On Thursday, the U.S. Departments of Energy and Transportation announced that they will allocate about $5 billion over the next five years to states to provide access to electric vehicle (“EV”) charging. This is part of the $7.5 billion bipartisan infrastructure package that will see electric charging stations distributed across U.S. highways.
This latest funding effort is part of the $1 trillion infrastructure bill that Congress approved in November. This year, $615 million will be allocated to the states whose submitted plans receive a green light from the federal officials. In the press conference, U.S. Transportation Secretary Pete Buttigieg said that they would not mandate the states in their submission but they would make sure that the essential requirements are met.
The infrastructure program, also known as National Electric Vehicle Infrastructure Formula Program, requires the states to submit plans to the Joint Office of Energy and Transportation by August 1. From these, the eligible plans will be approved by The Federal Highway Administration by September 30.
Some of the requirements include:
- States funding their DC Fast Chargers with the stations having four ports that can simultaneously charge four electric vehicles
- For every 50 miles, the state should install charging infrastructure and those stations should be located within a mile’s distance from highways
- Federal funds cover 80% of the electric vehicle charging costs
In recent years, the demand for electric vehicles has grown with the United States being the third-largest market behind China and Europe. The Biden administration has made EV adoption part of its commitment, stating that one-half of the cars sold in 2030 will either be electric or hybrid and the federal fleet of 600,000 cars will be electric by 2035. The transition will reduce greenhouse gas emissions from the transport sector accounting for almost 30% in total CO2 emissions in the U.S.
The program aims to reduce the range anxiety experienced by EV owners, which is a major challenge. According to a recent study, one in five electric car owners in California switched back to diesel or petrol powered vehicles because of the inconvenience in charging.
Jennifer Granholm, the U.S. Secretary of Energy, said that the shift to cleaner energy would not happen quickly if range anxiety is not eliminated. She stated that people need to be able to charge their electric cars “wherever they live, wherever they work, wherever they want to head.”
President Joseph Biden mentioned Australian company Tritium would set up a manufacturing plant for EV chargers in Tennessee and will create about 500 local jobs. Previously, the administration suggested a $1.75 trillion domestic investment bill that would see consumers receive tax credits on electric vehicles. Through the Build Back Better bill, commercial electric vehicles would receive a 30% tax credit and U.S. factories would get $3.5 billion to convert into EV production plants.
As these dollars are spent in the intended way, the country is likely to see an increase in the sales of EV manufacturers like Workhorse Group Inc. (NASDAQ: WKHS) since one of the primary concerns (inadequate charging stations) of motorists will have been addressed in a meaningful way.
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