Feds pump $2 billion into boosting U.S.-based EV manufacturing (2024)

While Donald Trump dumps on electric vehicles and China becomes an “electric vehicle export behemoth,” the Biden administration aims to keep the budding EV industry in the United States alive and thriving.

On Thursday, the administration announced $2 billion in grants to builders of fossil fuel vehicles and their suppliers. The money will be used to convert those factories into EV vehicle and parts manufacturing operations, while preserving traditional auto worker jobs. The cash was approved by Congress as part of the so-called Inflation Reduction Act in 2022.

Aggressive and impactful reporting on climate change, the environment, health and science.

Explore the section

The U.S. auto industry is concentrated in the Midwest and the South, and most of the 11 grants announced by the Department of Energy will land in political swing states: Michigan, Ohio, Pennsylvania, Georgia. Factories in blue states Illinois, Maryland and Virginia will also receive grants, as will the red state of Indiana.

“This is a big deal, relatively speaking,” said Arun Kumar at consulting firm AlixPartners. “The timing is right because when you have some doubts about what the future is going to be, it’s good to have good news.”

Advertisement

By doubts, he’s referring to forecasts from his firm and others that show EV sales growth slowing down. He also said that a change at the White House this fall adds to uncertainty. It’s questionable “how the politics is going to work if you have a new administration come in and not prioritize the EV push,” he said.

Still, he expects the U.S. auto industry to remain committed to EVs, in large part because China has become the world’s largest EV maker and is growing fast, exporting around the world – Europe, Asia, Australia, Russia, and more, though not much yet in the U.S. Juiced in large part by low wages, long work hours and heavy state subsidies, the cars carry significantly lower price tags, and many models have won praise from automobile reviewers for high quality.

The U.S. responded in May by erecting a tall wall to keep the vehicles out, at least for now: a 100% tariff that obliterates China’s price advantage and then some. Europe followed with smaller but still stiff tariffs.

If China continues to push cheaper EVs — better for consumer wallets and better for the climate — it may be increasingly difficult for other nations to resist, even if domestic jobs are at stake. So automakers around the world know they can’t let up on making more EVs and making them less expensive, Kumar said.

California won’t receive any of the grant money, because no motor vehicle factories here have closed recently or are considered in imminent danger of shutdown.

Are Tesla Superchargers really open to other EVs in California? It’s complicated

Non-Tesla EV drivers will want to double-check their routes before planning a road trip that relies on the Supercharger network. Not all California locations are open to other makes of EVs yet.

May 2, 2024

Not that there’s much here to close in a state that was once a major motor vehicle manufacturer. Despite spending billions of dollars to subsidize EV makers and EV buyers in the state, only two major EV assembly plants remain in California: car maker Tesla, in Fremont, and electric bus maker BYD, in Lancaster.

Advertisement

The California Energy Commission gave an electric bus maker a $3-million grant toward a new factory in City of Industry, which opened in 2020. Three years later, the company, Proterra, shut it down and moved its manufacturing to South Carolina, before declaring Chapter 11 bankruptcy a few months later and splitting itself into pieces.

The Biden administration said companies receiving the grants agreed to retain or hire back large numbers of the traditional auto industry workforce, pledged to retrain them for EV work, and promised to pay them higher than average wages.

The grants provide up to 50% of the cost of a factory conversion, with the companies picking up the rest.

Can California pull off the epic transition to EVs? Read our coverage here

California has ambitious climate goals, including a pledge to ban the sale of new gasoline- and diesel-powered cars and light trucks by 2035.

March 29, 2024

The recipients include:

  • General Motors: $500 million toward conversion of an internal-combustion Cadillac plant in Lansing, Mich., to build electric vehicles instead.
  • FCA North America, an arm of Stellantis: $334 million to reopen a recently shuttered Jeep Cherokee plant in Belvidere, Ill., to manufacture thus-far unidentified EV models.
  • Volvo: $280 million to build electric and fuel cell heavy duty Mack and Volvo trucks in Pennsylvania, Virginia and Maryland.
  • Harley-Davidson: $89 million toward an electric motorcycle plant in York, Penn.
  • Blue Bird Body Company: $79 million to build a new electric school bus line on the site of a former motor home manufacturer in Fort Valley, Ga.
  • Cummins: $75 million to convert an internal combustion product line in Columbus, Ind., to make battery packs and other electric power-train parts.

More to Read

  • Editorial: Trump and oil companies are lying to you about electric cars to serve their own interests

    July 23, 2024

  • EPA awards $4.3 billion to fund projects in 30 states to reduce climate pollution

    July 22, 2024

  • Early adopters, mainstream success, buyer’s remorse — where is the EV market headed?

    June 12, 2024

Feds pump $2 billion into boosting U.S.-based EV manufacturing (2024)

FAQs

How much does the US government subsidize electric vehicles? ›

Tax Credits and Incentives

Some all-electric and plug-in hybrid vehicles qualify for a $3,700 to $7,500 federal tax credit. Many states also offer additional incentives for purchasing new EVs. Find tax credits and incentives in your state.

How many new EV models are expected by 2025 from competitive manufacturers? ›

By 2025, more than 100 EV models are expected to be on the market and available to US customers. That includes cars, trucks, and SUVs. Both global and US EV sales remained strong in 2021 – up 40% and 4% year-over-year, respectively – despite supply chain disruptions and material shortages.

Are taxpayers subsidizing rich electric vehicle owners? ›

Electric vehicles (EVs) may be the most subsidized product in America. Federal taxpayers shell out $7,500 every time a new eligible electric vehicle is purchased (usually by wealthy buyers). State and local taxpayers chip in an additional $1,500 for each EV purchase.

How much does the US government subsidize Tesla? ›

Subsidy Tracker Parent Company Summary
Subsidy SummarySubsidy ValueNumber of Awards
Federal (grants and allocated tax credits)$333,086,03980
TOTAL$2,829,855,494109
Loan / Bailout SummaryTotal Face ValueNumber of Awards
State/Local loans, bond financing and venture capital$00
3 more rows

What is the US government rebate for EV? ›

You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV).

Does US government subsidize electricity? ›

Energy subsidies are government payments that keep the price of energy lower than market rate for consumers or higher than market rate for producers. These subsidies are part of the energy policy of the United States.

Does the US give grants on electric cars? ›

EPA Key Programs. The EPA's DERA Program funds grants and rebates that protect human health and improve air quality by reducing harmful emissions from diesel engines. The program can be used to replace heavy-duty diesel vehicles and equipment with electric vehicles and chargers.

What is the federal government pushing for electric vehicles? ›

The Federal Government has set a goal to make half of all new vehicles sold in the U.S. in 2030 zero-emissions vehicles, and to build a convenient and equitable network of 500,000 chargers to help make EVs accessible to all Americans for both local and long-distance trips.

Top Articles
Latest Posts
Recommended Articles
Article information

Author: Carlyn Walter

Last Updated:

Views: 5884

Rating: 5 / 5 (70 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: Carlyn Walter

Birthday: 1996-01-03

Address: Suite 452 40815 Denyse Extensions, Sengermouth, OR 42374

Phone: +8501809515404

Job: Manufacturing Technician

Hobby: Table tennis, Archery, Vacation, Metal detecting, Yo-yoing, Crocheting, Creative writing

Introduction: My name is Carlyn Walter, I am a lively, glamorous, healthy, clean, powerful, calm, combative person who loves writing and wants to share my knowledge and understanding with you.