Biden’s Electric Car Problem

from New York Times I'm Michael baboro. this is the. [Music]. daily a little over a year ago at. President Biden's urging Congressional. Democrats passed a sweeping plan to. supercharge the production and sale of. electric. vehicles today my colleague Jim. tankersley reports on whether the law is.

actually. [Music]. [Applause]. [Music]. working it's Thursday November. [Music]. 16th Jim it's always a pleasure thank. you as always for having me so we're. coming to you because you have been. engaged in some old-fashioned account. accountability journalism you've been.

trying to understand whether President. Biden's signature climate Bill is doing. what it was designed to do so tell us. what you found I found a lot so the. climate bill which you might recall was. called the inflation reduction act the. inflation reduction act invest. 369 billion dollar to take the most. aggressive action ever ever ever ever. and fronting the climate crisis it's the.

biggest climate investment in American. history and one of the centerpieces of. that climate investment was to try to. accelerate America's transition from. what we might think of as regular gas. guzzling automobiles to electric. vehicles American Auto companies along. with American labor are committing their. treasure and their talent billions of. dollars in investment to make electric. vehicles and battery and electric. charging stations all across America.

made in America all of it made in. America and what a team of colleagues. and I set out to find was is that. happening has the transition really been. helped Along by all of the tax credits. in this bill and in the Biden agenda. that are meant to push EVS forward got. it and just in short what's the answer. to that question so the short answer is. the law is trying to do two things at. once it's trying to have more Electric. and trucks made in America and on that.

we can say unquestionably it's a. success but it's also trying to get more. Americans to buy electric vehicles and. on that um not so much at least not yet. and that of course feels important. because if you can't convince Americans. to walk into a car dealership and buy an. EV then what's the point of developing a. system for manufacturing them in the. country so let's start though by. focusing on how this law is working in.

getting EVS made in America so the law. includes what are very powerful. investment incentives for what is truly. every step along the path of. manufacturing an electric vehicle like. starting from pulling the most important. materials for an Eevee out of the ground. and ending with recycling those. materials once a battery has lived its. full life and needs to be returned to. something else so start with the very. beginning this battery and walk us. through how the incentive touch.

almost every point of the process right. so there is a mining component to the. inflation reduction act it is a tax. credit for companies that pull out of. the ground in the United States certain. critical minerals that are used in the. making of electric car batteries and if. you do that mining here you get a. production tax credit which reduces your. taxes and makes the project more. attractive the White House for example. loves to tout a lithium mine in Nevada. data as an example of the sort of.

activity that's being encouraged by. these incentives mhm okay what's the. next touch point so then you have the. processing of those materials to be. turned into batteries and there you see. a bunch of other investment across the. country including in North and South. Carolina again because there are tax. credits that incentivize companies to. set up mineral processing facilities to. turn those raw materials into what you. need make batteries and of course that.

means there are new jobs in the. Carolinas as well exactly and by the way. we're talking about billions of dollars. of investment that otherwise probably. wouldn't be happening if not for the. fact that the inflation reduction Act. passed okay so those are the batteries. how does this bill incentivize the rest. of putting together an electric vehicle. um well we've got one more step on. batteries which is you actually have to. put go to a plant now with the refined. materials and here is something where.

we've seen a really big boom of. investment activity across the South a. lot of foreign automakers have announced. plans to do their own battery making. facilities in the United States that. will create the batteries that then will. go into their electric cars and trucks. so this is pretty fasing because just in. the creation of a battery this one. component of an electric car you're. saying this bill has generated an entire. ecosystem of businesses in a year yes. totally and it's really interesting some.

of that ecosystem is where you might. expect it where Auto plants already are. like in Michigan but other parts of this. investment are like entirely new. ecosystems like in the Mountain West. which are interesting because it sort of. shows the power of these incentives to. break out of the traditional economic. Pathways that the Auto industry has been. in and then we come to sort of the final. piece of manufacturing an electric. vehicle which is the actual assembly. plant and here again the law encourages.

investment by companies in doing that. assembly taking the battery and the rest. of the car components putting it all. together and rolling it off to head to a. de lot here in the United States and. again it appears to be working so for. example Hyundai the Korean automaker is. going to do its first US Electric. Vehicle plant in Georgia a company. called Scout which used to make cars in. the 60s and 70s now they're coming back. with EVs and they're going to assemble. them in South Carolina you're basically.

seeing an EV supply chain grow out of. almost nothing in the United States this. feels like a really powerful reminder. Jim that tax breaks which we often joke. about and sometimes we malign have this. tremendous force in our economy and here. government tax breaks are fundamentally. transforming an industry yeah the tax. breaks were designed in this case to. change the economics and the calculation.

that a company might make of where you. want to build an electric vehicle and. they are very powerful but they're not. working alone here they're not the only. reason we're seeing this investment. there's a second part of the law that is. really encouraging companies to spend. money now to ramp up their electric. vehicle sourcing and production in. America and that is tied to the question.

of how do you get more people to buy. these cars well what is it. exactly the law creates a. $7,500 tax credit for most people to buy. an electric vehicle it's a lot of money. it's a lot of money it can definitely. reshape a buyer's decision when you're. comparing you know a Chevy Bolt versus a. Toyota Camry but there's a catch to. qualify for the credit a car or truck. has to meet certain requirements for how.

much of it is made and assembled in. America that's why there's so much money. being poured into changing the EV supply. chain so quickly because if you're an. automaker and you want your vehicle to. be able to get that big advantage of the. government just throwing money at. customers to buy an EV you have to meet. those made in America requirements which. means you need to be investing and the. requirements get tougher every year so. you need to keep building out your. supply chain so you can keep meeting the. requirements it's sort of a long-term.

strategy with the goal being you have to. keep qualifying for the full $7,500. benefit mhm this year is the first year. those requirements actually started and. that was pretty fast the law just passed. in 2022 so a lot of cars were just sort. of left out in the cold they didn't. qualify for the full credit because. their automakers hadn't had time to. build up their supply chains that means. that customers weren't able to get the. $7,500 each either and so that's sort of. why the law right now is doing a lot.

less to incentivize people buying EVS. than it is to incentivize companies. investing in making. [Music]. [Music]. EVS we'll be right. [Music]. back. [Music].

Jim just before the break you said that. this law isn't doing enough to get. consumers to buy electric vehicles. despite this $7,500 tax credit even if. the law leaves some EV car makers out in. the cold like you said I have to imagine. it still does apply to plenty of EVS so. walk us through this kind of complicated.

Dynamic okay first off electric vehicles. at the moment tend to be pretty. expensive in the United States which is. why if you want to get people to buy. more of them the government is offering. them money that's a pretty. straightforward calculation but they're. also getting increasingly popular this. year the country appears to be on track. to buy about 1 million electric vehicles. for the first time that's a big de but. it's still not very much in the context.

of the overall car market like it's less. than one out of every 10 cars and trucks. sold in the United States is an EV and. Biden wants that to be significantly. higher and I think when we talk about. the incentives not yet working to. supercharge that buying Market the. easiest way to look at it is that the. rate of increase in EV sales actually. went down last year after the law was. passed it's obviously still growing but. when you talk to car deal ERS they.

mention a few obstacles that a lot of. potential EV buyers still face when. trying to decide between an EV or a. conventional car like what cost is the. big one they say it's it's still too. expensive and particularly if the car. doesn't qualify for the tax credit which. a lot of models don't then it just. doesn't pencil out for them compared to. a cheaper alternative what if it does. though is that still a problem the cost. of a car even with a $7,500 tax credit. well you can really make a difference. once you factor in the $7,500 credit.

dealers will tell you that removes a. significant barrier for a lot of of. buyers but it's not everything people. still have other concerns too they're. still worried about can I charge this. car often enough and easily enough to. get where I want to go something that. people call range anxiety like oh I want. to take road trips are there enough. Chargers along the highway for me to be. able to do that and fuel up you know. like I can with a gas station with a. conventional car and right right now the. government is racing to build out an.

infrastructure of chargers to expand on. the one that's already in the United. States but it's just not big enough yet. for a lot of people to feel comfortable. so those two issues affordability and. range anxiety combine to make a. difficult calculation for a lot of. buyers but when you talk to the dealers. affordability is the big one they come. back to they really say that if people. have incentive it makes a difference it.

makes it easier to sell people on the. idea of of taking a leap and trying an. electric car got it so in that sense one. of the Law's real limitations and. perhaps it was unforeseen is that in the. early years of this new world not enough. EVS were going to qualify for that. difficult to qualify for $7,500 tax. credit and therefore a lot of Americans. just couldn't get over the hump couldn't. get to buying an EV I think the best way. to think about this is the people who.

wrote the law and that includes some. very key Senators like Joe Mansion of. West Virginia who was not in a rush to. get a bunch of people into EVS but very. much was in a rush to get more. Manufacturing in the United States were. really trying to do these two things at. once remember one they wanted people to. buy more electric cars and trucks and. two they wanted those electric cars and. trucks to be built and sourced. in the United States and so by balancing.

those competing interests you were. almost inevitably going to have this. transition period where the buyer side. incentive is just not as powerful as it. could be once all of the production. incentives work their magic and get a. full electric vehicle supply chain in. America that allows more cars to qualify. for the credit you're saying there was. always going to be a tradeoff either. manufacturing was going to be favored or. consumer purchasing and in this case it.

end up being manufacturing yeah if what. you really wanted to do was say listen. no matter what we want as many Americans. possible buying and driving electric. vehicles right away we don't care where. they're made you do a very different. sort of shape of the law than what they. did and you might have a lot more people. buying EVS today than what you actually. see in the data now interestingly the. treasury Department did Issue a ruling. late last year that kind of gave some.

buyers a workaround and probably made. the numbers look better than they. otherwise would have it's complicated so. I'll boil it down to basically just say. the department is allowing people who. lease an electric vehicle to recoup as. much as. $7500 that full tax credit off the cost. of their lease even if the car they are. leasing doesn't qualify for the credit. because it's not assembled in America. it's essentially a. workaround so a lot of people ended up.

getting EVS that way this year if you. look at Independent Auto Dealers about. half of them this year have been leased. as opposed to bot so what should we make. of that the number of people willing to. lease an EV to get that incentive well. it's an unusually large share of Auto. Shoppers who are choosing to lease over. buying so what that tells us is it's. probably people who would not otherwise. be leasing but are responding to this. workaround ability to get the full tax.

credit got it you know and listening to. all of this Jim I guess I'm a little bit. confused why exactly we're supposed to. care that sales actually purchases of. not just leases of EVS in this first. year are lackluster this is as you have. said a long-term investment and a. long-term transition that's envisioned. by these Investments so what is the big. deal if in just one year sales are a. little bit.

disappointing well there are definitely. people inside the administration who say. exactly what you just said we don't need. to worry about this but there are people. I talk to who worry a lot about it for a. couple of big reasons the first is every. car you put on the road stays there for. a while people own cars for a long time. or they sell them as used cars and they. say the life cycle of a car is a decade. or more easily and so every time you put. a conventional gasoline car on the. market it on the road it's going to stay.

there and it's going to continue to emit. fossil fuel emissions which contribute. to the warming of the planet put a. different way every time you don't sell. an EV you've missed an opportunity to. fight climate change right and so sure. in that scenario if what you care about. very very most here is reducing. emissions you want as many Eves on the. road as possible as soon as possible and. in that sense this law encouraged people. to make the UN environmentally friendly. decision to by the gas guzzling car.

versus the Eevee by restricting which. cars qualifi for the credit the law made. it easier for a lot of buyers to choose. a lower cost conventional car than would. have been the case if every Eevee got. the credit for sure got it but Michael. the other reason people worry about. getting EV sales you know on a rocket. Pace trajectory and not just a steady. climb is because they worry about what. could happen in the next presidential.

election if President Biden loses either. to Donald Trump or any other the. Republican candidates who are running. right now in the primary it is very. likely Republicans will try to overturn. basically all of Biden's efforts to. promote EVS Joe Biden's Green New Deal. agenda is good for Beijing and bad for. Detroit I've watched all of the. Republican debate. and when EVS come up they are mocked the.

candidates talk about them being. uneconomic and weiding the cars not. every car we're subsidizing electric. vehicles and they want to reverse these. tax credits these subsidies are not. working we also need they would like to. reverse the regulations that Biden's EPA. is putting in place to encourage more. EVS they need two3 less workers to build. an electric car Joe Biden this strike is. at Joe Biden's. feet so there's this sense that the.

Biden EV moment could be fragile as. fragile as the next election is right. this manal push for all electric cars is. killing the United States killing. Michigan is a and I think we should. probably establish clearly the front. runner in the Republican field Donald. Trump is outright hostile to electric. vehicles they say you want electric. vehicles will give it to you when the. damn things don't go far enough and. they're too expensive and has made very. clear that he would not encourage people.

to buy them and in fact that he would. encourage people to buy traditional gasp. powered cars yes and we saw when. President Trump was in office that he. leaned on the automakers the American. automakers not to transition to EVS so. if you're a person who really cares for. climate reasons about getting more EVS. on the road GE you you'd much rather. they take hold in the market faster and. have people demanding them more such. that they could survive the loss of that.

support should a republican take the. Oval Office in the next. election but Jim isn't there a version. of everything you just talked about. where even if Biden loses and a. republican who's hostile to Eevees wins. guts this law removes these incentives. that all the Investments you talked. about which are big and represent. billions of dollars represent a cake. that's pretty well baked and that this. is not really derail that people are too.

invested in this change the Hope among. EV Advocates is that this industry will. become so quickly and so deeply rooted. in the United States that no one is. going to be able to reverse that. progress from inside the Oval Office. that if consumers Drive EVS buy EVS they. like them that if Regulators in States. like California succeed in pushing. automakers to make more EVS they'll just. continue to down the path no matter what. the federal government does but the real.

hope here for Ev Advocates goes back to. the first part of this whole equation. that made in America supply chain and. it's about jobs because a lot of these. jobs are going to be created in red. Republican areas and there is this big. expectation among the Democrats and. their supporters who sponsored this bill. that if you build enough battery plants. in Georgia and Tennessee and you put. enough people to work in critical.

mineral mines or in assembly plants then. that will become its own sort of. economic gravity and will be difficult. for Congress to reverse and perhaps it. will be its own kind of political. gravity because what you're outlining is. a world where so many not just. Democratic voters but Republican voters. independent voters become invested in. the economy of electric vehicles that. they might not want any future president. to make it harder for those cars to get. into the hands of consumers everybody.

could in theory become more and more. invested in this because the economy is. more and more invested in it and. people's jobs are more and more invested. in it yeah the simplest way to think. about this is a potential Congressional. vote to reverse these tax incentives in. a world in which that was an actual live. option on the table well the Hope among. Democrats is that you have enough. Republicans from these districts that. are getting battery incentives that they. will have to vote know because they'll. be getting pressure from the companies.

creating jobs in their districts from. the workers working at those plants and. you know it's this sort of idea that. yeah you can vote along party lines but. it's very difficult to vote against the. economic interests of your district and. if you can make enough of the district's. economic interests aligned with EVS then. maybe you've got something and so this. is for some people why the complicated. design of the law was the right way to. go. M if all you did was shower subsidies on.

the people buying electric cars you. might make some consumers happy but if. you tie those subsidies to this. complicated series of tax incentives to. create production and jobs in America. well then that might become its own sort. of sustainable ecosystem both. economically and. politically well Jim thank you very much. thank. you. [Music].

we'll be right. back here's what else you need to know. today on Wednesday Israel and Hamas. appeared to be closing in on a deal to. release a group of Israeli hostages. taken by by Hamas on October 7th.

according to both Israeli officials and. Hamas under the proposed deal Hamas. would release 50 Israeli women and. children in return for the release of 50. Palestinian women and children being. held in Israeli. prisons the deal which is being. negotiated by officials from Qatar Egypt. and the US would also include a. so-called humanitarian pause in fighting. that could last for several days but.

despite the movement toward a deal. Israeli Prime Minister Benjamin. Netanyahu must first present the. proposal to his government for a vote. and the times reports that some. hardliners in netanyahu's government who. do not want to make any deal with Hamas. May seek to block. it today's episode was produced by. Claire tennis and Simon Johnson it was. edited by Lexi di with help from Mark.

George contains original music by Diane. Wong and Maran Lozano and was engineered. by Alyssa Moxley our theme music is by. Jim brunberg and Ben Lans furk of. [Music]. wonderly.

that's it for the daily I'm Michael raro. see you. [Music]. tomorrow.