The U.S. is racing to deploy a national electric vehicle charging network to catch up with booming EV growth in China and Europe and to tackle its largest source of greenhouse gas emissions. Cars and trucks on U.S. roads accounted for 38% of the country's energy-related carbon pollution in 2021, according to the Congressional Budget Office.

Slowed by inconsistent federal tax rebates, politics and an entrenched long-distance driving culture, U.S. EV adoption fell behind, industry observers said. The question for many is how quickly the country can ramp up and capitalize on what some analysts expect to be an $800 billion-plus industry by 2030.

Under the landmark 2021 bipartisan infrastructure legislation, the U.S. earmarked $7.5 billion to build out a national network of charging stations. This was followed by the Inflation Reduction Act, signed into law in August 2022, which included expanded EV tax credits as well as supply chain requirements focused on developing a domestic industry for clean cars and trucks.

"Once we send those market signals, and we get over the hump on some of the supply chain issues and other issues — and you get cost parity with [internal combustion engines], which we're starting to see — I think then the market takes over," Gabe Klein, director of the Biden administration's Joint Office of Energy Transportation, said during a BloombergNEF summit Jan. 30.

Uneven policies made US lose time

The U.S. fell behind China and Western Europe in EV sales because it invested later and lost time, Ingrid Malmgren, policy director for the EV advocacy group Plug In America, said in an interview.

"China really ramped up its investment in 2017, and Europe ramped up at the end of 2019 and again in 2021," Malmgren said. "But we're definitely catching up."

Other nations also got a head start during the Trump administration years, when clean car policies were deprioritized only to become a cornerstone of President Joe Biden's climate change agenda in 2021. The Biden administration has set a goal to have 50% of all new vehicles sold in 2030 be EVs.

Vehicle manufacturers and battery-makers plan to invest $860 billion globally by 2030 to transition to EVs. Nearly a quarter, $210 billion, is now expected to be invested in the U.S., more than in any other country, according to data platform Atlas EV Hub.

$5 billion to reduce charging anxiety

EV advocates are bullish on federal and state efforts to develop a national EV charging network. And since roughly 80% of EV charging typically will be done at home, the advocates are also applauding fledgling efforts to promote charging infrastructure for apartment buildings and urban areas.

But the Biden administration and federal lawmakers have made building a national charging network the priority. EV advocates explained that many Americans remain hesitant about investing in an EV for fear their driving may be curtailed. Not only is the U.S. a big country where one state can be the size of a single European nation, but the hesitancy is also due to "the way Americans think about sort of freedom of mobility," Klein said. "We've got to have a national network."

So far, states have received $1.5 billion for electric vehicle charging stations under the infrastructure bill, a spokesperson for the Federal Highway Administration confirmed Feb. 3.

In all, $5 billion will go to states to help them deploy a charging station every 50 miles along major highways. Another $2.5 billion is available in competitive grants that states can use for EV infrastructure in other areas. Carmakers are responding by making electric models of the larger SUVs and pickup trucks that many Americans like to drive.

Tax rebates to the rescue

Another major hurdle to EV adoption in the U.S. has been steeper vehicle costs than consumers in other markets faced.

Amy Stanley, a senior manager with Toyota Motor North America Inc., recalled traveling in Norway in 2018 and discovering that the country's carbon penalty on gasoline-fueled cars made a Tesla cheaper than hybrid models. "That was creating the financials to help the customers choose," Stanley said during the BNEF summit.

On Feb. 3, the U.S. Treasury Department rolled out new vehicle classification standards, expanding the number of car models that qualify for a $7,500 tax credit under the 2022 Inflation Reduction Act legislation. The boosted tax credit program, along with a push by car manufacturers to lower the price of EVs, will begin to put EVs on parity with conventional gasoline-fueled cars, industry advocates said.

But European nations have for years offered EV subsidies at the point of sale to reduce upfront costs for consumers, along with other incentives, whereas most buyers in the U.S. must wait until the next tax season to claim such benefits. That has kept Americans outside higher income brackets away from the market, something Congress sought to address.

The IRS is expected to issue guidance later this year on how dealers can begin to apply the tax break when the car is sold. The change, which the Inflation Reduction Act requires to be rolled out in 2024, will help consumers qualify for lower interest rates on car payments and lower monthly payments, Anthony Bento, chief legal officer for the California New Car Dealers Association, said in an interview. California already has such a system in place.

"If we're talking about middle-income, moderate-income consumers, they're not going to have the flexibility upfront to pay another $7,500 at the point of sale with an expectation that they may receive a rebate at some point in the future," Bento said. "There's an income eligibility issue that we're going to need to wrestle with."

California, Europe take parallel paths

California is the epicenter of the shift in the U.S., with nearly 1.4 million battery electric and plug-in hybrids sold through 2022 and a roughly 19% share of the light-duty market in 2022.

In a rule that several other states intend to follow, California will not allow any new conventional internal combustion engine passenger vehicles to be sold in the state after the 2034 model year, although some plug-in hybrid sales will still be allowed. The mandate puts California and the states that have embraced its approach on a similar path as the European Union, which reached an agreement in October 2022 to effectively ban the sale of new combustion engine cars and vans by 2035.

Like the rest of the nation, the Golden State has some big gaps to fill in its EV charging network. The California Energy Commission sought to address that in December 2022 by approving a four-year, $2.9 billion transportation investment plan, mostly for EV charging

Those investments, including over $900 million in light-duty vehicle charging and nearly $1.7 billion for medium- and heavy-duty vehicle infrastructure, are intended to double the number of publicly available chargers in the state to 170,000. California has a target of installing 250,000 EV chargers by 2025, including 10,000 DC fast chargers.

New challenges

As the charging station expansion gets underway, there is another challenge vexing California and Europe alike: charger reliability. Public charging sessions in the U.S. fail up to 30% of the time due to a variety of hardware and software issues, an executive with the engineering group SAE International cautioned California regulators in October. Such spotty performance has prompted the state as well as the federal government to call for 97% uptime requirements.

"Any time you're experiencing exponential change and exponential growth ... there's going to be new challenges," Chanel Parson, director of electrification at Edison International subsidiary Southern California Edison Co., said in an interview. But so far, Parson said, there is nothing suggesting to the company that such technical hiccups will slow the state's ambitious EV expansion.

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