We Need More Electric Vehicles, But Extending Regulatory Incentives For EVs Is A Bad Idea

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4 years ago

July 16, 2021

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Originally published by Union of Concerned Scientists, The Equation.
By Dave Cooke, Senior Vehicles Analyst

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.

While a 2017 change in federal policy was supposed to incentivize EV sales around the country, states with zero-emission vehicle (ZEV) sales requirements are leading the way in EV adoption. Data comparing EV sales before and after those incentives show that, if anything, state ZEV policies are now doing even more to drive adoption, with ZEV states making up a larger share of EV sales since EPA’s EV multipliers took effect. Nearly 2/3 of all EVs sold are sold in ZEV states, despite them making up less than 30 percent of the total U.S. new vehicle market. And this number has increased over time, with the elimination of flexibilities like the “travel provision” and with new states like Colorado adopting ZEV standards.

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.

EV sales in states like California which require manufacturers to sell EVs track those requirements, indicating that at most federal policy is serving to facilitate the remaining 30-35 percent of EV sales. However, that spillover to the rest of the country is largely just proportional to the number of EVs offered, a feature which is also related to increasing ZEV requirements. While Tesla saw a large spike in sales nationwide with the release of its mass market Model 3 and Model Y, no other substantial increase in sales is observable resulting from the change in EPA EV incentives in 2017. (Note: State ZEV policies are based on complex credit accumulation, so the “ZEV obligation” represents an estimated annual sales requirement taking into account the average number of credits per vehicle and flexibilities in the regulation regarding non-EV sales.)

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.

UCS modeling shows that setting strong federal standards without specific EV incentives would save consumers tens of billions of dollars more than the type of credit-heavy proposal offered by industry, protecting lives, increasing jobs, and leading to more electric vehicles in the process. (For more details, see this blog.)

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.

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11 states launch coalition to expand clean cars in face of federal attacks

Published

2 hours ago

May 23, 2025

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11 states launch coalition to expand clean cars in face of federal attacks

Hot on the heels of Congress illegally attacking clean air, a coalition of 11 states has launched an Affordable Clean Cars Coalition to expand access to clean cars even as the federal government tries to raise costs for Americans and drag down the US auto industry during the all-important transition to EVs.

The coalition has been in the works for some time now, but official announcement couldn’t come at a better time.

Just yesterday, Congressional republicans moved on two separate efforts to increase pollution and harm the US auto industry, both by illegally voting to rescind a waiver they don’t have the authority to rescind and voting to send US EV jobs to China and give trillions of dollars to wealthy elites instead.

The new coalition includes 11 states whose governors want to protect their residents from these attacks, and to keep pushing forward on clean cars.

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Here’s the list of governors:

Gavin Newsom, California
Jared Polis, Colorado
Matt Meyer, Delaware
Maura Healey, Massachusetts
Wes Moore, Maryland
Phil Murphy, New Jersey
Michelle Lujan Grisham, New Mexico
Kathy Hochul, New York
Tina Kotek, Oregon
Dan McKee, Rhode Island
Bob Ferguson, Washington

The coalition represents over 100 million Americans and around 30% of the US car market. It’s a subset of the 24 states in the US Climate Alliance, a bipartisan coalition of 24 governors that represents ~60% of the US economy and 55% of the US population.

The US Climate Alliance has worked on several initiatives, including on cleaner construction materials, modernized grids, and of course clean cars.

The governors in the new Clean Cars Coalition closely (but not exactly) track the group of “section 177” states which follow California Air Resources Board’s clean air rules.

Section 177 is the portion of the federal Clean Air Act which allows California to ask for a waiver to set its own emissions rules, as long as those rules are stronger than federal rules, and lets other states follow the same rules, as long as they follow California’s rules exactly.

Not every state follows every rule, and each individual rule has somewhere around 10-12 states that follow it. Each of the states involved in today’s effort are section 177 states, but not every section 177 state is represented in this coalition.

States participating in the Affordable Clean Cars Coalition will collaborate to:

Develop solutions that make cleaner vehicles more affordable and accessible to all Americans who want them, including by reducing cost barriers, increasing availability of options, and expanding accessible charging and fueling infrastructure at home and in our communities.
Continue making progress toward the goals of states’ clean vehicle programs.
Defend longstanding authority under the Clean Air Act for states to adopt transportation solutions that best meet their needs and most effectively support their families and communities.
Explore opportunities to develop and adopt next-generation standards and programs to further reduce vehicle pollution, as permitted under the Clean Air Act or otherwise, such as solutions that increase consumer access to cleaner cars and low-carbon fuels.
Collaborate with one another, share evidence-based practices, engage experts, and develop solutions that can be shared across state lines and eventually scaled by the federal government.
Foster meaningful engagement with manufacturers, suppliers, dealers, labor unions, business associations, utilities, community-based organizations, charging and fueling infrastructure providers, and others in developing and successfully implementing state transportation solutions.
Prioritize efforts that bolster America’s ability to compete and innovate in a growing global market.

Electrek’s Take

Today’s coalition is a similar effort to that which came out of the last time the federal government tried to force dirty air on states.

In fact, the US Climate Alliance was originally formed in 2017, in response to former reality TV host Donald Trump declaring that the US should pull out of the Paris Agreement (which Tesla CEO Elon Musk opposed at the time, but now relishes his chance to be “not good for America or the world“).

Mr. Trump also tried to attack California’s clean air rules many times the first time he squatted in the Oval Office (after losing the 2016 election by 3 million votes), but through a combination of being both morally and legally correct, California eventually won that fight.

Along the way, coalition-building like today’s made it clear who the eventual winner would be. California negotiated a clean car deal on its own with automakers, and several states took California’s side in a lawsuit against republican big government overreach. California even made international agreements and went to international climate conferences in the US’ stead, as Mr. Trump committed itself to diminishing the US on the international stage.

This time, the story looks like it’s starting to play out similarly. And since the players are the same (though some, somehow, are even stupider), and the importance and dominance of electric cars is more apparent now than ever, I wouldn’t bet on the outcome being all that different.

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Volkswagen builds first pre-series ID.2 parts and the low-cost battery system to power it

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2 hours ago

May 23, 2025

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Volkswagen builds first pre-series ID.2 parts and the low-cost battery system to power it

Volkswagen’s entry-level EV is coming along. The first pre-series battery systems, which will power the ID.2, are now rolling off the assembly line, and Volkswagen is already building parts for the low-cost EV.

Volkswagen produces the first ID.2 parts and battery

It’s been over two years now since VW first introduced the ID.2all, a preview of its upcoming entry-level EV priced under €25,000 ($27,000).

The ID.2 is inching closer to its official debut after the first pre-series battery systems and parts rolled off the assembly line at the Group’s Martorell plant in Spain.

SEAT S.A., which will lead VW’s new Electric Urban Car Family (entry-level models), announced two major milestones this week. The company produced the first body parts on the new PXL press that will be used for the new CUPRA Raval in 2026, followed by the production version of the Volkswagen ID.2.

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Markus Haupt, Interim CEO of the Group’s SEAT and CUPRA brands, said 2025 is a “decisive year” as the company gears up to kick off series production of its new entry-level EV lineup.

During pre-series production, both automated and manual tasks are in place. Once the plant upgrades are complete, Volkswagen said it will have fully robotized processes and around 500 workers.

After investing €300 million ($340 million), the Martorell plant will be able to produce up to 300,000 batteries annually. The company aims to begin series production in 2026.

More affordable EVs are coming soon

The ID.2 will be the first Volkswagen EV based on its new MEB+ platform and low-cost LFP battery system, promising to significantly cut costs.

With “particularly efficient drive, battery, and charging technology,” the ID.2 is expected to have a WLTP range of up to 450 km (280 miles).

Volkswagen-ID.2-EV-interior — Volkswagen’s ID 2all EV interior (Source: VW)

Volkswagen says the lower-cost electric car is “as spacious as a golf,” but “as inexpensive as a Polo.” It will start at under €25,000 ($27,000) when it arrives later this year or early 2026.

At the LA Auto Show in November, VW’s tech development head, Kai Grünitz, told Autocar that “huge improvements” are coming, starting with the ID.2. Grünitz promised VW is “going back to where we came from” with inspiration from iconic cars of the past, including the Golf.

One fun feature? The new drive modes. You can switch between “Classic” and “Vintage” themes, and your display cluster will look like it’s straight out of an old-school Beetle or Golf.

Volkswagen's-ID.1-EV — Thomas Schäfer and the ID. EVERY1 concept car

The production version of the ID.2 will be one of ten new EVs Volkswagen will launch by 2026. It will be followed by the ID.2 SUV and the smaller, more affordable ID.1.

The ID.1 will kick off a new era as VW’s first software-defined vehicle (SDV) with help from Rivian. Earlier this year, earnings call, VW brand CFO David Powels confirmed the company plans to launch the ID in 2027.

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Tesla ranks under UnitedHealth, Temu, BP in brand reputation poll due to Musk

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4 hours ago

May 23, 2025

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The 2025 version of the Axios Harris poll of brand reputation is out, and it shows a sharp decline in the reputation of Tesla and other Elon Musk-related brands, putting them among the lowest-ranked brands in America, largely due to the toxicity of Musk himself.

The Axios Harris Poll 100 ranks brand reputation of America’s 100 most visible companies, and asks a sample of thousands of Americans how they feel about each brand.

The survey is a collaboration between Axios and Harris that has been going on since 2019, though is based on 20 years of similar Harris Poll research before then, starting in 1999. It has developed its own reputation as a reliable way to take temperature of the American public’s opinion on various high profile brands.

It’s conducted through multiple samples of thousands of Americans, asking them what the most high-profile brands are, how familiar they are with those brands, and their opinions of those brands.

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Tesla has been ranked in the survey many times over the years, with varying results. In the first poll in 2019, it ranked 42nd, with a brand score of 75.4 out of 100.

But Tesla rose from there, ranking 18th in 2020 and reaching a high-water mark as the 8th most trusted brand in America in 2021, with a reputation score of 80.2 out of 100.

Since then, the company’s shine has started to tarnish, and it has been dropping in the rankings. 2022 saw a slight dip to #12 and a score of 79.5, but in 2023 Tesla took a huge hit, dropping a whopping 50 places in the rankings. Axios titled the poll the “year of the tarnished titans” partially due to Tesla’s huge drop.

But the drop didn’t stop there, as Tesla dropped another position in 2024, down to #63, but with a brand score that would still at least be a barely-passing grade (for a lenient teacher), at 72.5 out of 100.

But this year’s poll shows that things just continue to get worse, and in fact, the reputation damage is accelerating.

In 2025, Tesla dropped another 32 places into 95th place, and down to a brand score of 61.3, a huge numerical drop in both position and brand score.

The only companies ranked worse are:

#96 Wells Fargo – which defrauded its customers and was fined ~$3 billion for it. Incidentally, the fraud was uncovered by the Consumer Financial Protection Bureau, a government organization which Elon Musk is trying to dismantle.

#97 Meta (Facebook) – This feels self-explanatory, but just about everyone is unhappy with Facebook, for reasons with varying levels of rationality behind them.

#98 Twitter – Also run by Elon Musk, which has been flooded with Nazi rhetoric and disinformation after he wasted $44 billion and most of his time on it (though it consistently ranked poorly even before Musk’s takeover0.

#99 The Trump Organization – I mean, it has the name of the highest-profile traitor to America right there in the name.

#100 Spirit Airlines – The “most hated airline in America,” butt of innumerable jokes, with generally low levels of service.

SpaceX, the third company run by Musk on the list, also earned a low reputation score, ranking 86th with a score of 66.4.

Notably, there are several companies with bad reputations ranked above Tesla, many of which have had high-profile scandals either recently or that still loom large in the public consciousness.

For example, those in the title of this article: BP, which presided over the Deepwater Horizon oil spill; UnitedHealth, which is currently imploding and whose former CEO was recently murdered in broad daylight and lots of people kind of didn’t seem to mind it; and Temu, which has faced data privacy lawsuits and is the butt of many jokes for selling low quality products, on top of general anti-China sentiment.

For a few other names, another Chinese app, TikTok, is also ranked above Tesla. As is Fox Corporation, one of the largest purveyors of misinformation and causes of the political division we see in America today. And finally, Boeing, which spent last year wracked by scandals, yet is 7 places above Tesla on this year’s list.

Meanwhile, every other automaker on the list ranked higher than Tesla by at least 35 places (Ford, #60).

Electrek’s Take

So, the news is quite bad for Tesla. But why is Tesla ranked so low?

Well, as you may have divined from our repeated mention of a certain name, the primary reason is Tesla CEO Elon Musk.

As we’ve been warning people about for quite some time now, Tesla CEO Elon Musk is doing his best to completely destroy Tesla’s brand.

Musk has presided over an incredible amount of brand damage to Tesla, with the company ranking the lowest of any US EV brand in a recent survey. This negative perception seems to apply to pretty much any question asked about the brand, including its standout Supercharger network, which suggests that the reason isn’t anything to do with Tesla’s products.

As an EV publication, we have the same mission as Tesla – to advance sustainable transport. In order for that to happen, we obviously want the (formerly) largest EV company in the world to do its job the best it can.

The problem is, Musk doesn’t have that mission, and has been doing his best over the last year(s) to ruin Tesla’s brand perception with increasingly idiotic decisions, both in terms of his public advocacy and his work within Tesla.

Musk’s high-profile political advocacy, which has included support for German neo-Nazis and agreeing with a defense of Hitler’s actions in the Holocaust, among many other white supremacist statements, has driven protests against the company, embarrassed owners and pushed many customers away. The first round of the poll started on Jan 22, which means it captured the period after Musk did two back-to-back Nazi salutes in public.

Beyond politics, Musk’s leadership (or lack thereof) has also resulted in Tesla putting all of its effort into products that either don’t work or don’t sell, instead of focusing on Tesla’s strengths like its cost advantages and Supercharger network.

So, once again, this report shows the effect of the constant drumbeat of bad Tesla business moves and horrendous public behavior by the company’s CEO.

Indeed, it seems like the legend of the “Tesla killer” finally came true – and it’s Elon Musk.

The company’s employees, for the most part, are still working to succesfully to make good electric vehicles. But Musk is spending the money he made from selling EVs to try to ruin EVs – something that the company itself had to call him out on in its quarterly report (and which the formerly-more-lucid Musk would have opposed just a few years ago before he forgot how climate change works).

Unfortunately, Tesla’s board seems content to destroy the company, and its shareholders do too, as they voted again last year to give Musk $55 billion in exchange for his bad leadership, an award that is greater than the total amount of profits Tesla has made over its entire lifetime.

That pay package was stopped by a court for violating corporate law, but Musk has spent his political influence getting Texas to rewrite its business laws to disadvantage shareholders and benefit Musk personally – even as Texas continues to block Tesla from selling cars in the state Musk unwisely moved its headquarters to.

We’re not sure what’s going to make Tesla’s board (which have been dumping TSLA stock like mad) or shareholders wake up to Musk’s destruction of the company, but this report is just one more data point showing how severe the situation has gotten.

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