encourage municipal and utility development of infrastructure, such as providing incentives for owners of multifamily homes or apartments to provide charging technology. Similarly, policymakers should work with building code regulators to introduce minimum electrical wiring for EV charging capability in new homes.
As we recover from the COVID-19 pandemic, commuting will also resume for many auto owners. Federal, state and local governments could provide incentives to employers that provide charging and also build out sensible amenities such as designated EV lanes, preferred parking spaces and reduced licensing fees.