Issue Brief

Electric Vehicles

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Summary

Battery technology improvements, declining battery costs, and significant government incentives are driving increased adoption of electric vehicles (EVs) nationwide. The Energy Information Administration anticipates that EV sales will reach 18 percent of new passenger vehicle sales by 2050. This “electrification” of the transportation sector is expected to lead to reduced emissions, economic growth (from investments in EV technologies), and the enhancement of America’s energy security through the diversification of transportation fuels. EVs may also be an asset to the grid through vehicle-grid integration technologies, including by absorbing excess generation from renewable energy resources, curtailing charging during peak hours, and even transferring power back to the grid if needed. Public power utilities are working with their communities to enable greater EV adoption through the development of charging infrastructure and EV customer programs and investment in smart grid technologies to manage EV charging. The American Public Power Association (APPA) supports policies to promote the adoption of EVs and the ability for public power utilities to provide EV-related services to their customers.

Background

The Internal Revenue Code includes several provisions to promote EVs. The Alternative Fuel Vehicle Refueling Property Credit (26 U.S.C. 30C) provides a tax credit equal to 30 percent of the cost of installing alternative fuel vehicle refueling infrastructure, including EV recharging. The credit is capped at $30,000 for a business and $1,000 for an individual. This credit was created by the Energy Policy Act of 2005 and was extended by Congress through December 31, 2020. The New Qualified Plug-in Electric Drive Motor Vehicles Credit (26 U.S.C. 30D) provides a tax credit for the purchase of a new plug-in electric vehicle. Depending on the vehicle’s battery capacity, the credit is worth at least $2,500, but no more than $7,500. The credit was created in the Energy Improvement and Extension Act of 2008 and is phased out for any vehicle manufactured by a manufacturer that has sold 200,000 or more qualifying EVs. In the case of a tax-exempt entity that cannot make use of these tax credits, such as a public power utility, the tax credits instead can be claimed by the seller of the EV.

Additionally, the Fixing America’s Surface Transportation (FAST) Act of 2015 included several measures to accelerate the growth of the EV market. One provision directed the Department of Transportation (DOT) to create corridor maps to identify “near- and long-term need for, and location of, electric vehicle charging infrastructure… across the United States.” Beginning in 2016, DOT has designated routes as Alternative Fuel Corridors, leading to a national network that spans 46 states and nearly 135,000 miles.

Congressional Action

Several bills intended to further encourage EV purchases and EV infrastructure investments have been introduced in the 116th Congress. House Ways & Means Committee member Dan Kildee (D-MI) and Senate Finance Committee member Debbie Stabenow (D-MI) introduced the Driving America Forward Act (H.R. 2256/S. 1094), which would allow an additional 400,000 vehicles per manufacturer to be eligible for a credit of up to $7,000 before the credit begins to phase out. APPA supports the Driving America Forward Act, which along with a new credit of up to $2,500 or 30 percent of the sale price for the purchase of used EVs, was included in H.R. 7330, the Growing Renewable Energy and Efficiency Now (GREEN) Act introduced by House Ways & Means Committee Democrats in June 2020. It was also included in H.R. 2, the Moving Forward Act, broad-based infrastructure legislation approved by the House of Representatives on July 1.

In addition, Senator Tom Carper (D-DE) and Representative Mark DeSaulnier (D-CA) introduced the Clean Corridors Act of 2019 (S. 674/H.R. 2616), which would provide grant funding for the installation of electric vehicle charging stations and hydrogen fueling infrastructure along designated Alternative Fuel Corridors across the National Highway System. The Clean Corridors Act of 2019 was included in S. 2302, the America’s Transportation Infrastructure Act of 2019, which would reauthorize the nation’s highway programs, and was approved by the Senate Environment & Public Works Committee in July 2019. APPA supports the legislation. In the House, H.R. 2616 was included in H.R. 2, the Investing in a New Vision for the Environment and Surface Transportation in America (INVEST in America) Act, which was approved by the House Transportation & Infrastructure Committee in June. House Democrats used H.R. 2 as the vehicle for the Moving Forward Act, which also included EV-related provisions from both the INVEST in America Act and the GREEN Act. The infrastructure package also included a federal rebate program to support publicly available EV chargers and a provision that would create a “must-consider" requirement under section 111(d) of the Public Utility Regulatory Policies Act that would direct state public utility commissions and non-regulated electric utilities to consider establishing rates for EV charging stations. The House passed H.R. 2, the Moving America Forward Act, on July 1, 2020.

American Public Power Association Position

Public power utilities are committed to providing their communities with the infrastructure and programs needed to support increased EV adoption. Insofar as Congress seeks to encourage the use of EVs, it should ensure that any such incentives are available to public power utilities and their customers. Public power supports S. 674/H.R. 2616, the Clean Corridors Act of 2019, because it would allow public power utilities to receive federal grants to install EV charging stations adjacent to established routes. APPA was pleased to see it included in both the Senate and House transportation reauthorization bills and will support its inclusion in a final highway bill should the bills pass in their respective chambers and go to conference. The association also supports H.R. 2256/S. 1094, the Driving America Forward Act, because it will promote the continued adoption of EVs.