Infrastructure Deal Drives Investment in Electric Vehicles and Batteries

Transportation is the single largest contributor in the U.S. to climate change. Electric vehicles (EVs) are increasingly seen as a way to reduce fossil-fuel emissions that are warming the planet. President Biden recently signed an executive order that calls for half of all new vehicles sold in 2030 to be zero-emissions vehicles, including battery-electric, plug-in hybrid electric, or fuel cell electric vehicles. The President’s new $1 trillion infrastructure deal fuels that investment. The bill calls for $174 billion in government spending to boost EV development, including $100 billion in consumer incentives, $7.5 billion for grants to build charging stations, and $2.5 billion for electric buses.

The $7.5 billion for EV charging infrastructure “would be allocated through grants to states and would be used to help build out a national network of charging stations,” says Byron Brown, a senior counsel in Crowell & Moring LLP’s government affairs and environment and natural resources practice groups. “It also authorizes $3 billion for a grant program to support the development of a domestic and North American battery material processing industry and another $3 billion for a grant program to support the development of domestic and North American battery manufacturing and recycling facilities.”

 

“The Department of Energy is going to invest billions of dollars over the next few years in the technologies that are going to make the EV future a reality,” states Secretary of Energy Jennifer Granholm.

 

U.S. Auto Companies on Board

 

American and foreign automakers support the administration’s 50% target.

 

Ford, General Motors, and Chrysler parent Stellantis jointly announced their support to achieve sales of 40-50% of annual U.S. volumes of electric vehicles by 2030 to “move the nation closer to a zero-emissions future consistent with Paris climate goals. Our recent product, technology, and investment announcements highlight our collective commitment to be leaders in the U.S. transition to electric vehicles.” General Motors also plans to invest $27 billion in electric and autonomous vehicles over the next five years and make the vast majority of its vehicles electric by 2035. Toyota indicates it will “do its part” and Subaru recently announced plans to open a seven-story, $272-million R&D center in 2024 to accelerate EV research and development.

 

Besides automakers, the big push for EVs also benefits other vital parts of the automotive supply chain, such as battery manufacturers and charging infrastructure developers. For example, battery-maker Nano One Materials has partnered with Johnson Matthey, a provider of advanced materials, to develop new battery technologies for the EV market that utilize advanced materials and new nanocrystal configurations. In another example, EV charging network operator ChargePoint Holdings, through its acquisition of ViriCiti, a provider of automotive electrification technology, will expand its services to include battery management, charging station monitoring, and collection and analysis of vehicle operations data.

"The Department of Energy is going to invest billions of dollars over the next few years in the technologies that are going to make the EV future a reality."
Secretary of Energy Jennifer Granholm

Making It Happen

 

There is plenty of support for the electrification of the auto industry—the bigger question is funding.

 

According to the Alliance for Automotive Innovation, the auto industry is committed to investing over $330 billion to bring EV vehicles to market. However, top automakers Ford, GM, and Stellantis indicate that President Biden’s ambitious EV sales goals can only be met with a “full suite of electrification policies committed to by the administration in the Build Back Better Plan, including purchase incentives, a comprehensive charging network of sufficient density to support the millions of vehicles, investments in R&D, and incentives to expand the electric vehicle manufacturing and supply chains in the United States.”

 

Automakers are hopeful that the infrastructure legislation will eventually be approved in the House of Representatives and provide additional support for EV R&D commercialization.

 

Consumer adaptation, however, might be slow. AlixPartners reports that, even now, EVs only represent about 2% of total global vehicle sales and will be about 24% of total sales by 2030—about one-half of what the Biden administration is hoping for as a result.

 

“It remains to be seen how quickly consumers will be willing to embrace higher-mileage, lower-emission vehicles over less fuel-efficient SUVs, currently the industry’s top sellers,” states AP News. “The 2030 EV targets ultimately are nonbinding, and the industry stresses that billions of dollars in electric-vehicle investments in legislation pending in Congress will be vital to meeting those goals.”

"It remains to be seen how quickly consumers will be willing to embrace higher-mileage, lower-emission vehicles over less fuel-efficient SUVs, currently the industry's top sellers."
AP News

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