How Political Policies Are Shaping the Future of Electric Vehicles in the US

More Than Market Forces Are at Play

The current political landscape is very favorable to EV development nationwide and locally in Ohio. We’ll evaluate how political policies are shaping the future of electric vehicles in the US.

The proposed transition from gas to electric vehicles has been fraught with political conflict. Currently, the Federal government and many state governments are adopting favorable policies. Let’s take a look at some of them.

Federal Tax Credits for Individuals

Public acceptance of EVs has grown in recent years, but the transition is happening slower than some policymakers like. Some federal incentives, such as the Clean Vehicle Credit (CVC), specifically target consumers.

The CVC gives individuals and businesses a tax credit of up to $7,500 for purchasing qualifying EVs. The CVC targets low- to middle-income families and business owners, though the amount of the credit varies based on factors like kWh of battery capacity, not income.

The program aims to make it easier for Americans to switch from gas-burning to electric vehicles by functionally lowering the required investment.

Federal Incentives for Manufacturers

Parts of the CVC require automakers to meet specific eligibility criteria if they want to offer the tax credit to their buyers. Most importantly, the vehicles must undergo final assembly in North America and meet critical mineral and battery component requirements.

The critical mineral and battery requirements imposed in 2023 require automakers to avoid critical minerals or battery components manufactured in a “foreign entity of concern.” This stipulation encourages domestic production and creates new opportunities for American workers.

From a manufacturing standpoint, Ohio is leading the pack in domestic production. The Ultium Cells battery manufacturing plant in Warren, Ohio, offers the state a strategic advantage. Honda is also in the process of constructing a battery production plant in Jeffersonville, Ohio.

The local government lends support via an Accelerating Ohio’s Automotive Industry Task Force, which provides grants and other forms of support to EV manufacturers and related companies.

State-Level Initiatives

Some states are pushing forward into the electric future faster than others. California is the best-known example. With its Zero Emission Vehicle (ZEV) mandate, part of a broader Advanced Clean Cars (ACC) legislation, it is pushing for all new vehicles to be zero-emission by 2035.

California’s goal is very ambitious, but the state also included what it calls “zero-emission vehicle assurance measures” designed to help CA households make the switch. Other policymakers are following suit, and 17 states plus DC have adopted some or all of California’s ACC policies.

Although the political landscape in Ohio is very different from that of California, the Buckeye State is also implementing policies that shape EV manufacturing and sales. Ohio is a member of the National Electric Highway Coalition, and most state vehicles are required to be capable of using alternative fuels, which often include electricity.

Broader Implications for Ohio and Other States

The broader implications of federal and state incentives and tax credits are that they encourage companies to engage in domestic production and open US EV and battery assembly plants. They encourage individuals to purchase EVs by making them more affordable.

There are still many barriers to EV adoption in Ohio and elsewhere. However, if the Federal government continues to adopt EV-friendly policies and automakers continue to make relevant technological advances, issues such as range anxiety should soon be a thing of the past.

The EV revolution has been slow to come, but with government support, the switch from fossil fuels to electricity should only continue to accelerate.