Michael Grunwald reports in Politico:
Now that electric vehicles are going mainstream in the U.S.most automakers believe “the future is electric." There are 43 plug-in models for sale in the U.S., with dozens more expected. The main obstacle to mass adoption has been battery costs, but they’ve plunged more than 80%, and they’re expected to keep plunging. The credit phases out for automakers that sell 200,000 EVs, a milestone that both Tesla and General Motors reached in 2018. The status quo would keep the tax credit afloat, but in reduced form for GM as well as Tesla. “Trump couldn’t bring back coal, and he won’t kill the electric car.”
The electric vehicle revolution, after years of hype that outpaced reality, finally seems to be taking off in the United States. The best five months for plug-in sales in American history have been the past five months. Tesla’s Model 3 has been one of America’s top five selling passenger cars this fall, surging ahead of fossil-fueled mainstays like the Ford Fusion and Nissan Sentra. The U.S. put its 1 millionth electric vehicle on the road in September, not a large chunk of the nation’s 260 million vehicles, but not too shabby considering production started only in 2010.
The question is: Can President Donald Trump stop this trend?
The Trump administration is already trying to roll back strict fuel-efficiency rules that have helped encourage automakers to produce electric cars. Now the president, angry at General Motors for closing U.S. plants, is vowing to eliminate tax credits that have helped encourage consumers to buy electric cars. And his protectionist trade policies could create additional burdens for EV manufacturers. The electrification of transportation was a key element of President Barack Obama’s strategy to cut U.S. carbon emissions and fight climate change, but Trump doesn’t care about cutting emissions, and he doesn’t like things associated with Obama.
So far, Trump’s incendiary rhetoric and fossil-fuel-friendly policies have failed to even slow down America’s transition to a clean-energy economy. For example, the president has repeatedly vowed to revive the coal industry, by pushing to weaken air pollution rules and putting a coal lobbyist in charge of the Environmental Protection Agency, but utilities have continued to shut down dirty and uneconomical coal plants. U.S. coal consumption has dropped to its lowest level since 1979, while zero-emission wind and solar power are booming; they now account for 10 percent of U.S. generating capacity, up from about 1 percent a decade ago.
Trump won’t be able to kill the federal tax credit for electric vehicles without cooperation from Congress, and his efforts to ease fuel-efficiency standards will face serious legal and bureaucratic obstacles. But while the clean power revolution is in its adolescence, the electric vehicle revolution is only in its infancy, and Washington could conceivably help strangle it in its cradle. EV sales are up nearly 80 percent this year, but they’re still under 2 percent of all vehicle sales. EVs still cost more upfront than internal-combustion vehicles, and with gas prices low, it takes longer for EV drivers to make up the difference in fuel savings. Lithium-ion batteries keep getting better and cheaper, but “range anxiety” still scares away many potential EV buyers, and there still aren’t many charging stations on the roads. As tough as it has been to persuade utilities that have a legal obligation to select cheaper options to abandon expensive coal plants, it has been far tougher to persuade consumers who are accustomed to gasoline to spend extra money to change their lifestyles.
“There’s so much inertia working against us,” says Chris Nelder, who runs an electric vehicle program at the clean-energy Rocky Mountain Institute. “People don’t know a lot about EVs. They don’t know where there’s a charging station. The dealers don’t keep EVs on the lots. And it doesn’t help when the president is making threats.”
The next big political fight over electric vehicles will involve the federal tax credit of up to $7,500 that Trump vowed to kill last week. Congress created the credit in 2008 and expanded it in 2009 in an effort to reduce U.S. dependence on foreign oil as well as carbon emissions and other pollutants. By all accounts, it has helped to jump-start the industry, spurring automakers to invest in EVs and consumers to buy them. But the credit quickly phases out for automakers that sell 200,000 EVs, a milestone that both Tesla and General Motors reached in 2018; as a result, even if Trump did manage to kill the credit, GM would barely be affected.
Then again, this fight isn’t really about climate policy or transportation policy or even Trump’s pique at a company that made him look bad. EVs have become yet another battleground in America’s ubiquitous culture wars, targeted by many Republicans as eco-elitist Obamamobiles. Even before Trump took aim at the tax credit, GOP Senator John Barrasso of Wyoming had introduced a bill that would not only kill it but also would slap new federal fees on EV owners. At the same time, Democratic Rep. Peter Welch of Vermont has filed a pro-EV bill that would remove the 200,000-car threshold and extend the credit for 10 years. Senate Minority Leader Chuck Schumer has said he’ll demand that any bipartisan infrastructure bill include permanent tax credits for EVs, while climate-conscious Democrats like incoming Rep. Alexandria Ocasio-Cortez are pushing a “Green New Deal” that would bolster government support for EVs.
The most likely result is probably the status quo, which would keep the tax credit afloat, but in reduced form for buyers of GM’s all-electric Chevrolet Bolt—GM is discontinuing its plug-in hybrid Chevy Volt—as well as Tesla’s Model S luxury sedan, Model X sports-utility vehicle and Model 3 mass-market sedan. Tesla CEO Elon Musk has pledged to sell the Model 3 for $35,000 sometime next year, but the current version is still listed at $50,000, and the loss of the tax credit will diminish its appeal to more cost-conscious consumers. At the same time, Trump’s steel tariffs are boosting prices for all U.S. vehicles, and the auto provisions in the new version of the North American Free Trade Agreement could create additional costs for electric vehicles that rely heavily on imported electronics and other parts from abroad.
Electric vehicles tend to have higher safety ratings and customer satisfaction than their internal-combustion counterparts; they’re unusually peppy, and Tesla in particular has received consistently rapturous reviews. Just this Tuesday, Musk tweeted about a Detroit News auto reviewer who doesn’t believe climate change is real but nevertheless bought a Model 3: “Not everyone can be convinced about global warming, but if an electric car is the best product, they don’t need to be.” The Model 3’s production delays nearly brought down Tesla, but the kinks seem to have been worked out: Tesla has sold more than 90,000 of them in the U.S. in the past five months, accounting for nearly half the nation’s EV sales.
Brett Smith, a manufacturing expert at the Center for Automotive Research, says most EV buyers are thrilled with their cars. But the vast majority of Americans know nothing about EVs, he says, because they’re still a niche technology outside California, where generous state rebates and an extensive network of charging stations has boosted them to nearly 10 percent of all vehicle sales. Smith is skeptical that EVs will hit critical mass in the rest of the country without more federal help. “They’ve expanded their market share and opened some eyes, but with gas prices this low, they’re not going to have mass market appeal,” Smith says. “They’re a political football, and this administration is obviously punting that football.”
Still, most automakers seem to believe “the future is electric,” as Volkswagen USA’s CEO put it last week at the Los Angeles Auto Show. There are already 43 plug-in models for sale in the U.S., with dozens more expected in the coming years, and there’s even more investment happening in China and Europe, where governments are more concerned about a carbon-constrained world. The main obstacle to mass adoption has been battery costs, but they’ve plunged more than 80 percent in the past decade, and they’re expected to keep plunging through technological advances and economies of scale. Another obstacle has been the lack of electric options for pickup trucks and SUVs, the vehicles of choice for most Americans in recent years, but those options are expected to expand as well.
Now that electric vehicles are on the verge of going mainstream in the U.S., federal policy could become the primary obstacle to their spread. The Obama administration made a concerted effort to promote all kinds of alternatives to fossil fuels, from solar panels to advanced biofuels to LED lighting, and its 2009 economic stimulus bill included more than $2 billion to charge up a battery industry for electric vehicles in the U.S. By contrast, the Trump administration has aggressively promoted fossil fuels by opening new areas to mining and drilling, relaxing restrictions on air and water pollution, even floating a plan to bail out uneconomical plants.
Trump’s most consequential initiative for the electric-vehicle market could be his effort to reverse Obama’s stricter fuel-efficiency standards, which could dramatically reduce the pressure on automakers to replace gas-guzzlers with cleaner models. “That could be devastating,” says Mary Lunetta, a San Diego-based activist who leads an electric vehicle initiative for the Sierra Club. “The science shows we need to reduce emissions so quickly, and to do that we need to electrify transportation. It’s crazy that we’re even talking about going backwards.”
Trump rejects climate science and withdrew the United States from the Paris climate accord. Just this week, the U.S. joined with fossil-fuel-friendly nations like Saudi Arabia and Russia to block action at a global climate conference in Poland. Meanwhile, as electric vehicles have advanced from nothing to novelty to potential threat in less than a decade, the oil industry has taken notice and started to fight back, portraying government support for EVs as a subsidy to rich hobbyists. Frank Macchiarola, a vice president at the American Petroleum Institute, told me that EV subsidies and mandates distort the free market, an argument that Trump economic adviser Larry Kudlow recently echoed at a White House briefing. Macchiarola said Georgia was one of the leading states in EV sales until it ditched its EV subsidies—and then it faded back into the pack.“We want consumers to decide what to drive, not bureaucrats in Washington or some state capitol,” Macchiarola said. “Sure, reducing emissions is an important aspect of energy and transportation policy, but it shouldn’t be the only aspect.”
Environmentalists point out that U.S. taxpayers lose more money from tax breaks for fossil fuels than they spend on subsidies for alternatives to fossil fuels. Studies have also shown that federal subsidies to promote nuclear power and hydraulic fracking were more generous than comparable subsidies for renewables. And those kinds of analyses leave out some of the most important perks for fossil energy, like America’s military and diplomatic commitment to protecting the free flow of oil, not to mention the lack of a tax or other price on carbon pollution.
Still, electric vehicles have come a long way in just eight years in a country with 150,000 gas stations. EV drivers tend to be EV evangelists, raving about the joy of torque and the thrill of no longer spending money at the pump, posting photos of their pets in the “frunks” where traditional cars have engines. They’re worried that Trump will slow the progress of a cleaner, better, and soon-to-be-cheaper technology, but they’re confident he won’t be able to stop it.
“Trump couldn’t bring back coal, and he won’t kill the electric car,” says David Reichmuth, who runs a clean-car program for the Union of Concerned Scientists. “The transition will happen. It just needs to happen a lot faster.”
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