Electric vehicles near ‘tipping point’ in 2023, but tax credit questions, utility interconnection challenges lie ahead

0


Electric vehicles made up more than 5% of new vehicle sales in the United States last year, and experts say rapid growth in transportation electrification is likely to continue. Federal funds will help to develop a national charging network and incentivize consumers to purchase from dozens of new models that automakers are bringing to market.

EVs as a percent of new vehicle sales have risen from around 2% in 2020 to more than 6% in the third quarter of 2022.

“There’s an incredible amount of opportunity and momentum,” Electrification Coalition Executive Director Ben Prochazka said. The group advocates for policies to speed the adoption of plug-in vehicles, and sees the bipartisan infrastructure law of 2021 and last year’s Inflation Reduction Act as key accelerators in the industry.

Among other investments, the infrastructure law provided $7.5 billion for a national network of 500,000 electric vehicle chargers while the IRA extended federal tax credits for vehicle purchases.

It appears EVs “are on the verge of a tipping point,” Prochazka said. “But I do think we have challenges,” including working out the details of how federal incentives will be structured.

“The transition takes time,” said Joe Britton, founder and former executive director of the Zero Emission Transportation Association. The group’s members include utilities and charging companies, Tesla, Lucid, Sunrun and other technology companies.

EV sales in the U.S. could reach 10% this year, he said, though Britton doesn’t expect sales to continue growing at such a rapid pace.    

President Joe Biden wants half of all new passenger vehicle sales in the U.S. to be electric vehicles by 2030. Experts say the goal is aggressive and will hinge on the easing of constrained supply chains and how federal incentives are implemented. 

Stephen Engblom, senior managing director of commercial real estate firm CBRE, says he is “optimistic” the president’s goal can be achieved if challenges in locating charging stations are met and the grid can support the new demand. “You have to have the energy and you have to have the real estate,” he said.

Building out the EV charging network “is actually a real estate challenge,” Engblom said, requiring automotive and charging companies, utilities and commercial real estate owners, to work together. “I think, inherently, real estate will be the biggest challenge, and I would say that that’s where I would watch over the next year as these partnerships work themselves out.”

In New York City, electric utility Consolidated Edison has seen “tremendous growth, just in the last several months,” said Director of E-mobility & Demonstrations Raghusimha Sudhakara.

The transition to electric vehicles is “something we think about every day,” Sudhakara said. “So far it’s been very smooth,” with ConEd able to meet every new service request for electric chargers. But the utility is also looking to proactively build out areas of its grid where there are large fleets that may want to electrify.

The Edison Electric Institute, which represents investor-owned utilities, expects there will be 26.4 million EVs on U.S. roads in 2030, with annual sales of nearly 5.6 million vehicles in 2030, or about 32% of the light-duty total. 

“In the last year we doubled sales, from 3% to 6%,” Britton said. “Obviously I don’t know that we can keep doubling every year, but we’re going to see a ton of growth. … I think [in 2023] we’ll probably sell 1.5 million units.”

Industry observers say keys to accelerating EV adoption in the next year include the details of vehicle tax credit implementation, the rollout of $5 billion in funds for the president’s National Electric Vehicle Infrastructure formula program, and addressing potential utility bottlenecks in electrifying charging stations. 

Vehicle credit rules

The Inflation Reduction Act contained $369 billion for clean energy investments, including reviving tax credits for EVs. But the new tax credit is not simple: It is split into portions, and qualifying depends on where the vehicle was assembled and what percentage of critical minerals used were extracted or processed in the U.S.

“I think the changes to the tax credit right now are probably challenging for the average consumer to figure out and understand what vehicles are eligible,” Prochazka said. “With any new policy like this, that has nuance that consumers have to try and sift through, it’s going to take a little bit of time.”

Some of that uncertainty surrounds which vehicles qualify for credits, which depends on mineral content and whether it meets domestic assembly requirements.



Source link

Leave A Reply

Your email address will not be published.