Electric vehicles (EV) sales could go in reverse since the status of the federal tax credit is in jeopardy. But the real story is not about the money- it’s the perception of why the $7500. sweetener is needed at all. Fortunately, there’s another government program in the wings. It will lead to selling more electric vehicles with less tax credit.
The point-of-sale credit is currently the lure that gets shoppers in the showroom door. But often the vehicles they want to buy might not have qualified for the cash-out.
The credit comes with lots of strings. The full tax credit is only offered for EVs that are made domestically, including batteries. Second, only individuals within set income brackets can qualify, unless they lease the vehicle. Third, the $7500. comes with a price cap. Very few EVs with the exception of General Motors and Tesla models qualify. Vehicles that do qualify, like the Chevy Bolt, are no longer made. Korean car companies and other manufacturers offer their own rebates, perhaps with an offsetting sticker price (MSRP).
Fortunately, there is a better incentive being built out in 2025 . Albeit, it still flies under the radar.
Introducing NEVI:
The best way to promote electric vehicle sales is to elevate the importance of NEVI and make its better known to both car-salespeople and their customers. NEVI, not a household name, stands for the National Electric Vehicle Infrastructure Program. The NEVI initiative was funded by the Bipartisan Infrastructure Law and authorized under the Highway Infrastructure Program. Its mission is to secure fast, level 3 charging ports spaced at 50 mile intervals, or within one mile of an Interstate exit or highway. The buildout is along the nation’s interstate system- more than 80,000 miles. Each state Department of Transportation must submit an annual plan to report NEVI activity and funding. A year-end report in December, 2024 reports that 60 percent of the most heavily trafficked interstate corridors have a fast charger. In 2025, they predictr 70 percent of those corridors will be covered.
Tesla Playbook:
NEVI is of quintessential importance if the electric vehicle industry is to grow- it must transition from a vehicle commonly used for work commutes or local travel into full purpose motoring. It must put to rest the oft-cited aphorism that thirty miles a day is a sufficient range. In fact, the DOT reports twice that mileage for a two-person household. NEVI takes a page from the Tesla playbook. Tesla continues to sell many more vehicles than other manufacturers because owners have access to a nationwide charging network. When NEVI wraps up, drivers of non-Tesla cars will go coast-to-coast without fear that they will be subject to excess delays and anxiety as they search for fast- chargers. It will mean less fear crossing rural states with long, empty distances.
While it is maxim that only a few drivers actually travel coast-to-coast, or need extended range that is not the story that sells new vehicles. People in the market for a new (or used) vehicle have multiple choices and are accustomed to picking a model and features that exceed monetary reasons. We are sold vehicles based on our aspirations and perceived needs. For example, a four-wheel drive vehicle may never see mud or snow, but prospective buyers are sold on a wish-fulfilled off-road experience. Convertible roofed cars are similar. An eager buyer imagines cruising in the sunshine with their hair blowing in the wind. Later on, they will learn it seldom is safe or comfortable at high speeds.
Going the Distance:
But, let’s return to electric vehicles. NEVI is important because new car buyers expect two things. First, they need a vehicle that would do the distance in an emergency, say leaving the state if there’s an evacuation for an hurricane or tornado alert. Second, they harbor dreams of taking a longer vacation or road adventure. Perhaps they pine to visit National Parks, go camping across the U.S., take a cross-country move, or just save on air-fares with a car-full of kids. There won’t be a gas station on every corner but future electric vehicle buyers are conditioned to expect a dependable and easy-to-locate fueling option.
Second, buyers enter the showroom with a budget. The average cost of a new gasoline car in 2024 is over $48,000 and the average price of an EV sits at $55,105 (usually before the $7500 incentive). While the cost of EVs has been dropping these are jaw-dropping numbers as the second largest item in a household’s budget is transportation cost, after housing.
In the first-wave of EV sales, say from 2015 through today, many of the early adopters were propelled by environmental and climate-concerns. In this second wave, price and range will take priority. It is disingenuous to tell buyers that they are getting a product that will be inferior to a gasoline car for longer trip-taking. The second wave of buyers need to believe the vehicle they are getting is as versatile as a gasoline car, and they should not be counseled to rent a gasoline vehicle for longer trips.
NEVI II
For these reasons, the NEVI program is mission critical. Electric vehicles buyers need to perceive that their large cash investment in new technology meets or exceeds the capabilities of the alternative, a gasoline car. When it comes to torque and maintenance cost it’s an easy story to explain but selling range has to be foremost.
NEVI, and similar programs, have their work cut out, because not all travel-trips will take place on the interstate system. The automotive experience means satisfying those who want to also visit remote state parks, or say travel the 2,448 miles of Route 66 from Chicago to Santa Monica. All 50 states have quiet, off-the-beaten paths where drivers can ramble but find a gas station every hundred miles or so. For the EV sales to expand and gas vehicles contract, the $7500. credit is only a drop in the bucket. There needs to be NEVI like build outs everywhere. Fast charging should be as predictable as the rest stops, visitor attractions, and roadside fast food.