Publication

Achieving U.S. climate resilience requires a dynamic and unprecedented American clean energy transition, including large investments in zero-emissions infrastructure and clean energy manufacturing — the fastest growing global manufacturing sector set to attract $10 trillion in investment by 2050.

A new report from the Progressive Policy Institute finds the U.S. has the opportunity to build tens of millions of new electric vehicles, charging stations, and the advanced electric grid to serve them, as well as upgrading our roads, bridges, high-speed internet, ports, and public transport to fulfill this clean energy vision. The Covid-19 economic and unemployment crisis has only intensified the political imperative to create millions of these new, clean energy jobs, with a particular emphasis on well-paid manufacturing.

In his 2016 campaign, Donald Trump famously promised to revitalize American manufacturing and rebuild our crumbling infrastructure. But as president he has done neither one. In fact, U.S. manufacturing declined deeply during each quarter of 2019, long before the coronavirus reached our country.

Now former Vice President Joe Biden and other Democrats have put clean energy at the center of bold blueprints for reviving the comatose U.S. economy. The House last month passed a $1.5 trillion infrastructure and tax package, and Biden recently unveiled his $2 trillion “Build Back Better” plan. But ambitious as these proposals are, they do not offer a detailed roadmap for making America the global leader in the key clean energy technologies, especially electric vehicles, and related technologies like an advanced electricity grid and storage.

Yet the mass commercialization of electric vehicles is key to cutting the largest source of U.S. greenhouse gas emissions, making America’s air cleaner and healthier, ending dependence on foreign oil, and bringing about a resurgence of the U.S. auto industry and American manufacturing jobs.

Until we are producing American-made vehicles that can beat oil-burning cars on price and consumer appeal over the long-term, the clean energy transition in the key transport sector will not gain speed. We need a muscular new vision of America’s clean energy infrastructure and manufacturing sector creating millions of good new jobs. This is modern equivalent of Franklin D. Roosevelt’s “Arsenal of Democracy”— helping to solve many of our economic, manufacturing, trade and environmental problems together.

The United States can’t afford to forfeit the lead on electric vehicles to China, as has happened with other clean energy technologies. For example, China in 2008 devoted half its total $650 billion stimulus to manufacturing PV solar panels and lithium ion batteries, growing China’s PV solar panel global market share from less than 30% to about 70% today.

Cars are far more important to America’s economy and national identity than solar panels. Thanks to heavy investments in electric vehicle technology, China already is dominating the emerging global EV market, with over 50% of global production, and 73% of the EV battery market. Meanwhile, the US produces fewer than 20% of EVs. Industry experts predict that electric vehicles will be the key to auto industry growth over the next years and decades—from less than two million EVs today to more than 30 million by 2030—representing the world’s most important new manufacturing market.

But today, most Americans cannot afford the excellent but more expensive EVs that dominate the U.S. market. And the EVs that are affordable are not available in models—especially SUVs, minivans and light trucks—that most U.S. consumers prefer, and that provide higher profit margins for automakers.

America needs a new approach to the electrification of transport – a comprehensive program to jumpstart the production and purchase of the electric cars and trucks Americans want and can afford. The existing federal consumer tax credit of $7,500 per EV has reached a cap of 200,000 for GM and Telsa, the largest US producers. While Democrats
in Congress have proposed raising the cap per manufacturer, this minor change won’t drive large and rapid electrification of the U.S. fleet. And Republicans have (hypocritically but successfully) attacked the current tax credit as a government giveaway for “Tesla millionaires” that favor only the richest consumers.

Instead, Congress should provide average American consumers much larger tax credits for purchase of affordable U.S.-made EVs, including models Americans actually want, especially minivans, SUVs, and light trucks. This means dedicating large consumer tax credits to the purchase of more affordable EVs with an emphasis on high-volume model types on graduated scale as follows: $15K credit for vehicles under $35k: $7.5k for EVs under $50k; $2.5k under $75k and $1.5k under $100k. A version of this PPI approach has been crafted into legislation by US Rep. Jackie Speier; the bill has over 30 cosponsors but, the tax credit must be applied to SUVs and trucks to achieve volume and scale and gain broad bipartisan support.

Buyers should also get to use the EV credit over a 5-year period, or apply the credit at the point of sale, making it more applicable to average income buyers who lack large tax liability. Additional measures should include extra tax incentives for trade-in’s to rapidly turn over the non-EV fleet (“cash for clunkers”) and requiring the federal government fleet to purchase U.S.-made EVs. And infrastructure legislation must provide strong incentives for electric charging stations, advanced electric grid and storage.

The rapid retooling at GM and Ford to build ventilators and masks to address the Covid-19 crisis illustrates the ability of automakers to adapt to new market demands and government incentives. In fact, many these plants had been making hybrid car batteries.

With nearly 20 million people out of work, America must create millions of new jobs by investing in an infrastructure-led manufacturing recovery through federal legislation just as we did in the 1930s New Deal, the 1950s Interstate Highway System, 1960’s through NASA and the 2009 American Recovery and Reinvestment Act. We must also train workers in technology and manufacturing skills through high schools and community colleges, focused where unemployment is highest, in direct cooperation with EV and other clean energy employers.

America has led the world in auto innovation for most of the last century. We must do so again in a new era. U.S.-made EVs are crucial to climate resilience, the U.S. economic rebound and gaining broader political support for the clean energy transition. It’s time to act.