We Need More Electric Vehicles, But Extending Regulatory Incentives For EVs Is A Bad Idea
A recent New York Times article noted that the Biden administration will be looking to use vehicle efficiency standards to boost electric vehicles sales. Our analysis shows that strong standards are the best way to accelerate toward an electric future and that we need exactly what President Biden called for: “Setting strong, clear targets where we need to go.” However, if the administration is using voluntary agreements with automakers as the basis for its proposal, as reported, we could be in for continued delay in that transformation.
Automakers continue to push for extra credit for the small number of EVs they do sell, just like the voluntary California agreements. Previous standards have already included a number of incentives for electrification, so it’s worth examining both their historical impact and their significance moving forward. This is especially important with the Biden administration set to propose new vehicle standards later this month.
What regulatory incentives are there for EVs today?
Under EPA’s vehicle emissions program, EVs are credited as having zero emissions (emitting 0 grams CO2 per mile [g/mi]). While EVs are cleaner than gasoline-powered vehicles virtually everywhere in the U.S., ignoring the emissions from the grid powering those vehicles means that every electric vehicle sold can actually reduce the global warming emissions benefits of the program in the short term because it allows automakers to sell higher emitting gasoline vehicles than they would have otherwise.
In addition to ignoring grid emissions, for model years 2017–2021, each sale of an electric vehicle is given extra credit — for example, every EV sold in model year 2017 was counted as TWO vehicles, for the purpose of compliance. These credit multipliers lead to reductions on paper towards compliance, ostensibly encouraging automakers to invest in and sell electric vehicles, but don’t actually bring down real-world emissions. Similar to ignoring grid emissions from EVs for regulatory compliance, credit multipliers allow manufacturers to sell higher-polluting gasoline vehicles the more EVs they sell.
There are additional, somewhat comparable incentives under the fuel economy program that are more complex, but the bottom line is this: these EV incentives built into the regulatory standards were intended to support early electric vehicle sales to help with long-term emissions reductions, at the cost of some additional emissions in the short term. The question now is whether this tradeoff is worth continuing.
State EV policies are a key driver of EV adoption
The complicating factor about federal regulatory incentives to spur EV adoption is that states are already leading the way. California set the first zero-emission vehicle (ZEV) sales requirements in the country, and ten states have since adopted those ZEV requirements (with more on the way).
Unsurprisingly, the states with ZEV requirements see more EV models and greater EV adoption. While complementary policies and differences in local demography may play a role, the data is clear: manufacturers preferentially distribute and sell EVs in states with ZEV policies. As a result, while so-called ZEV states make up less than 30 percent of the new car buying market, consumers in those states purchase nearly two-thirds of all EVs.
The EV market is growing
While ZEV sales requirements are driving sales upwards in those states, EV sales around the country are on the rise. Are EV credit multipliers helping to drive that boost? The data raises doubts.
Apart from Tesla’s sales, which skyrocketed beginning in 2017 with the releases of the Model 3 and Model Y (which now make up more than half of all EV sales annually), EV sales have grown steadily, consistent with the pace of growth required by state ZEV policies. While there may be some additionality from federal regulatory incentives (after all, EVs are not sold exclusively in ZEV states), there has been no proportional jump in sales in response to the additional EV incentives. For automakers other than Tesla, sales have remained proportional to the number of vehicle offerings, a number which is also related to increasing state ZEV requirements (since many of those models can only be found in ZEV states).
For Tesla, it is likely that federal EV incentives have helped support growth, since the sale of overcompliance credits to EV laggards like Stellantis (fka Fiat-Chrysler) and Mercedes helps improve profit margins on their EV offerings. However, such credits are reducing the incentive for those companies themselves to invest in electrification, so it is not clear how much of a win even Tesla’s bonus credits are, on net.
Growth in EV sales predominantly coming from Tesla and from sales in ZEV states indicates that federal emissions regulations (applicable to all states) are not a primary driver of EV sales. So if EPA’s incentives are not driving additional sales, overcrediting EVs act simply as a windfall to manufacturers for responding to other policies and incentives. This is especially important to reflect upon when manufacturers like GM clamoring for more of those credits are doing so to undermine the state programs helping to drive adoption.
This means the so-called incentives act only to weaken the federal program, and they are doing so at a significant environmental cost. Since 2011, manufacturers have reduced lifetime fleet emissions by nearly 1 billion metric tons by responding to strong standards set under the Obama administration — however, an additional 66 million metric tons of extra EV credits were used for compliance, resulting in a relative increase in emissions and fuel use of nearly 7 percent over where we’d be without those incentives. (To the extent that the grid continues to get cleaner with time, the long-term impact will be reduced somewhat, but the broader point remains.)
EV regulatory incentives can actually REDUCE overall EV sales
While EPA’s incentives appear to have little positive impact thus far, extending those incentives could be much worse. A recent economic analysis presented at a conference on energy and economic policy noted the potential hazards of overcrediting as EV technology improves:
- Pairing an EV multiplier with a lack of accounting for grid emissions for charging EVs directly, and significantly, reduces the stringency of a standard.
- Automakers have an incentive to sell less-efficient gasoline-powered vehicles under regulations which include a higher EV credit multiplier.
- EV incentives can increase EV adoption rates when sales are small and/or technology costs are high.
- BUT as soon as electric vehicles approach being priced competitively with conventional vehicles, extra credits become likely to decrease EV market share because fewer EVs are needed to comply.
While those first three points are all reasonably intuitive, it is that fourth point which has the most impact as we look to the next generation of fuel economy and emissions standards to help drive the industry towards our climate goals — offering extra credits for EVs could actually reduce the incentive to sell more of them.
This data is consistent with our own analysis, which showed that extending EV credit multipliers would lead to fewer EVs on the road. As both analyses show, any EV sales with all these extra credits drastically reduces the overall stringency of the standard a manufacturer must meet — this reduction in stringency reduces the need for technology deployment to meet the standard (it’s easier), allowing for manufacturers to increase sales of gasoline-powered vehicles at the expense of more EVs.
On top of this, those remaining internal combustion engine vehicles are less efficient than they otherwise would have been, which is particularly problematic when EVs are still a small (but growing) share of the overall new car market. While this may be a gold mine for automakers, it’s disastrous for the environment. Clearly, we need a new direction.
The best way to get more EVs nationwide is setting strong standards
EVs are on the cusp of cost parity, and manufacturers are offering more and more models, including in popular vehicle classes like crossovers and pick-ups. This puts the industry poised to accelerate the transition to electrification. But as we move through that transition, we need to be driving emissions down in our gasoline-powered cars and trucks as well.
The best way to maximize emissions reductions as we move towards a more sustainable fleet is to set standards that are based on the real-world performance of these vehicles and ensure emissions are being reduced across the entire new vehicle fleet. The types of bonus credits manufacturers have asked for push us in the wrong direction, undermine emissions reductions, and are counterproductive for electrifying the transportation system.
Vehicles sold in the next few years will remain on the road for nearly two decades, impacting the climate for many more years to come. As the current administration moves forward to right the wrongs of the previous administration, we need to learn from the data and develop strong policies that will drive the industry forward, not policies with the kinds of hand-outs that have repeatedly delayed climate action. While we need to electrify passenger cars and trucks as quickly as possible, it is critical that our fuel economy and emissions standards not just help accelerate that transition, but do so while driving continued improvements in gasoline-powered vehicles as well.
This guy built a six-seater electric bike for $150, and it absolutely rips
I’ve always enjoyed multi-seater electric bikes, which bring passenger-carrying utility to small-format, easy-to-produce vehicles. But I never thought I’d see the concept taken this far. At least not until I stumbled upon a six-seater electric bike that has me all kinds of jealous.
It’s no surprise where this custom e-bike originated. If you want to see the most creative and ingenious transportation solutions in the world, you have to head over to Asia.
The Chinese often get a lot of credit for some of the more wacky vehicles popping up on Alibaba, but India usually takes the cake with some of the coolest auto and motorcycle innovation on the planet. And that’s exactly where this impressive six-seater bike comes from, where it was hand-built by Ashhad Abdullah from Lohra in eastern India.
Abdullah seems to have caught my recent Awesomely Weird Alibaba Electric Vehicle of the Week entry for a three-seater electric bike and said “Hold my lassi.”
Instead of a three-seater, Abdullah doubled the capacity to six seats. His stretch-limousine electric bike looks like it wears a scooter fork on front complete with drum brake, off-road lighting kit, and even a motorcycle horn. The rear seems to hold a hub motor wheel in a swingarm supported by dual coilover shocks. There’s a battery box mounted just in front of the swingarm, though how much capacity he’s rocking seems to be a mystery.
Bridging the two ends of the bike is a bespoke ladder frame with six seats, six handlebars, and six pairs of foot pegs.
There’s no word on the turning radius, but we’d wager it’s somewhere around the width of the state of Bihar.
Abdullah created the custom-designed bike after climbing fuel prices made petrol-powered motorcycles less appealing. In total, he says the bike cost him around 12,000 INR (US $150) to build.
It gets a range of around 150 km (93 miles) and costs around 10 INR (US $0.12) to recharge.
I’m not sure if this is technically an e-bike, at least by electric bicycle standards. It certainly looks like a tandem-style bicycle setup with bicycle seats, but the lack of pedals means it would be classified more like an electric scooter or motorcycle.
But whatever you call it, the six-seater bike has received a warm reception around the world.
The novel creation went viral on Twitter after a video of it in action was reposted by Anand Mahindra, the chairman of Mahindra Group, one of the largest automakers in India (and similar in size to GM).
It’s unlikely we’d see an awesome ride like this in the West, where safety regulations and an unhealthy aversion to two wheels would likely make this six-seater dead on arrival.
I’ll admit that it’s hard for me to argue with the safety concerns, especially when seeing six helmet-less heads and a few bare feet as well.
There are some good alternatives available in the US, at least if you’re alright with just two-seater e-bikes. But with options like a $999 Lectric XP 3.0 or a $1,499 RadRunner helping put more riders on smaller electric vehicles, the chances for sharing the fun on e-bikes are growing, even in laggard countries like the US.
We may never get six bodies on one bike, but even two would be a good start!
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Tesla launches in Thailand, opens Model 3 and Y orders at competitive prices
Tesla has officially launched in Thailand and opened orders for Model 3 and Model Y at competitive prices.
It has been a little while since Tesla has expanded into a brand-new market. The company was trying hard to enter the Indian market for years, but the effort was put on hold earlier this year after negotiations with the government stalled.
A few weeks later, we learned that Tesla’s new market team turned its attention to Southeast Asia, and more specifically Thailand.
The automaker filed to register its product for sale in the country. That was the first indication that Tesla planned to enter the market.
In September, we reported that Tesla started to hire in Thailand – indicating that a launch was imminent.
Today, Tesla has officially launched its Model 3 and Model Y vehicles in Thailand with a small event in a luxury mall in central Bangkok.
The automaker has started taking orders through a new Thai configurator for those two models. Tesla is offering all variants of the Model 3 and Model Y for sale in Thailand:
The Model 3 starts at ฿1,759,000 in Thailand, which is the equivalent of about $50,000 USD and fairly competitive compared to other luxury EVs in the market.
The Model Y starts ฿1,959,000, or about $58,000 USD.
Interestingly, while Tesla is starting to take orders through the new configurator, the automaker doesn’t list expected delivery windows in the country.
While we don’t know when official deliveries from Tesla will start in Thailand, there are already a decent number of Tesla electric vehicles in the country.
They have been imported privately by the owners – and that’s a factor that Tesla takes into account when considering entering a new market. If many people are willing to go through the trouble of importing the vehicle, there’s a good chance that there’s a market for its vehicles in the country.
We even reported on the Thai police buying a fleet of Tesla Model 3 vehicles for police patrol back in 2020, pictured above.
The Thai auto market is more significant than most people would think. More than 750,000 cars were sold in the market last year, and it is expected to ramp up to 800K–900K this year. However, most of those vehicles are not in the same price range as Tesla vehicles.
Thailand is also a vehicle assembly hub with up to 2 million vehicles produced locally per year.
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U.S. pledges to ramp up supplies of natural gas to Britain as Biden and Sunak seek to cut off Russia
Rishi Sunak and Joe Biden photographed on the sidelines of the G20 Summit in Indonesia on Nov. 16, 2022.
Saul Loeb | AFP | Getty Images
LONDON — The U.K. and U.S. are forming a new energy partnership focused on boosting energy security and reducing prices.
In a statement Wednesday, the U.K. government said the new partnership would “drive work to reduce global dependence on Russian energy exports, stabilise energy markets and step up collaboration on energy efficiency, nuclear and renewables.”
The U.K.-U.S. Energy Security and Affordability Partnership, as it’s known, will be directed by a U.K.-U.S. Joint Action Group headed up by officials from both the White House and U.K. government.
Among other things, the group will undertake efforts to make sure the market ramps up supplies of liquefied natural gas from the U.S. to the U.K.
“As part of this, the US will strive to export at least 9-10 billion cubic metres of LNG over the next year via UK terminals, more than doubling the level exported in 2021 and capitalising on the UK’s leading import infrastructure,” Wednesday’s announcement said.
“The group will also work to reduce global reliance on Russian energy by driving efforts to increase energy efficiency and supporting the transition to clean energy, expediting the development of clean hydrogen globally and promoting civil nuclear as a secure use of energy,” it added.
Commenting on the plans, U.K. Prime Minister Rishi Sunak said: “We have the natural resources, industry and innovative thinking we need to create a better, freer system and accelerate the clean energy transition.”
“This partnership will bring down prices for British consumers and help end Europe’s dependence on Russian energy once and for all.”
The news comes at a time of huge disruption within global energy markets following Russia’s invasion of Ukraine in February.
The Kremlin was the biggest supplier of both natural gas and petroleum oils to the EU in 2021, according to Eurostat, but gas exports from Russia to the European Union have been signifciantly reduced this year. The U.K. left the EU on Jan. 31, 2020.
Major European economies have been trying to reduce their own consumption and shore up supplies from alternative sources for the colder months ahead — and beyond.
Top CEOs from the power industry have forecast that turbulence in energy markets is likely to persist for some time. “Things are extremely turbulent, as they have been the whole year, I would say,” Francesco Starace, the CEO of Italy’s Enel, told CNBC last month.
“The turbulence we’re going to have will remain — it might change a little bit, the pattern, but we’re looking at one or two years of extreme volatility in the energy markets,” Starace added.
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