Clark Hill 2022 Automotive & Manufacturing Industry Outlook: EV Infrastructure And Government Relations
Increasing electric vehicle adoption has been a priority for the Biden administration. Early in his presidency, President Joe Biden set a goal of 50% of new vehicle sales be electric by 2030. The American Jobs Plan did not become law but heavily influenced the Infrastructure Investment and Jobs Act (IIJA), which was signed into law by President Joe Biden on November 15th, 2021, and included incentives, tax credits for zero-emission vehicles, funding to convert the federal vehicle fleet, school buses to clean fuels, and various vehicle and battery manufacturing initiatives. The plan called for $15B to fund a nationwide EV charging station network and included a tax credit for private charging infrastructure such as workplace and residential charging.
The two programs in the IIJA focused on the EV and alternative fuel network total $7.5B over five years. The $5B EV Charging Program is formula-based and will be distributed at the state-level. The $2.5B Charging and Fueling Infrastructure Program will be a competitive program to build EV charging and other alternative fuel infrastructure such as hydrogen, natural gas, and propane. Select governmental and regional entities are eligible to apply. Until federal guidance is released, it is unclear what the specifications of each program will be, however municipalities can expect the funds to flow through their state departments of transportation. The U.S. Department of Transportation (DOT) will set a deadline by which state DOTs must submit a plan for how the State intends to use funds.
In the statute, Congress specified funds must be used for the acquisition and installation of EV charging infrastructure, network connections, data collection and reliability, operation and maintenance of the EV charging infrastructure, and data sharing to ensure program success. The operation and maintenance uses are particularly interesting, suggesting the grants may not be one-time construction awards. Rather, funds may sustain the integrity of stations. According to statute, private entities are eligible to receive awards under the program, but the charging infrastructure must remain publicly accessible and include charging for more than one car model. That prevents novel technologies that may be proprietary from being the sole charging station at a particular location. For example, if this were a charging station for phones, a location would not qualify if it only offered cords to charge Androids.
An additional condition of the use of funds is the requirement that funds be used to deploy EV charging stations along designated alternative fuel corridors (AFC) until the U.S. DOT certifies that a corridor is fully built out. This limits the geography criteria for most funds, at least in the short-term. It also emphasizes the importance that municipalities coordinate with their state DOTs to apply to the AFC program to gain access to the funds.
On November 29th, the departments of Energy and Transportation issued a joint RFI requesting public comment on how the programs should be structured. The comment period closed on January 28th. The RFI, required by the law to be issued within 90 days, asks for input that will be used to develop guidance for states and localities. The Federal Highway Administration (FHWA) focuses on nine considerations such as distance between stations, electrical connections, infrastructure in rural or disadvantaged areas, and existing programs.
On December 13th, Vice President Kamala Harris announced the EV Charging Action Plan. While most of the action plan is federal initiatives intended to help the administration move toward a goal of 50% EVs by 2030, the plan establishes a DOE/DOE Joint Office of Energy and Transportation focused on deploying EV infrastructure. It also states DOT will publish the guidance for States and cities to strategically deploy EV charging stations to build out a national network along our nation’s highway system by February 11th, 2022. In conjunction with the EV Charging Plan announcement, the Federal Highway Administration (FHWA) announced a forthcoming solicitation for the Alternative Fuel Corridor program.
Entities planning to either take advantage of the funding or who have an interest in the geography of a network should be doing two things right now to ensure success. First, is to be in regular contact with the state department of transportation to learn about the planned use of funds and/or to coordinate on AFC designations. Second, private sector entities should be working with municipalities to guarantee projects are as close to shovel-ready as possible. While the funding is spread over five years, pent-up competition for awards is expected to be significant.