Yahoo Finance Is President Biden's electric vehicle disaster coming to the UK?
Presidents do not normally get behind the wheel of a car, but in May 2021 Joe Biden was in the driving seat of a Ford F-150 Lightning – an electric pick-up truck.
Mr Biden put the pedal to the metal and the car shot off in a photocall designed to gain support for his electric car revolution.
“This sucker’s quick,” he said, adding that he had taken the truck from 0-60 in 4.4 seconds.
But the push to wean American motorists away from the traditional internal combustion engine, a key part of his “Green New Deal”, has not gone as smoothly as the administration has hoped.
For Britain, there is a lesson on how to avoid a chaotic rollout. Experts say Rishi Sunak, the Prime Minister, is steering clear of some of the same pitfalls, but similarities remain.
Under America's “Inflation Reduction Act”, hailed by the White House as one of the flagship achievements of Mr Biden’s presidency, anyone who bought an electric powered car was supposed to get a $7,500 (£6,000) credit towards the cost.
But the bill was watered down by opposing political factions.
Are the wheels coming off Biden's EV revolution?
Instead of the credits being across the board for all electric cars, they were limited to car parts – notably batteries – from the US, which has added complexities to the plan given that China dominates the market.
It has left consumers unsure what tax credits they might get if they take the plunge and invest in an electric car.
According to experts in the US the changes mean the number of models – currently around 40 – eligible for the tax credit will be reduced drastically.
“The intent of the inflation reduction act was to make EVs more accessible to the middle class, that’s why it has price limits and income criteria which adds to the confusion,” Michelle Krebs, of automotive firm Cox Automotive, said.
“The number one obstacle is the price. There is also the concern about the EV supply chain.
“Consumers will need help to see if they qualify and their car qualifies.”
Jessica Caldwell, an analyst with Edmunds Automotive, was also critical.
“The goal here is to increase EV sales in the US. It’s obviously not that straightforward,” she said.
“It’s becoming more complicated by the day and it’s making it more difficult for consumers to wade through this.
“There is confusion over where batteries are made. Right now, it’s as clear as mud.”
Cody Lusk, president and chief executive of the American International Automobile Dealers Association, said the new rules have “created confusion” and is hoping that updates expected as early as today will clarify the situation.
The reluctance to invest in an electric car has been intensified by supply chain problems dating back to Covid.
Cars generally are in short supply as are parts, which has had an impact on the market.
“There is also a pandemic car buying hangover,” Chris Galdieri, professor of politics at Saint Anselm College in New Hampshire, said.
“It was a case of hoping a car was available. Everybody has a friend with a car horror story because they couldn’t find anything.
“Cars have been kind of a mess the last few years,” she added.
According to the Alliance for Automotive Innovation, a trade body, electric cars accounted for 7pc of new car sales last year.
It fears that the US still lacks the infrastructure to cope with a rise in demand.
Given the vast distances Americans can drive, charging points are essential if motorists are not going to be stranded.
According to the latest figures there are just over 100,000 charging points for the three million electric vehicles on the road.
An analysis of 3,100 counties and city counties in the US found that 39pc had no charging points at all and 63pc had fewer than five.
More than half failed to even install one last year.
Lessons for Britain
Britain faces similar challenges but is pursuing a more efficient use of public funds.
Jeremy Hunt, the Chancellor, has accused President Biden of leading a “distortive” global subsidy race with his $400bn green investment package.
Writing in The Times, he said he would not go “toe-to-toe” with the US and EU by paying out billions in subsidies for electric vehicles and other green investments.
Instead, he announced on Wednesday that EV owners will benefit from cheaper electricity rates as part of the Government’s move to rebalance gas and electricity prices.
To ensure there are enough charging points to keep drivers from getting stranded, the Government has committed to expanding the network.
EV drivers in Britain are already struggling to take long journeys in their cars because of a lack of charging points.
Charging points will have to allow drivers to pay without specific smartphone apps and subscriptions.
The cost of buying a new electric vehicle will not be reduced by a subsidy scheme, although the Government is sticking to its plan to phase out sales of petrol cars by 2030.
Labour has pledged to match the US subsidy, but experts warned that this would be damaging to Britain’s economy.
Dillon Smith, an expert in energy policy at the Centre for Policy Studies think tank, said Jeremy Hunt was right to stick to targeted taxpayer support “at a time when the UK tax burden is already eye-wateringly high”.
Sam Robinson, a senior research fellow at Bright Blue, another think tank, said Britain’s economy could be damaged by a lavish US-style spending plan.
“It is important to be cautious when it comes to the fiscal situation,” he said.
“We’ve just come out of a pandemic, with a debt to GDP ratio that is almost at unprecedented levels. We have to pay for that with a very high tax burden.”
He said there were other ways to incentivise the take-up of EVs, like tax breaks.
“If you’re going to get in a subsidy race it’s potentially expensive,” he said. “It might put public finances on an unsustainable path.”
Mr Robinson said the lack of clarity for consumers in the US serves as a warning to Britain, which faces a similar problem.
He said the Government needed to provide consumers with more certainty about the long-term taxes and costs they would face if they buy an EV rather than a petrol car.
Steve Gooding, director of the research organisation the RAC Foundation, said Britain needed to do more work to avoid the same infrastructure problems as the US.
Last week, the Government said it would spend £1.6bn to make charging easier and cheaper. But there are just 37,055 charging points across the country, according to the Department for Transport – far off the Government's target of having 300,000 by 2030.
“We need to have enough chargers, we need to have all of those chargers working reliably, which currently they don't,” Gooding adds.
“And we need to be able to find and access them. And some of them aren't necessarily in the places where you would want to go.”
