Federal Infrastructure Bills Would Drive Transportation Electrification

By Published On: October 6, 2021

Two federal proposals to advance electric vehicles in California and across the nation are the $1.2 trillion Invest in America (HR 3684) bill, already passed by the Senate, and the House’s controversial and still evolving $3.5 trillion Build Back Better Act.

There is $30.7 billion in Invest in America to advance EVs, according to Atlas EV Hub. That includes $7.7 billion in funding for ZEVs, $12.7 billion for “clean” vehicles, including hybrids, and $10.3 billion for battery manufacturing and recycling and transportation electrification-related power system infrastructure.

There are grants for charging and fueling infrastructure, public school efficiency and renewable energy, and advanced manufacturing, Atlas reported. Funds also are included for studies on electrification impacts and critical minerals mining, charging station standards, network interoperability, and medium- and heavy-duty truck, fleet, bus, ferry, and port emissions reductions.

The more ambitious but uncertain ​House Act provides $34.5 billion for ZEV-related projects, Atlas reported. It also could provide as much as $117.1 billion in “clean” funding for which ZEV-related manufacturing, production, deployment projects are eligible.

​The House Act adds $10 billion in grants for vehicle and charging infrastructure deployment, for battery recycling, and for transportation electrification at ports and airports. It also provides $22.5 billion for federal fleet electrification and $15 billion for charging station and rapid transit project development in low-income and disadvantaged communities.

Importantly, it also provides ​$10 million to continue the $7,500 tax credit for ZEV purchases. Bonuses for a ZEV’s domestic and union-made product could make the tax credit as high as $12,500. A House provision removing the current limit of $200,000 in tax credits per ZEV manufacturer would be especially valuable at driving the market, automakers, charger providers, and advocates agreed.

Many transportation electrification stakeholders seem to prefer the certainty of the Senate bill, which the House could probably pass by setting aside its own Act. Others remain neutral in the hope of seeing the tax credit and other House provisions continued.

An Exelon letter to House representatives in its territories asked them to sign the Senate infrastructure bill because its “charging infrastructure funding is huge for utilities,” Exelon Utilities Vice President of Utility Oversight Denise Galambos told Current.

Only a down payment

Both bills “are ambitious but needed, and they meet the U.S. recommitment to the Paris climate accord,” Alliance for Transportation Electrification Executive Director Phil Jones, a former Washington utilities commissioner, said. But the investments are only “a down payment” on the billions of dollars needed to make U.S. transportation electrification competitive in world markets.

Drivers’ reluctance to go electric could prevent meeting California’s “all light duty ZEVs by 2035” goal, but deploying chargers could accelerate the market, SCE Director of Resource and Environmental Planning and Strategy Erica Bowman said.

With utility spending approved by the California Public Utilities Commission and planned private sector investments, the state can deploy 1.5 million public and workplace chargers by 2025, according to a September 2021 Edison International white paper.

But to meet its 2035 ZEV goal, California will need to have 1.16 million chargers in place by 2030. A “funding gap of $10 billion exists for the remaining 900,000 chargers,” Edison reported.

Distribution system upgrades to accommodate electrification needs could cost California up to $33 million and the U.S. $4.5 trillion in the next 20 years, recent reports from Nature Energy and Wood MacKenzie found. But with proper planning to manage the new load coming from transportation electrification, especially from medium- and heavy-duty vehicles, that load may pay for itself.

First, ZEV drivers can save between $700/year and $1,600/year in fuel costs, depending on gasoline and electricity prices, ATE’s Jones and SEPA’s Fitzgerald said. That would significantly offset utility rate increases.

Second, the technologies and compensations for “selling electrons back to the grid” would enhance the ZEV value proposition, Ford CEO Farley said. Partnerships like Ford’s with Sunrun that include solar and home battery installations could make ZEVs a compensated resource for meeting peak demand and creating electricity customer savings, he said.

Third, “the more charging is moved away from peak demand, the less distribution system infrastructure and generation would be needed to meet peak demand,” Bowman said. Spreading fixed costs over a larger base of kWh sales would “put downward pressure on rates,” she said. Effective managed charging “could reduce customers’ electricity bills 30%.”

CA Helps Meet Call for Half of Car Sales to be All Electric

The Biden administration’s Aug. 5 Executive Order calls for 50% of annual U.S. new car sales to come from zero emission vehicles by 2030.

California is doing its share, with over 924,000 of the nation’s almost 2.1 million ZEVs on the road through July 2021, according to the California Energy Commission. In contrast, nationally only about 306,000 of the estimated 14.5 million U.S. new car sales in 2020 were ZEVs.

But “we’re at the beginning of an exponential ZEV uptake,” Smart Electric Power Alliance Electrification Principal Garrett Fitzgerald told Current. New ZEV sales increased from 1.5% in the first half of 2020 to 2.5% in first half of 2021 and were 3.6% of Q2 2021 new car sales,” he added.

When the Big Three U.S. automakers’ CEOs stood with President Biden to announce the 50% of new sales by 2030 goal, “it was a huge confidence signal,” Rocky Mountain Institute Carbon Free Mobility Global Program Director Britta Gross told Current. “It told utilities and their regulators to get ready for new load.”

President Biden’s new goal reinforced ambitions to build a national charging station network, accelerate vehicle and charger sales, and retool supply chains, stakeholders said. It also signaled a new focus on electrification of medium- and heavy-duty transport.

California’s U.S.-leading 10.4% ZEV adoption is due to “strong fiscal and non-fiscal policies” like rebates, mandates, vehicle emissions and low carbon fuel standards, and utility funding for charger deployments, SEPA’s Fitzgerald said. Other states are now developing similar policies to increase ZEV adoption and charger infrastructure deployment, he added.

By 2025, “there should be 130 ZEV models in the U.S., compared to 28 today, he said. But the Biden goal of deploying 500,000 chargers will probably only begin to drive adequate private sector investment in deployment, he added. To achieve the 2030 goals “will require tremendous coordination and push at all levels of government and the market.”

That coordination is growing, Ford Motor Company President and CEO Jim Farley told a Sept. 25 Columbia University webinar, in describing his company’s efforts to bring its all-electric F-150 pickup truck to market in 2022. Thanks to “clear Biden policies,” Ford already has 150,000 orders for the truck, he said.

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