By Motus
August 6, 2024
Electric vehicles are on the rise. Consumers have asked and manufacturers have rushed to answer the demand for battery-powered cars. While we’re still quite a way away from electric vehicles dominating U.S. roadways, robust electric vehicle infrastructure is pivotal to widespread adoption and the centerpiece of the recent infrastructure legislation. So, when will start to see charging stations that boost EV practicality? And what does that mean for electric vehicle ownership?
The Bipartisan Infrastructure Law (BIL) allocated $7.5 billion to develop EV-charging infrastructure across the United States. The goal of this funding is to install 500,000 publicly accessible charging stations, compatible with all vehicles and technologies, nationwide by 2030. This legislation also includes the National Electric Vehicle Infrastructure Formula Program, which provides states with $5 billion over the next five years to establish their own network of electric vehicle chargers. These EV charging stations will be deployed along designated alternative fuel corridors on the national highway system.
The Biden Administration has been aggressive in setting goals for the implementation of electric vehicle infrastructure to coincide with its proposed rates of adoption. The installation of 500,000 charging stations by 2030 aligns with the administration’s aim for electric vehicles to comprise half of all new car sales by the end of the decade. After the BIL was signed in February, each state was required to submit an Electric Vehicle Infrastructure Deployment Plan to access the allocated funds. This was to help ensure a convenient, reliable, affordable and equitable charging experience for all users.
The U.S. Transportation Department announced in September that it approved EV charging station plans for all 50 states, Washington, D.C. and Puerto Rico. States can now begin constructing their networks of chargers and the approved deployment proposals grant them access to more than $1.5 billion to support these efforts. The remaining $3.5 billion will be dispersed over the next four years to help bolster what officials are calling the backbone of our national EV charging network.
The approved Electric Vehicle Infrastructure Deployment Plans ensure that every single state, D.C. and Puerto Rico will be able to leverage the investments from the BIL. While it is unclear how many charging stations BIL funds will support, it is estimated these networks will cover 75,000 miles of highways from the largest cities to the most rural communities. States have not shared specific charger locations, but Transportation Department officials said EV charging stations should be installed every 50 miles and each within one mile of an interstate.
As a result of the current administration rolling back the previous administration’s climate policy and introducing a new infrastructure bill, states have been proactive in their own work towards carbon neutrality. Massachusetts plans to ban gas-dependent vehicles by 2035 to meet their decarbonization goals by 2050. The state of California has been focusing their efforts on vehicle emission standards. That effort has brought many vehicle manufacturers – BMW, Ford, Honda, Volkswagen, and Volvo—to agree to recognize California’s emission standards throughout the country by averaging 40 MPG.
Since the introduction of fuel tax, its purpose has remained constant: paying for repairs and improvements to infrastructure. While fuel consumption is a large source of that tax revenue, unfortunately it hasn’t been able to effectively support infrastructure needs. Congress has needed to transfer funds to cover infrastructure needs since 2008. With EVs not using gasoline, vehicles can erode the roadways without contributing to repairs. Eventually this funding gap will have to be filled.
The current White House administration is not considering a raise in the gas tax, or a vehicle-miles-traveled tax. The reasoning is simple. As strong as the case is, it’s an unpopular decision to raise taxes. However, with the increase in electric vehicle production, something will have to be done to fund the infrastructure beyond the fuel tax. So, what does a vehicle-miles-traveled (VMT) tax look like?
Oregon rolled out a VMT tax in 2019. Participants go through the sign-up process, select a mileage reporting option, and then pay their bill for miles traveled. Those already paying the fuel tax with their gas-dependent vehicle can receive a credit. While the program has been around for over 5 years, the VMT tax remains voluntary. EV owners who do not opt into the program pay for infrastructure with an increased DMV fee that is reduced when the vehicle is enrolled.
There are over 1 million hybrid and electric vehicles registered in the state of California. Each of those driving on the road reduces the revenue gathered from the gas tax to repair roads and improve infrastructure. Given the estimated $8 to $9 billion it takes to maintain the state’s roads each year, the California Department of Transportation (or Caltrans) decided to move forward with a VMT pilot program. The program, which began in June, will last for six months. During that time, drivers will track mileage with an electronic device like their phone, a system built into their vehicle or photos of their odometer.
Will other states, or the nation, adopt a VMT? While the future remains unclear, Americans can agree that infrastructure is vital to our country. Without safe roadways, business and personal travel become needlessly dangerous. Whatever the vehicle of the future may be, a tax that continues to support maintenance and improvements to the highway infrastructure will be necessary.
The emphasis on EV infrastructure and new tax credits in the Inflation Reduction Act (IRA) make buying an electric vehicle more appealing than ever. While consumers and business leaders are incentivized to make their purchases now, it’s important for both to step back and determine whether it is the appropriate time to take such action. As an individual, you must consider where you live, the resources and infrastructure currently available in your area and the lifestyle you intend to live in order to support it. For a business leader, buying or leasing fleet vehicles – regardless of if they’re an internal combustion engine or electric vehicle – is a poor investment for many reasons.
Location is a critical component of owning and maintaining an electric vehicle. EVs make sense for those who live in an urban area with ample access to charging stations. In addition to designated charging station locations, examples include shopping centers, residential buildings and commercial properties outfitted with the necessary hardware. Electric vehicles also make sense for people living in a rural or suburban area of the U.S. that has put forth a plan for augmenting their charging infrastructure.
Lifestyle is also an important consideration when determining if an electric vehicle makes sense for you. You must consider how you will primarily be relying on your EV as a mode of transportation and if it is the most practical means for you. For example, EVs work well for people who intend to use their vehicle primarily for commuting to and from work as opposed to traveling extended distances.
Electric vehicle ownership will be challenging if you live in a remote area with little access to charging options. It becomes even more challenging if you’re relying on this purchase to travel extended distances. Range limitations due to the current state of EV batteries are a clear and present shortcoming. This is exacerbated for those who live in an area with no plans for DC Fast Charging infrastructure expansion, such as Alaska.
Fleet vehicles programs are the most expensive vehicle programs a business can implement. Every organization that relies on a fleet will incur costs associated with purchasing or leasing the vehicle, maintenance and legal costs, and the cost to power the vehicle’s engine. The size of a company and its driver pool will determine the size of the fleet and likely have an impact on the terms of the lease of purchase. Dealer supply will also affect the total cost and limited availability has caused prices to skyrocket. Routine maintenance, including oil changes, tire rotations and regularly scheduled service at certain mileage milestones, is another cost incurred by the company that owns the fleet. The organization is also responsible for the legal costs and ramifications if one of their fleet drivers gets into an accident.
One of the biggest contributors to fleet prices is fuel. Market volatility has caused the cost of fuel to soar over the past 18 months. Companies shifting to electric vehicles to offset fuel-related expenses must also account for the recurring costs associated with managing a fleet. Businesses looking to leverage an electrified fleet to reduce greenhouse gas emissions can act in other ways to achieve their corporate ESG goals.
Sustainability has evolved into both a social responsibility and strategic imperative. For many, a greater number of electric vehicle options, lower price points and improved charging infrastructure would enable them to say goodbye to gas-powered vehicles permanently. Unfortunately, we’re still a few years away from that reality. But that doesn’t mean we can’t do things to prepare and take steps now to reduce our carbon footprint.
Companies interested in lowering their greenhouse gas (GHG) emissions should identify opportunities for small changes that have the potential for a large impact. This can include offering incentives for employees who purchase an electric vehicle or a more fuel-efficient option. With vehicle choices emerging and evolving beyond hybrid to fully electric, emissions reduction strategies should remain top of mind for business leaders with large groups of business drivers.
Electric vehicles may not be a viable solution for everyone at this time, but consumers and business leaders can act today to lower GHG emissions. Interested in learning how you can make a positive impact? Explore options for planning corporate sustainability today.
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