Alternative fuel vehicles (AFVs) became mainstays in the news in 2017, with several big stories focusing predominantly on electric vehicles (EVs). This, combined with several other factors, could mean a big year in 2018 for EVs and a real shift towards an electric, autonomous, and connected vehicle future.
Electric Vehicle Tax Credit
The electric vehicle tax credit ranges from $2,500 to $7,500 for new EVs purchased depending on the size of the vehicle. This tax credit is available until 200,000 qualified vehicles have been sold in the U.S. by each vehicle manufacturer. As a side note, this threshold has yet to be met by any manufacturer.
The threat of elimination of the electric vehicle tax credit in the federal tax overhaul was one of the biggest EV news stories in 2017. The House version of the bill originally eliminated the $7,500 EV tax credit, while the Senate version did not.
Once the EV tax credit was up for elimination, support came rolling in to save it. Even local leaders jumped into the fray, producing a letter signed by 22 mayors that urged Congress to preserve the EV tax credit. The letter cited jobs created in the U.S. automobile industry and the financial savings afforded to American families through owning an EV as direct benefits of this tax credit.
The House and the Senate were ultimately able to reach a deal on the EV tax credit, protecting it from elimination in the final version of the tax bill. While it is not clear what pushed Congress to save the credit, there is little doubt that it will help the EV market grow beyond 2018.
Transportation as a U.S. Greenhouse Gas Pollutant
Another overarching factor contributing to a potential EV boom in 2018 is the designation of transportation as the biggest source of U.S. greenhouse gas pollution. This is the first time in 40 years that power plants have not been recognized as the largest polluters.
While electricity use has not declined, its production has become much cleaner compared to the transportation sector. Wind, solar, and natural gas have replaced a sizable portion of coal-produced electricity, reversing negative trends of power plant emissions. This shift may help make the case for implementing policies or other mechanisms to increase EV adoption in states and localities.
EV Volkswagen Settlement Funds
The release of Volkswagen (VW) settlement funds will be another big variable for the 2018 EV market. As a part of the VW emissions settlement, $4.7 billion will be used for zero emission vehicle (ZEV) investments and Environmental Mitigation Trust funds for states.
The $2 billion ZEV investment will install more than 2,500 EV chargers during the first national ZEV investment cycle, according to Electrify America, with more plans to come.
The plans for the $2.7 billion for Environmental Mitigation Trust funds vary from state to state, but a portion can be invested directly in EV infrastructure. Vermont, for example, plans to spend 15% of its $18.7 million settlement on electric vehicle charging infrastructure. The state is polling the public on how the rest should be spent. Other states are following suit to build up their EV infrastructure as well.
While beneficiaries have several years to implement plans, the initial investments may push consumers to consider buying an electric vehicle as early as this year.
Improvement of EV Options
The surge in affordable and reliable electric vehicle options in the market may also lead to increased adoption in 2018. The three options below show that EVs are beginning to achieve long-range trips at an affordable price – two of the biggest concerns with EV technology:
- Chevrolet Bolt EV:
- 2018 will be the first full year this very popular vehicle is available.
- Range: 238 miles
- Price: Starts at $37,495
- Tesla Model 3:
- The Tesla Model 3 may become more widely available in 2018 following production challenges in 2017.
- Range: 220 miles
- Price: Starts at $35,000
- Nissan LEAF:
- Range: 107 miles
- Price: Starts at $30,680
How Regions Can Participate in the 2018 EV Opportunity
The convening of these factors in 2018 marks an exciting year for AFVs. As EVs become more affordable and can travel longer distances, we are likely to see a growing shift in their use.
To help make these options available to public fleets, NARC’s Fleets for the Future project has been working to consolidate bulk purchases for public fleets nationwide. The project team is also closely following the tides of AFV procurement, looking for ways regions can capitalize on the EV movement. For example, many regions will be looking to invest in many emission-reducing vehicles, ranging from EV sedans to propane school buses over the next year. Fleets for the Future will play an important role in reducing costs on these vehicles to help more public agencies transition to AFVs in 2018.
How Does This Impact Regional Planning?
The need for planning for charging stations and AFV corridors will certainly create demand for metropolitan planning organizations (MPOs), regional councils, and their members. This shift will impact gas tax revenues for states and will also increase the need for pilot programs on user fees and vehicle miles traveled (VMT) tax to help solve funding issues at the regional, state, and federal levels.
These regional impacts may also depend on the Trump administration’s infrastructure plan. While there are not many details available, the package may change the market and could have specific provisions that dictate how much the EV market expands.
NARC and its Fleets for the Future project team will keep you updated on these factors converging in the new year. We will be watching with anticipation to see if 2018 is the year of the EV.