Biden’s Electric Car Problem | The Daily

Intro

In this episode of “The Daily,” the focus is on President Biden’s climate bill and its impact on the electric vehicle (EV) industry in America. The law aims to accelerate the transition to EVs, but it faces challenges in getting more Americans to buy them. The episode explores the various incentives and tax credits provided by the law to encourage EV manufacturing and sourcing in the US. It also discusses the obstacles and concerns surrounding EV adoption, such as cost and range anxiety. Additionally, the episode delves into the potential long-term effects of the law on the EV industry and the political challenges it may face.

Main Takeaways

Increasing EV Manufacturing in America

• President Biden’s climate bill aims to accelerate America’s transition to electric vehicles (EVs).
• The law includes powerful investment incentives for every step of the EV manufacturing process, from mining critical minerals to recycling batteries.
• Tax credits incentivize companies to mine critical minerals in the US, such as a lithium mine in Nevada.
• Tax credits also incentivize companies to set up mineral processing facilities in the Carolinas, creating new jobs.
• The law has created an entire ecosystem of businesses around the creation of EV batteries, including foreign automakers setting up their own battery making facilities in the US.
• Investment in new ecosystems is breaking out of traditional economic pathways in the auto industry.

Incentives for EV Buyers

• The law is doing more to incentivize companies investing in making EVs than it is to incentivize people buying them.
• To qualify for the $7,500 tax credit, cars must meet certain requirements for how much of it is made and assembled in America.
• Automakers need to keep building out their supply chain to keep meeting the requirements, making it a long-term strategy.
• Cost is a big obstacle for potential EV buyers, even with the $7,500 tax credit.
• Range anxiety is a concern for buyers, as there aren’t enough charging stations yet.
• The law was trying to balance two competing interests: getting people to buy more EVs and getting more manufacturing in the US, which meant a transition period where buyer incentives weren’t as powerful as they could be.

Potential Impact and Challenges

• The hope is that the EV industry will become deeply rooted in the US, making it difficult for any future president to reverse progress from inside the Oval Office.
• Jobs created by the EV industry could create its own economic and political gravity, making it difficult for Congress to reverse tax incentives.
• Republicans from districts benefiting from battery incentives may have to vote against party lines due to pressure from companies creating jobs and workers at those plants.
• The complicated design of the law ties subsidies to tax incentives for creating production and jobs in America, creating a sustainable ecosystem both economically and politically.

Summary

Accelerating EV Manufacturing in the US

President Biden’s climate bill aims to accelerate America’s transition to electric vehicles (EVs). The law includes powerful investment incentives for every step of the EV manufacturing process, from mining critical minerals to recycling batteries. Tax credits incentivize companies to mine critical minerals in the US and set up mineral processing facilities, creating new jobs and an entire ecosystem of businesses around EV battery creation. This investment is breaking out of traditional economic pathways in the auto industry, with new ecosystems emerging in areas like the Mountain West.

Incentivizing EV Buyers

While the law focuses more on incentivizing companies investing in EV production, there are also incentives for EV buyers. To qualify for the $7,500 tax credit, cars must meet certain requirements for how much of it is made and assembled in America. However, cost and range anxiety remain obstacles for potential EV buyers, even with the tax credit. The law aims to balance the interests of increasing EV adoption and boosting domestic manufacturing, which may result in a transition period where buyer incentives are not as powerful as they could be.

Potential Impact and Challenges

The hope is that the EV industry will become deeply rooted in the US, making it difficult for any future president to reverse progress. Jobs created by the EV industry could create its own economic and political gravity, making it challenging for Congress to reverse tax incentives. Republicans from districts benefiting from battery incentives may face pressure to vote against party lines due to the job creation and economic benefits. The law’s design, tying subsidies to tax incentives for creating production and jobs in America, creates a sustainable ecosystem both economically and politically.

Conclusion

The Biden administration’s climate bill aims to accelerate the transition to electric vehicles in America, with a focus on increasing domestic manufacturing. While the law provides powerful incentives for EV production, there are challenges in incentivizing more Americans to buy EVs. Cost, range anxiety, and the balancing act between buyer incentives and manufacturing incentives present obstacles. However, the hope is that the EV industry will become deeply rooted in the US, making it difficult to reverse progress. The law’s impact on job creation and the potential political challenges it poses further contribute to its significance in shaping the future of the EV industry in America.