The COVID-19 pandemic has arrived at a time when the global transportation sector is on the verge of a transition away from a gasoline past to an electrified future. Governments and automakers worldwide are investing hundreds of billions of dollars into this transition. The countries that realize and refine these technologies first will dominate the transportation industry for decades to come and reap the economic rewards. This critical moment is also serving as an inflection point for how much of our economy functions today. In putting the country back to work, the federal government will be spending trillions of dollars to stimulate the economy.
In putting the country back to work, the federal government will be spending trillions of dollars to stimulate our economy.
As the Electrification Coalition (EC) and Securing America’s Future Energy (SAFE) outlines in its latest report, Get America Moving Again (GAMA), transportation is one such crucial sector. Not only does it provide employment—our auto industry supports 10 million jobs, and our transit agencies employ over 430,000 people—but it underpins our mobile economy and catalyzes productivity. The report includes proposals to scale up the manufacturing of EVs of all classifications and increase the market appetite for EVs.
Driving EV Adoption
If the United States is to bolster its competitiveness in the global EV market, expanding the domestic EV market is a crucial early step. Electrification of transit, freight and logistics sectors offers a compelling route to scaling up the U.S. EV market. Creating a 30 percent tax credit for medium- and heavy-duty vehicles would be a strong step in that direction, as would expanding the oversubscribed Low- or No- Emissions Grant Program. Additionally, appropriating $12.5 billion over five years for a Diesel Emissions Reduction Act (DERA) school bus rebate program would replace our nation’s 480,000 school buses with electric or hybrid electric buses, or other alternatives.
GAMA outlines how the transportation sector is a critical sector for economic recovery, the report includes proposals to scale up the manufacturing of EVs and how to increase the market appetite for EVs.
The popular federal 30D light-duty EV tax credit should be reformed, in order to make it more accessible and encourage the expedited manufacturing and adoption of EVs in the passenger vehicle market. An updated version should eliminate the volume limitation of 200,000 vehicles per manufacturer, initiate a gradual phase-down beginning on December 31, 2023, and provide consumers with the alternative option of a cash-on-the-hood rebate of $7,000 instead of a $7,500 tax credit in order to reduce barriers for consumers to immediately access the credit.
GAMA and the Transportation Future
To incentivize a switch away from older, less efficient vehicles, GAMA proposes a Cash For Clunkers 2.0, establishing a $12.5 billion federal voucher program that will provide consumers who trade in older, vehicles with a voucher of $5,000 toward the purchase of a newer, more efficient vehicle. To further accelerate a transition away from ICE vehicles, GAMA proposes an additional $1,000 voucher for the purchase of an EV or other alternative fuel vehicle.
GAMA proposes a Cash for Clunkers 2.0, as well as a plan for expanding our domestic manufacturing capabilities with the ATVM program to spur investments in state-of-the-art manufacturing facilities.
Alongside measures to scale up our market for advanced fuel vehicles (AFVs), it is critical that we expand our domestic manufacturing capabilities. Updating the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing (ATVM) program would spur investments in state-of-the-art manufacturing facilities that will support the domestic production of autonomous vehicles (AVs), AFV and their associated infrastructure. Furthermore, ATVM eligibility should be expanded to include manufacturing facilities for medium- and heavy-duty AFVs, autonomous vehicles, micromobility devices, and their associated components.
The pandemic has also brought the benefits of contactless AV technology into focus. Its value, particularly by connecting us to the things that we need—even when we are being asked to stay apart for our safety—has never been more evident. Therefore, Congress should enable the domestic, at-scale manufacturing of AVs with novel designs by providing NHTSA with the authority to grant Federal Motor Vehicle Safety Standards (FMVSS) exemptions for up to 100,000 vehicles per manufacturer—as long as the vehicle is as safe as, or safer than, FMVSS-compliant vehicles.
Countering the risk of this pandemic requires smart spending of the stimulus money. By investing wisely in our transportation sector, we can move beyond the status quo, create a return on investment, and strengthen our national security.