According to a new Bloomberg report, measures such as carbon pricing and tax credits could be good news for electric vehicle automakers. Experts foresee that under a Biden administration, the U.S. market for electric cars and trucks can grow through the implementation of those measures.
Carbon pricing and tax credits: an answer for the EV market?
Mr. Biden’s first order is expected to be the setting of new regulations for emissions limits. The President-elect has promised to go beyond President Barack Obama’s rules. This situation would mean to reinforce the 4.7% yearly increase effort in average fleet fuel economy.
To reach that target alone would mean that by 2026, one of every four light-duty passenger vehicles sold in the U.S. would be electric.
However, current President Donald Trump lowered this standard to just 1.5%. In this regard, experts expect Mr. Biden to re-set or even reinforce reducing-emissions regulations with Congress’s help.
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Beyond that, experts also highlight the simplest way to curb emissions and enhance electric vehicle use by introducing an economy-wide tax on carbon emissions.
In that sense, gasoline prices would rise for consumers, incentivizing them to buy greener cars without the need for further regulation. Furthermore, these actions would accelerate the transition away from carbon in several sectors, such as power generation, manufacturing, construction, and agriculture.
Also, industry people expect carbon pricing and tax credits to boost innovation and long-term renewable energy investment. Unfortunately, experts note, Congress has resisted being outspoken regarding these measures.
The implementing of those measures: forecasts
Therefore, the next-best option, according to them, would be to expand electric-vehicle tax credits. Currently, Americans can claim a $7,500 credit for electric car purchases. Besides, automakers can sell up to 200 thousand qualifying vehicles before those credits are phased out.
For instance, Tesla and General Motors (GM) have already reached their tax credits cap. From the existing 1.9 million eligible cars cap, Democrats aim to raise the ceiling up to 7.5 million. Such a change would increase the cost of the credit from $14 billion to $53 billion.
Bloomberg also reported another way to boost electric-vehicle sales would be through a new cash-for-clunkers program. The new $392 billion “Clean Cars for America” program would pay EV buyers at least $3,000 for their old gas-powered vehicles.
Furthermore, Mr. Biden could increase demand for EVs by getting the government to purchase those old gas-powered vehicles and more electric cars for their operational use.
Today, less than 1% of the national fleet’s 645,000 vehicles are electric. Substantially boosting that share would represent a big step forward, according to Bloomberg analyses.
Finally, to ease concerns about electric vehicles travel range, the federal government could help provide more charging stations. The U.S. will need a $6 billion investment in 500 thousand new charging stations by 2025 to support 8.5 million EVs on the road, BloombergNEF estimates.