President Joe Biden declined to declare a "climate emergency" this week, but the administration still faces intense pressure to combat climate change — and electric vehicles will play a key role in reducing emissions.
As part of the push to shore up the nation's EV infrastructure, the White House has started implementing its $7.5 billion plan to bring 500,000 new EV chargers across the U.S. to enable drivers to re-charge so they can travel long distances.
In an interview with Yahoo Finance, Transportation Secretary Pete Buttigieg explained why the government — in addition to the private sector — should invest in this type of EV infrastructure.
“We think it is something we need to encourage for three reasons," Buttigieg said.
Those three reasons: The U.S. needs to act fast to address climate change; make sure U.S. firms take the lead; and ensure that the benefits of EVs reach everybody quickly including lower income drivers.
"Will it happen fast enough to meet our climate challenge? Will it happen in a way that is led by America and not dominated by firms from other countries?" Buttigieg said. "And will it happen in a way where the benefits reach everybody quickly, including those who, because they are lower income, stand the most to gain by being free from from gas bills — but only if they can afford the vehicle in the first place."
The money will fund two major efforts. Roughly $5 billion will go to the National Electric Vehicle Infrastructure Program for states to build out charging infrastructure along highways. Meanwhile, $2.5 billion will fund local grants to support community and corridor charging, improve local air quality, and increase EV charging access for rural and underserved communities.
In addition, the White House announced a $700 million public-private initiative to bring 250,000 additional chargers to the nation's charging network and create 2,000 new jobs in the industry.
Buttigieg's background — which includes a stint at McKinsey before becoming mayor of South Bend, Indiana — could prove useful as he works to spur change at both the government and corporate level.
Making EVs more affordable
Even after the U.S. creates a charging network, one big question remains: Who will actually buy EVS? New polling from AAA finds a quarter of Americans will likely buy an EV as their next car; however, high purchase prices remain the No. 1 reason that consumers might hesitate to take the plunge. Buttigieg addressed the issue of affordability in his interview with Yahoo Finance.
"We continue to believe in the idea of making EVs cheaper through tax credits until the market has come full circle,” Buttigieg says about boosting EV ownership.
The Transportation Secretary noted that the administration has a goal of EVs constituting half of all car sales by the end of the decade. Once these cars are produced at scale, they could become cheaper.
"So I'll be very interested to see it accelerate and watch the auto industry continue to rev up its supply to meet the growing demand for these vehicles," Buttigieg said.
Currently, consumers can get a $7,500 tax credit for buying an EV. The administration and Congress are clashing over whether the credit will be expanded beyond its current format, where it's phased out for automakers that pass 200,000 EV sales. Currently Tesla (TSLA) and GM (GM) no longer qualify for the federal tax credit, and Toyota (TM) and Ford (F) soon won't be eligible, either.
For the White House's climate and EV goals, and Buttigieg's plans, the hope is compromise can come soon.