Now the US – which has been an EV laggard thus far – could receive a big shot in the arm if Biden beats Trump in the upcoming US Presidential Election.
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Electric vehicle share across major markets, 2015 to H1 2020. Source: Wood Mackenzie
To encourage EV adoption, the Biden campaign has three key targets: deploy 500,000 new public EV charging outlets, restore the full EV tax credit, and develop a new fuel economy target.
The current tax credit system is capped at the first 200,000 vehicles sold by a manufacturer. Wood Mackenzie believes the Biden campaign’s promise to restore the full tax credit would mean increasing the cap to 600,000.
Increasing the cap to 600,000 would positively impact over 7.5 million new EV sales, whereas the current cap helps only 2.2 million EVs, Wood Mackenzie principal analyst Ram Chandrasekaran says.
“A cap change for the tax credit system would certainly boost the share of EVs in the US for the next four to five years,” Chandrasekaran said.
But the most impactful policy change for EV adoption would be increasing federal fuel economy targets.
A recent Trump administration directive reduced fuel economy targets from 5 per cent to 1.5 per cent improvement annually.
Passing stricter emissions regulations would push US EV sales over the 4 million per annum mark by 2030 – 50 per cent higher than Wood Mackenzie’s base case projection.
This approach has already been evidenced in other global markets like Europe, Chandrasekaran says.
“Setting a target at an automaker fleet level forces the automaker to manufacture more efficient cars,” he says.
“Automakers would also be required to spend more money on effective marketing campaigns and automaker-provided subsidies.”
