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EV Development and Deployment on a Fast Track with Boost from Federal Policymakers

August 17, 2021

It’s been a big week for electric vehicles. Between the Biden-Harris administration’s August 5 executive order to encourage the development of electric vehicles (EVs) and $15 billion in funds in the Senate-approved infrastructure legislation, the growth outlook for EVs and other zero-emission transportation is strong.

On August 10, the Senate approved a modified infrastructure bill with a proposed $7.5 billion for the creation of a national charging network and $7.5 billion in funding to transition busses and other public transportation vehicles (such as ferries) to zero emissions. Although that amended legislation, H.R. 3684, did not include the electrification tax incentives originally proposed in the Biden-Harris administration’s initial infrastructure proposal and also reflects a reduction from the $174 billion originally proposed in the bill, it nevertheless signals bipartisan support for a federal policy initiative to promote EVs and reiterates the administration’s commitment to its electrification agenda.

Meanwhile, US President Joseph Biden signed an executive order on August 5 that underscores his stated commitment to encourage the development and deployment of EVs as part of the Biden-Harris administration’s clean energy agenda. The executive order, Strengthening American Leadership in Clean Cars and Trucks, aims to increase the production of zero-emission vehicles by 2030 and directs new pollution and fuel economy standards for light‑, medium-, and heavy-duty vehicles for model years 2027 and later. President Biden’s issuance of the executive order, combined with the EV-related implications of various provisions in the draft infrastructure bill currently pending in Congress, may well serve to facilitate increased deployment of EVs in US markets.

These two major efforts are a clear signal that the administration intends to make good on its campaign promises to work toward electrification in the automotive sector. We can expect more movement down that path as there is now money earmarked for more electric vehicles and charging stations.

STRENGTHENING AMERICAN LEADERSHIP IN CLEAN CARS AND TRUCKS EXECUTIVE ORDER

The executive order sets a nonbinding goal that 50% of all new passenger cars and light trucks sold in the United States be zero-emission vehicles by 2030. The order includes a noninclusive list of zero-emission options, such as battery electric, plug-in hybrid electric, or fuel cell vehicles. In the last three years, around 2% of new car sales would have qualified as zero emission, with more than 40% of those sales coming from California.

To meet this goal, the order provides generally that the Biden-Harris administration will prioritize clear standards, infrastructure development, and innovation. Specific proposals include installing a national network of EV charging stations and creating point-of-sale incentives for consumers. Major domestic auto manufacturers have previously indicated their intent to have 40–50% of total new vehicles sales be for EVs by 2030.

The order also directs the Environmental Protection Agency (EPA) to establish new multipollutant emission standards, to include greenhouse gas emissions, for light- and medium-duty vehicles for model years 2027 through at least 2030. The order sets the EPA’s goal for its final rulemakings as December 2022. For heavy-duty engines and vehicles, the EPA will also establish new nitrogen oxide standards for model years 2027 through at least 2030; must consider updating existing greenhouse gas standards for model years 2027 through at least 2029; and must establish a new greenhouse gas standard for model year 2030. The order sets the EPA’s goal for these other final rulemakings as July 2024.

Further, the order directs the US Department of Transportation to establish new fuel economy standards for passenger cars and light-duty trucks for model years 2027 through at least 2030 and for heavy-duty pickup trucks and vans for model years 2028 through at least 2030. The order sets the goal for these final rulemakings as July 2024.

The order also suggests adopting the emissions standards recently imposed in California, noting California’s “significant expertise and historical leadership” on the issue.

Though imposing stricter standards on conventional internal combustion vehicles does not directly relate to EVs, stricter standards will make EVs more economically competitive.

LEGAL IMPLICATIONS AND OPPORTUNITIES

Since the start of 2021, the Biden-Harris administration has emphasized the concept of “Buy American” and American-sourced electric vehicles. Initially, the thinking behind that commitment would include sourcing from US mines natural materials and minerals that are needed for the creation and manufacturing of battery packs in electric vehicles. But in May, the administration indicated it wouldn’t be as focused on sourcing the minerals in the United States, but instead focus on having all substantive manufacturing occur within US borders. They would then source the materials needed for the batteries for other ally countries, including Canada, Australia, and Brazil, among others. The administration also indicated it would take a yearlong review of the supply chain and national security issues to determine the best path forward in procuring the minerals outside of the United States.

With the focus on producing more electric vehicles and charging stations within the United States, this opens up some opportunities for automakers. We are seeing partnerships between automakers and network charging service providers, who are looking at long-term opportunities beyond the manufacturing of the vehicles. This also opens some new sources of revenue for the automakers, who can provide fee-based services beyond auto sales of EVs, for charging stations, over-the-air updates, potential assisted or self-driving capabilities, ability to monitor drivers of fleets, and ability to monitor if a car breaks down.

There is also a greater development of utility regional alliances. The electric highway coalition includes 14 utility members working together to develop an EV charging network; and the Midwest utility coalition is expected to comprise 10 members. This is a welcome development for consumers looking to see a collaborative approach to developing charging stations.

EV penetration in US markets has increased year over year for several years now, but some threshold issues must be resolved to facilitate widespread adoption—namely, issues concerning the ownership, jurisdictional status, and rate impacts on network charging stations, and the impact of the electrification of transportation on the electric grid, all of which we discuss in more detail in 5 Legal Issues Facing Electric Vehicle Charging Projects. Both the infrastructure bill and President Biden’s executive order address some of these threshold considerations.