Two thirds of all new cars sales would be electric within a decade under an ambitious new rule.
The Biden Administration hit the accelerator on the United States’s transition to a clean energy future last week. The Environmental Protection Agency (EPA) unveiled some of the most ambitious emissions standards for vehicles in the world. If adopted as proposed, the rules would halve emissions from U.S. cars and trucks over the next decade, putting the nation on the road to halve total U.S. emissions by 2030 and reach net-zero emissions by 2050.
Transforming the transportation sector is one of the biggest challenges in advancing a clean energy transition. The 278 million vehicles in the U.S. now account for more emissions than the entire power sector. But unlike the power sector, which has rapidly reduced emissions since 2000 as it phases out coal, transportation emissions have been falling much more slowly.
This proposal will change that. Although the proposed limitations on tailpipe emissions do not mandate any specific technology, in the near term, automakers are doubling down on their investments in electrification. With these rules, the EPA projects that in 2032 EVs will account for 67% of new passenger vehicles and 46% of medium-duty trucks.
Many skeptics view the EPA’s proposal as a pipe dream, given that EVs accounted for only 6% of new car sales in 2022 and a tiny proportion of new truck sales. And the rule would create other challenges: unless the U.S. significantly boosts development of minerals and manufacturing of batteries, it will only deepen its reliance on China, which leads the world in battery materials and manufacturing.
The 278 million vehicles in the U.S. now account for more emissions than the entire power sector.
For the past year, Arzy Abliadzhyieva, Pranathi Chintalapudi, and I, have been tracking the expansion of the U.S. EV supply chain from mine to factory. We’ve been analyzing every newly announced mining project, refinery, cell manufacturer, and EV factory, tabulating targeted production levels, capital investments, and employment, among other variables. Here is what our analysis reveals:
1. Is such a rapid transformation of the U.S. transportation sector possible?
Yes. In fact, this transition is accelerating. Since the passage of the Inflation Reduction Act (IRA) last August, both domestic and foreign automakers have announced unprecedented investments in the U.S. electric vehicle supply chain. The EPA projects that even without the newly announced emissions rules, EVs would account for 44% of new vehicle sales in 2030.
Based on our analysis, such ambitious projections are consistent with the plans of auto manufacturers. Factoring in projects that are in operation, in construction, and planned, our analysis indicates that the U.S. will have the capacity to manufacture 5 million EVs domestically per year in 2030. That figure will only grow, as companies such as Ford, Volvo, and BMW finalize U.S. manufacturing plans. And our projections don’t include vehicles manufactured elsewhere, including Canada, Mexico, and overseas, where manufacturers are also driving the EV transition.
The investments in battery manufacturing are even more impressive. If the average vehicle has a 75 kWh battery — roughly what is needed to travel 250 miles — the U.S. will be able to manufacture 934 GWh of battery capacity annually in 2030 — which translates into enough batteries for 12 million vehicles per year. Of 26 new battery cell plants announced for the U.S., 12 are already under construction.
The EPA projects that even without the newly announced emissions rules, EVs would account for 44% of new vehicle sales in 2030.
2. Will an electric vehicle future make the U.S. even more reliant on China for key materials and technology?
That depends on U.S. federal, state and local governments – and businesses. China leads the world in EV manufacturing, which is a concern, as diplomatic and trade relations have become tense. Starting in the early 2010s, China invested heavily in an electric vehicle supply chain, from mine to factory — much as the U.S. is doing now. That strategy paid off. Last year, China manufactured roughly 5.5 million EVs — almost ten times as many as were manufactured in the U.S. — and accounted for half of all EVs manufactured globally.
Those investments have given China an outsized role in the global supply chains critical to the EV industry. In 2020, China controlled 80% of chemical refining of key battery materials, 66% of cathode and anode production, and 73% of cell production globally, according to Benchmark Mineral Intelligence. For some key materials, such as natural graphite, China controls nearly all production.
To make the U.S. more competitive and in control of its economic destiny, the Inflation Reduction Act incentivizes domestic production and refining of critical minerals. To qualify for its tax credits, the IRA requires that an increasing proportion of the value of both the critical mineral and battery components be sourced domestically or from free trade partners. Pending forthcoming guidance, vehicles that have any materials or components sourced from “foreign entities of concern” might be excluded from federal tax credits.
If the U.S. wants to guard against the multi-billion-dollar damages that unchecked climate change will cost our economy and health, then this is exactly the kind of ambitious policy we need.
Those requirements are meant to accelerate the development of supply chains that can run around, rather than through, China. Unlike the burst of activity in the manufacturing sector, however, almost no new U.S. mining projects have been announced. That isn’t surprising, given the regulatory hurdles and long lead times on mining projects. It is clear that EV manufacturers will have to source the vast majority of those materials from free trade partners to meet the IRA’s requirements.
The EPA’s proposal has sparked concerns that it is too ambitious. The political firestorm that swirled around a potential phase out of gas stoves earlier this year will likely be mild compared to the controversy likely to engulf regulations aimed at retooling the entire U.S. transportation sector in less than a decade.
But if the U.S. wants to guard against the multi-billion-dollar damages that unchecked climate change will cost our economy and health, then this is exactly the kind of ambitious policy we need.
You can explore our interactive dashboard of the U.S. electric vehicle supply chain here. Let us know what we are missing.
Featured photo: BMW EV plant in San Luis Potosi, Mexico
Jay Turner is a professor in the Environmental Studies Department at Wellesley College and author of Charged: A History of Batteries and Lessons for a Clean Energy Future. He and his students, Arzy Abliadzhyieva and Pranathi Chintalapudi, have been tracking the development of the U.S. electric vehicle supply chain from mine to factory since May 2022.
