Transportation Secretary Pete Buttigieg has been a vocal advocate for electric vehicles (EVs), especially after Congress passed the recent infrastructure bill. But when it comes to the shift to EVs, there are three things which the administration is still working to resolve.
“Look, it's very clear that the future of the automotive sector is electric,” Secretary Buttigieg said on Yahoo Finance Live (video above).
He then laid out the three key areas that will guide the Biden administration's transportation priorities: climate goals, American manufacturing, and equitable access.
1: Do electric vehicles help the U.S. meet its climate goals?
Buttigieg set forth the first question dogging electric vehicle adoption: “Does it happen fast enough to meet our climate goals?”
Climate has been top of mind for the Biden administration, particularly in the wake of the recent UN climate conference in Glasgow. President Biden set a stated goal of halving U.S. greenhouse gas emissions (from 2005 levels) by 2030.
With 29% of U.S. emissions coming from the transportation sector, electric vehicles are seen as one way to diminish America's carbon footprint, as they can help draw down emissions due to their energy efficiency relative to internal combustion engines. And as electricity generation shifts to more renewable sources, electric cars will pollute even less.
The roughly $2 trillion bipartisan infrastructure plan invests in electric vehicles in a couple of ways. It allocates $7.5 billion to build out EV charging stations and another $7.5 billion for clean buses (and ferries).
But additional climate provisions — including a tax rebate for households that purchase an electric vehicle — are awaiting their fate as part of the Build Back Better bill, which passed in the House on Friday and is headed to the Senate.
2: Are electric vehicles and their components American-made?
The second question Buttigieg alluded to centered on American manufacturing.
"Does it happen with American workers and American companies on American soil as much as possible and create as much opportunity as we can here at home?” Buttigieg said.
This week, President Biden spoke at GM's Factory Zero, a factory in Detroit that was converted for all electric vehicle production, to promote his EV agenda, which champions union-made EVs manufactured in the U.S.
One proposed electric vehicle incentive in the president's Build Back Better bill applies a more generous tax credit for union-made vehicles, a provision that has drawn ire from Tesla CEO Elon Musk. While Tesla has manufactured more electric vehicles for the U.S. market in America than any other automaker, its workers are not represented by a union.
3: Are electric vehicles available to all Americans?
Buttigieg then addressed the third question surrounding electric vehicles: "Is it available to everybody?”
“Now, if you think about it, the Americans who stand to gain the most by going electric, saving all that gas money, are often low-income Americans who have a hard time getting that sticker price put together for one of those electric vehicles that could save them so much if they could afford it,” Buttigieg said.
Electric vehicles are, on average, $19,000 more expensive to drive off the lot than gas cars. But dramatically lower fuel costs may make up for the higher initial cost — especially since the electricity costs to "fill up" can be as low as the equivalent of $2 a gallon at a time when gas prices are on the rise. The national average gas price as of Nov. 19 is $3.41 for comparison.
But that initial electric vehicle premium may be an obstacle for households looking to buy a car.
“That's why the Build Back Better agenda, the piece still working its way through Congress, includes discounts of up to $12,500 to help a family acquire one of those vehicles,” Buttigieg said.
He also highlighted that the bipartisan infrastructure bill budgets money to build more charging stations to alleviate range anxiety, “so that nobody has to think twice about whether they can get to where they need to be.”
Overall, Buttigieg seemed determined to see the EV transition take off.
“We see this accelerating,” Buttigieg said. “We see this really defining the industry in so many ways. Again, the momentum is already there. But those issues of affordability and having it happen here in America, that doesn't happen on its own. That's why it's a policy priority, too.”
Grace is an assistant editor for Yahoo Finance.