EPA Takes the Road Less Travelled for US EV Industry




America’s Environmental Protection Agency (EPA) has revealed tougher rules that will in effect underwrite US demand for electric vehicles (EVs) over the next decade, with carmakers and miners handed the first set of ground rules for accessing subsidies to help speed up sales.

An announcement this week in the US car capital, Detroit saw the EPA unveil changes to tail pipe emission rules for the next decade that will see up to 67% of all vehicles sold in that year being EVs.

Cheering all this on are Australian explorers and producers of battery products and renewable metals.

The Chinese car industry is already well down this route and lead the world for EV sales and market penetration, but will be limited in their ability to invade the US market.

Under the EPA proposals, EVs will represent between 54% and 60% of new cars sold in the US by 2030, and between 64% to 67% of new cars by 2032. These levels are more ambitious that the 50% share President Joe Biden cited as a target for 2030.

Alarmist media reports say the proposed changes will ‘create challenges’ for automakers, who agreed to a 50% share by 2030 and might push back against the new plans, as will Republicans.

But the reality is all major carmakers in America are moving rapidly down the EV track with new models being sold, planned, designed, new factories built or being built, battery and other plants well underway and charging networks being built out.

Over $US65 billion in plans for new plant, equipment (especially batteries) and models have been announced or mooted by industry players in the past year, with most of that (an estimated $US56 billion) coming since the IRA legislation was passed last July.

There are plans to have more than half a million charging stations installed across the US by 2024 -2025 but the target is at least one million by 2030.

The IRA calls for $US7.5 billion in aid for charging networks. GM and Ford are already starting networks (which will have to interchangeable) and pressure is on Tesla to make its network interoperable. Around 130,000 charging stations are currently installed across the US.

Next Tuesday (April 18) sees the introduction of the new subsidy rules as laid out in the in the Inflation Reduction Act (IRA) and its massive $US369 billion in spending and assistance.

The rules will govern the amount of subsidy (starting at $US3,750 per vehicle or a maximum of $US7,500 per vehicle) will be paid on the percentage of new battery and renewable materials used EVs produced in the US or supplied by a group of countries nominated in the rules. Australia is in that list of countries because of our free trade agreement with the US.

There is also a $US4,000 credit for qualifying used EVs (with a low level of foreign – read, Chinese - content), along with for businesses moving to clean vehicles, and there’s $US3 billion to electrify the entire US Post Office fleet.

Before these rules changes and the IRA in 2022, US EV sales had perked up - an estimated 5.8% of all passenger vehicle sales in the US in 2022 were EVs, up from just over 3% the year before.

That improvement has continued into 2023 and industry figures show that US EV sales jumped 48% from in the March quarter to just over 258,000.

Data group Motorintelligence said this accounting for 7.2% of new vehicle sales over the 3 months, the highest yet and up from 2022’s 5.8% (which is far below the 30+% share in China).

Tesla led the way with an estimated 161,000 deliveries, followed by GM with 20,670 and Ford with only 10,866. That was low because it had to stop making its EV SUV version Mustang at its factory in Mexico to allow an expansion to handle greater output.

That’s why GM pushed Ford to third in the quarter. Still, Ford’s EV sales rose 41% above last year’s first quarter, the company said this week. Volkswagen was in fourth place in US. EV sales with 9,758 deliveries of the ID.4 hatchback.

The new subsidy rules coming into force next Tuesday cut the $US7,500 credit in half on many vehicles. That will force carmakers to access more material from the US or from countries like Australia (batteries, metals such as lithium, copper, graphite, nickel, aluminium, tungsten and manganese).

China is being excluded from the US subsidies.

Some media reports say the smaller credit may not be enough to attract new buyers for EVs that now cost an average of $US58,600 according to industry pricing bible, the Kelley Blue Book.

But that price is down from $US63,500 a year ago as an increased number of lower-priced EV models hit the market and existing models have their prices cut to try and entice buyers and get closer to the sales limit of $US55,000.

The average vehicle sold in the US costs just under $US46,000 but most purchasers pay more than that, especially for higher priced SUVs and pickups, which are the mainstay of the American car companies.

The US subsidies and EPA rules will put enormous pressure on Toyota, which is unprepared for the EV revolution.


Name Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.