U.S. needs to incentivize EV manufacturing
With boons to the EV industry over the last several years, it’s easy to believe that the United States is on a path to be an electrified superstar. Tesla, an undebatable giant in the EV world, is based primarily in the United States and produces the majority of its cars here. Last year, cars.com even found that several models of Teslas topped the “Most American Cars” index that they generate every year ranking all qualifying vehicles based on their assembly location, parts content, engine origins, transmission origins, and U.S. manufacturing workforce. This means that Tesla uses local suppliers for the majority of the components in its EVs and manufactures the vast majority of every car in the U.S. using U.S. workers. We also have home-owned and operated all-electric brands like Rivian or Lucid, albeit both much smaller fractions of the EV market share. When it comes to current companies, there’s no debate the U.S. is on the cutting edge of EV tech. So where are we lagging?
Despite this early dominance in R&D and manufacturing, the U.S. is quickly losing its edge in the automaking world due to stagnating policy that addresses only some elements of the transition to EVs while ignoring others. Studies conducted over the past several years have found a worrying trend in the EV industry: it’s starting to get bigger in other parts of the world and the United States isn’t making every effort it should to stay at the front of the ongoing energy revolution. While this month saw an expansion of the NEVI formula program to fund EV charging stations along the federal highway system, the government has largely left the workforce issues that will eventually arise from the transition to electrification alone.
As EVs roll out in droves, buyers are noticing an unspoken upside to owning an electrified car: there’s less repair and maintenance necessary to keep the thing running. Without an internal combustion engine, oil that needs to be changed, or spark plugs that habitually go kaput, EVs are remarkably cheaper to maintain than gasoline-powered autos. With the Bureau of Labor Statistics reporting that the Automotive Repair and Maintenance industry filled 222,970 jobs across the United States last year, 60,910 of which were located in California, the problem becomes apparent: What will these mechanics do once EVs are the majority of vehicles on the road? What will they have to repair, if anything?
The California Air Resources Board calculates that the state’s recent EV mandate would cause the loss of 64,700 jobs in the auto-service industry by 2040, while 24,900 jobs would be gained in other sectors, creating a net loss of 39,800 jobs across the state’s entire economy. While these numbers aren’t likely to cause a massive shift in the Californian economy due to its robustness, these job losses multiplied across all states propose a startling reality juxtaposed against what should be a joyously green revolution. With several of the top-paying metro areas for automotive service technicians and mechanics being located in California, there’s a lot of money that will be leaving Californian and American families without a corresponding industry for them to move into. Despite EVs also needing some types of maintenance and repair, the market is incredibly limited compared to that of combustion engine maintenance and will not be able to satisfy the job demands that will arise due to electrification.
Hoping to get ahead of this startling realization, the Economic Policy Institute (EPI) created a comprehensive report detailing the policy action needed to secure jobs in the U.S. auto sector as electrification increases. Recognizing that job losses will come primarily from the maintenance and repair sector and are unlikely to be re-found in the EV repair sector, the EPI found that “employment in the U.S. auto sector could rise by over 150,000 jobs in 2030” if “battery electric vehicles rise to 50% of domestic sales of autos in 2030” and the U.S. strengthens manufacturing at home for EV powertrain components to the level of its current market share of manufacturing of internal combustion engine components. Policies that promote both EV buying at high rates as well as EV parts manufacturing in the U.S. would effectively prevent job losses associated with the shift to electric and allow those in the auto service industry to stay in the same industry, albeit within a different sector. Federal and state policymakers have made good on incentive and rebate programs for EV purchase― now it’s time to ramp up manufacturing as much as possible.
China and Europe are currently seeing major investments from electric vehicle automakers hoping to make and sell there, with China seeing a rise in manufacturing from 2017 to 2020 in the way of 21% growth for a total share of global electric vehicle production of 44%. Over the same time period the U.S. saw a decline in manufacturing, from 20% to 18% of global production. When looking at companies’ announced investment plans, that trend appears to be building: “About 15% of the approximately $345 billion in global automaker electric vehicle investments appear to be destined for the United States,” with the other 85% going primarily to China and Europe. Only about “5% of this global total is actively being invested in specific U.S. assembly plants to increase electric vehicle production.” At the same time, companies are also making commitments outside of the U.S. like Ford pledging to offer an “all-electric variant for every model it sells in Europe by 2030” while failing to make a similar promise to the U.S. Despite being an American-founded brand, Ford is also only investing “about 6% of its $30 billion electric vehicle investment” actively in specific U.S. plants compared to General Motors’ 25% of $35 billion commitment to U.S.-based assembly and battery plants. Only 7 of the 44 auto manufacturing plants located in the U.S. will manufacture only EVs by 2025, a number which companies operating in the U.S. need to commit to increasing should the U.S. hope to stay competitive in the auto manufacturing market.
All of this research shows a clear, but avoidable trend: the U.S. government needs to further incentivize EV manufacturing in the U.S. in order to keep the majority of auto industry jobs state-side. Unless we want to fall behind China and Europe in vehicle manufacturing, we need to make provisions to bolster the automaking industry and create jobs programs that prioritize the minimization of job loss due to the rise of the EV sector. EVs won’t be going away, so the priority should be to make the transition to electric as seamless as possible. Charging station infrastructure is increasing at neck-braking speeds, but manufacturing isn’t keeping up the way it ought to. We need policies that support the growth of the EV sector from all possible angles in order to keep Americans happy, healthy, and employed. There shouldn’t be any barriers to emission-reduction and electrification goals, and there certainly shouldn’t be government lags in crafting policy that supports, rather than deters, auto manufacturing within the United States. Car-making will always be irrevocably tied to the nation’s history, and the transportation revolution need not be where that legacy ends.