Weekly Brief: US Plays Catch-Up to China’s EV Dominance

Commentary by Andrew Tolve

---

21st February 2022

The US government unveiled a $5Bn program last week to build a nation-wide charging network for electric vehicles.

The National Electric Vehicle Infrastructure (NEVI) program is a result of the $1Trn infrastructure bill that President Biden signed into law in November 2021. NEVI will provide the investment over five years to help states create a network of EV charging stations along designated “Alternative Fuel Corridors”, particularly along the existing interstate highway system. The funds are available straight away, with $615M up for grabs in fiscal year 2022. A second, competitive grant program designed to further increase EV charging access in locations throughout the country, including in rural and underserved communities, will be announced later this year.

“A century ago, America ushered in the modern automotive era; now America must lead the electric vehicle revolution,” said US Transportation Secretary Pete Buttigieg. If not lead the revolution, at the very least the US must keep up. America currently has about 47,000 EV charging stations. That’s a pittance of the roughly 450,000 charging stations already installed in Europe and a rounding error compared to the more than 2.2 million charging stations in China.

China is the clear world leader when it comes to transitioning its infrastructure to an electric future. Its government recognized years ago that a lack of EV charging stations would serve as a bottleneck toward EV adoption, a prediction that’s now come home to roost in the US, where just 3% of vehicles sold in 2021 were EVs. That amounted to 489,000 vehicles. By contrast, 15% of vehicles sold last year in China were EVs, totaling nearly three million in number.

This growth has led to a robust local EV industry in China, complete with leaders like BYD and XPeng whose size and technological sophistication could soon rival Tesla’s in China and beyond. The more advanced China’s EV industry becomes, the more of a threat it poses to the US economy, where the federal government and major automakers like General Motors, Ford and Chrysler dithered for years before making big EV pledges in the past two or three years. As a result, the talent pool, supply chain, factories and more are all tilting toward China, as well as Europe, over the US.

Hence the reason this is such a high stakes moment. President Biden set a target of 500,000 EV charging stations by 2030. The $5Bn will probably be enough to build about 200,000 in the next five years, barely enough to keep pace with the number of EV chargers China is adding each year. Still, it’s a start.

In order to qualify for the funding, states must submit an EV Infrastructure Deployment Plan that’s consistent with a set of guidelines from the Federal Highway Administration. The Joint Energy and Transportation Office will play a key role in the implementation of the NEVI Formula Program by providing direct technical assistance and support to help states develop their plans before they are reviewed and approved by the Federal Highway Administration, which will administer the funding.

If all goes according to plan, the result will be what Secretary Buttigieg calls “the backbone of a national charging network”.