On EVs, Congress Zigs while the EPA Zags

Chairman's Blog: Mike’s Message 05/03/23

Ever had two bosses giving you two different directions? If you have, you know it’s a surefire way to slow down workflow and muddy objectives. Too bad Washington, D.C. hasn’t gotten that memo. Recently, the auto industry has been receiving two distinct messages on electric vehicles from Capitol Hill, contradicting each other, and ensuring that America’s transition to green energy remains as convoluted as possible.

Message one: last month the EPA issued its strictest-ever proposal for tailpipe emissions, which could require that as much as 67 percent of all new vehicles sold in the U.S. by 2032 be all-electric. This proposal – driven in part by regulators in California, a state which told its residents over the summer NOT TO CHARGE THEIR CARS TO AVOID POWER OUTAGES – is ambitious to say the least. How big of a reach is 67 percent? Well, in 2022, electric vehicles accounted for just 5.8 percent of all vehicles sold in the U.S. And, according to a recent Gallup poll, 41 percent of adults said they'd never buy one.

Message two: Meanwhile, even as the EPA attempts to do the impossible by going from 5.8 percent EV sales to 67 percent in less than a decade, Congress is actively making EVs more expensive. Through its massive new IRA spending bill, Congress just ensured that fewer EVs and consumers will be eligible for EV tax credits. The law, which went into effect April 18, now requires that vehicles must be assembled in North America to qualify and must have an MSRP of less than $80,000 (trucks and SUVs) or $55,000 (cars). Additionally, individual consumers must make less than $150,000 to be eligible.

Messages one and two are in direct contradiction with each other, and that’s bad news for both dealers and their customers. How can we promote EV ownership even as our government makes them less affordable? As I write this, just one international nameplate electric vehicle qualifies for a full or partial credit.

Even if Americans could afford electric vehicles, can manufacturers build enough of them to meet the EPA’s new requirements? And can our current electrical grid support the millions of charging stations that would be needed to power them? S&P Global Mobility estimates that by 2030, with the assumption of 28.3 million units EVs on US roads, about 2.13 million Level 2 and 172,000 Level 3 public chargers will need to be built – all in addition to the units that consumers put in their own garages.

Dealers want to be part of the solution in the transition to clean energy. But for that to happen, Washington, D.C., needs to get its story straight. If our government wants more Americans behind the wheel of an electric vehicle, then they need to help us and our brands ensure that those vehicles are plentiful, chargeable, and, most of all, AFFORDABLE.

Here’s a message back to lawmakers, regulators, and the president: Let’s settle on one path forward and go there together.

Mike DeSilva
AIADA Chairman

Chairman's Blog: Mike’s Message

AIADA Chairman Mike DeSilva offers up a dealer's perspective on the 2023 auto retail industry.