Original article written by Mike Pare and posted in the Chattanooga Times Free Press. Reposted with permission from author. Contact Mike Pare at mpare@timesfreepress.com. Follow him on Twitter @MikePareTFP.
CLEVELAND, Tenn. — An automotive industry expert said Thursday that the Biden administration's new tax credits for electric vehicle buyers aren't consumer friendly.
"If I walk into a Tesla dealership, I don't know if I qualify," said Brett Smith, an industry consultant who recently retired after a long career with the Center for Automotive Research in Ann Arbor, Michigan.
Smith, one of several speakers at an EV battery innovation conference at the Smart Factory Institute at Cleveland's PIE Center, said the credits only apply to a limited number of vehicles and there are income and other provisions for buyers.
"There are a lot of really complex equations to figure out if I qualify," he said. Earlier this month, The Associated Press reported that only 10 electric or plug-in hybrid vehicles are eligible for the $7,500 tax credit under new standards that recently went into effect, a number down sharply from prior rules.
While Volkswagen's Chattanooga-built ID.4 wasn't on the initial list, a day or so later the company said that all its 2023 models of the SUV put into service this year are eligible for the credit. VW is the only international automaker to have a full-battery EV eligible for the entire credit, and that's due to assembly and sourcing in the North American region, according to the company. Smith told a group of about 100 at the conference the move to EVs is "a most fascinating, amazing change," but one that's "gut-wrenching from an industry side."
He cited the tens of billions of dollars of new investment announced by companies to move to EV production, adding that the effort is remarkably capital intensive. Smith said almost all the investment announced by automakers in the last three years has focused on EVs.
The industry consultant said experts in 2021 forecast EV sales would hit 12.5% in 2025 and then up to 20% in 2030. But President Joe Biden later floated a goal of 50% by 2030 and more than doubled expectations, he said.
"There would need to be a gigantic shift" to EVs, Smith said.
He said the federal government set rare national industrial policy over the last two years with the passage of legislation concerning EVs, related infrastructure, tax credits and proposed new standards for greenhouse gas emissions.
But, Smith said, the proposed emission standards could change in two years if there's a new president elected.
"The industry is spending billions of dollars to go down this path," he said. "Depending on who the president is in 21 or 22 months, we may have a totally different set of rules. That industrial policy could change in two years."
Edward Buiel, president and chief executive of Chattanooga-based battery testing company Coulometrics, told the group that battery fires related to EVs is an issue for the industry.
He said automakers "can't afford the recalls" of battery systems associated with fires.
Buiel, who said his company employs 22 people in 60,000 square feet of space in Chattanooga, added that upgrades are needed to the power grid if EVs become as prevalent as many claim.
He said his family owns a pair of Tesla EVs and they recharge them by plugging into chargers at his residence. Buiel said there's "no way" his neighborhood's power grid could support EV recharging if many people there did the same as his family.
"That's going to be a major problem," he said.
Smith said that while a lot of new jobs are expected to arrive along with more EVs and related production, factory closings are expected as well as businesses involved in conventional vehicles disappear.
"There's going to be winners and losers," he said. "A lot of the stuff we do traditionally in the auto industry is going away."
In addition, finding the materials that go into batteries is challenging, whether to mine or to purchase from China, where much of the raw product is processed, Smith said. "Where do we get the materials from?" he asked. "There's a massive transitioning in technologies to go to EVs. It's a really tough transition."
Smith said China has three or four automakers that could become "the next Tesla" and lead in the EV sector, though there are hurdles.
"But will they sell here?" he asked.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.