Now that the presumptive U.S. presidential candidates have been set, the campaigning for the federal election of 2024 will soon hit overdrive, and foreign policy and domestic issues, including transportation, will dominate the airwaves. Here are three key transportation topics to watch as the U.S. heads to one of the most important elections in its relatively young history.
What is the fate of Electric Vehicle (EV) proliferation?
In particular, there will be a spotlight on the future of federal support for EVs, which had been on a winning streak until recently. In 2023, EVs accounted for nearly nine percent of new auto registrations nationwide, though their high price tags create vulnerabilities for sustained growth. Most EVs cost significantly more than comparable gas-powered vehicles, and purchasers have consisted largely of high-income urban dwellers. Those same purchasers typically have their own garages to charge their cars, which makes owning and operating an EV more reliable and stress-free. The same cannot be said for EV owners who live in apartment buildings that either must share the chargers with others (who are likely also charging at the same time) or find alternative charging locations. So, in a way, wider adoption of EVs is also tied up in the ongoing struggle to find affordable housing because those who can afford their own homes with garages can also more likely afford to charge their EVs at their convenience. And, with housing affordability continuing to be a challenge in many regions, that doesn’t bode well for EVs unless the charging infrastructure becomes ubiquitous.
How are states battling the cost of creating EV infrastructure?
While the electric vehicle industry has been reeling from unsold inventory of higher-cost vehicles, there is another threat, though perhaps rightfully so. States will also need to defray the loss of fuel tax revenues that traditionally fund transportation infrastructure. In California, that loss is projected to be over four billion dollars over the next decade. Some states are now trying to limit that loss by raising fees on electric vehicle owners. For example, New Jersey recently introduced legislation to require EV owners to pay a new flat annual fee, starting at $250 and rising to $290 by 2028, to help fund road repairs.
Raising taxes to pay for EV infrastructure is also an unlikely option. In the last mid-term election in November 2022, California voters rejected Proposition 30, which proposed a tax on high-income residents to fund rebates for zero-emission vehicles and build EV charging stations. Almost sixty percent of California voters voted “no” on Proposition 30.
What is the role of federal support and charging infrastructure?
One way that EVs and charging infrastructure are supposed to become ubiquitous is with federal assistance from two ground-breaking federal bills adopted under the current administration: the bipartisan $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) in late 2021 and the Inflation Reduction Act (IRA) in 2022, increasing the national focus on incentives for alternatives to carbon fuel-powered cars. The IIJA includes billions of dollars in funding for the necessary buildout of the nation’s EV charging infrastructure to help meet President Biden’s goal of installing 500,000 EV chargers by 2030. The IRA provides tax credits of up to $7,500 for buying a new EV and a new $4,000 tax credit for the purchase of a previously owned EV. With these bills, momentum initially picked up for the ubiquity of EVs and their needed infrastructure. However, that momentum has slowed as a combination of higher interest rates and inflation may be having an adverse impact on the more expensive EVs, as noted by increased unsold inventories.
As previously noted, whoever wins the presidency will get more of his priorities approved by Congress if his respective party controls the Senate and the House. Expectations are high that if former President Trump is reelected, he will not continue with President Biden’s vision on electric vehicles, and the former president’s views on this topic are shared by some voters in key states, like Michigan, that have large amounts of auto workers. Those voters worry that while the building of electric vehicles may initially result in manufacturing jobs, the high cost of EVs and their lower ongoing maintenance requirements are antithetical to the interests of blue-collar workers. Protecting those interests may entail a campaign against all or parts of the IIJA and the IRA. If either the Democrats or the Republicans win the trifecta of the Executive branch, Senate, and House, they will have at least two years to approve presidential priorities, and if those priorities reduce federal assistance for EVs and their necessary charging infrastructure, the future ubiquity of EVs will be in doubt.
