California can fix Donald Trump's EV mistake
Tribune News Service
When he signed his budget bill into law on July 4, President Donald Trump dealt a heavy blow to America's electric vehicle industry, ending most federal support for US electric vehicle manufacturing and hobbling automakers' $100 billion effort to catch up with China, the world's new automotive manufacturing superpower. Now California alone has the size and market power to fill the void left by Washington's surrender. Our leaders in Sacramento must step up.
The gutting of EV support never got the national debate it deserved. Americans, including many in Congress, fail to see the real EV issue: China. As the world moves toward a future auto market dominated by electric vehicles — a reality no global auto executive doubts — China has seized the opportunity. It's China, not the United States, the European Union or Japan, that now rules global automotive manufacturing. For every car, SUV or pickup built in America, China builds about three, and the Chinese have the manufacturing muscle to build five.
Detroit understands this. Along with their European and Asian peers, US automakers have invested tens of billions in North American factories to build the next generation of EVs and compete in global markets. This month at the Aspen Ideas Festival, Ford Chief Executive Jim Farley put it bluntly: 'If we lose this (the race for EVs), we do not have a future Ford.' Unfortunately, the Trump administration is forcing free-world automakers to race against China at a disadvantage. Chinese automakers, awash in government help and subsidies, now manufacture 70% of the world's EVs. Their advanced, low-priced cars are quickly taking market share in Australia, Europe, Latin America and the Middle East. Mexico is a sobering example. In 2017, 1% of Mexican cars came from China. Last year that number was 20%. Despite China's success, have no doubt that US, European, South Korean and Japanese automakers can compete. Much of the EV technology that the Chinese have exploited was first developed in the United States. Although China has more than 100 EV brands, only a handful are profitable; many will fade away.
For America and its allies to compete in this race, carmakers must succeed in their anchor American market. (Remember, most foreign car companies — Hyundai, Kia, BMW, Volkswagen and Mercedes — build EVs in the United States, employing thousands of Americans.) What makes California so important? First, it's America's EV leader; over a third of all US EV sales are here; 1 in 4 cars sold in California is electric. Second, California is on the front line of the US auto industry's research and development battle with China. Lucid developed its world-class power train technology in Orange County. Rivian, in Irvine, licensed its world-class software and electrical architecture to Volkswagen for billions. Tesla has two large factories and several labs here, employing more than 40,000 workers. Ford, the pride of Detroit, has bet the company's future on a California skunkworks, where hundreds of engineers are working on a new, affordable EV platform designed to compete worldwide.
What can California do to fill the massive void in EV support left by Washington? Plenty. Here are three priorities:
Until Sept. 30, buying or leasing a new EV still qualifies for a $7,500 federal credit. When that ends, California should replace it with a $3,500 state credit to lower most lease payments by nearly $100 a month (as any auto salesman knows, consumers make their decisions based more on monthly payments, not total cost.) The $3,500 credit should also apply to used EV sales. The state has a tangle of consumer EV subsidies; this simple approach should replace them. To control costs to taxpayers, lawmakers could make these 'conquest' credits — that is, they would be limited to first-time EV buyers and leasers. This program should not have income limits. The more new EV drivers the better because data show that most consumers happily stick with EVs once they have leased or bought one. Income limits would simply limit sales volume.
Many Californians in large metropolitan areas such as LA or San Francisco live in apartments or condos without the convenience and cost savings of overnight charging. Instead, they are often forced to wait in line at fast-charging stations, where electricity prices are usually higher than at home. This lack of apartment and condo chargers is a 'pinch point' in the EV market that California could take the lead in solving.
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