February 1, 2024

Here's How Government Policies Are Shaping EV Adoption Rates


8 Min. Read

The Inflation Reduction Act (IRA) represents the most significant investment in fighting climate change in U.S. history. Beyond sustainability and addressing climate change, the IRA is also working to update an existing electrical infrastructure that has remained largely unchanged since it was first created and installed decades ago.

As we’ve entered into a new era of technology and electrification with a population that has more than doubled since these systems were installed, it’s more important now than ever before that our infrastructure is expanded to support the growing needs of our country. For many, this includes updates to homes and businesses, but our transportation is changing as well.

More than 1 million electric vehicles (EVs) were sold in the U.S. in 2023 alone and demand for a robust EV charging infrastructure to support the growing electric vehicle movement is at an all-time high. As part of a broader initiative to transform mobility and create the energy infrastructure needed to fuel an electric vehicle future, the IRA also introduced measures designed to increase EV adoption rates, support EV charger installation, and incentivize the transition to a more sustainable form of transportation.

Two years after the adoption of the IRA, these measures have had a significant effect on electrification. In this article, we explore how government policies are shaping EV adoption rates and impacting the energy transition.

Here’s How Government Policies Are Shaping EV Adoption Rates

Federal Support for EVs

Since the adoption of the Inflation Reduction Act, investments in manufacturing zero-emission vehicles have increased by more than 100%.

While EV production is one of the largest trends changing since the IRA, there has also been an incredible revitalization of the American economy with companies around the world investing in U.S. manufacturing for the necessary parts of electric vehicles as well, such as producing and manufacturing EV batteries in North America to ensure EVs qualify for incentives created through the Inflation Reduction Act. This trend reflects the automotive industry’s response to the rise in EV adoption rates but also serves as a powerful indicator of how the IRA is impacting global development and electrification as well.

EV adoption is up for several reasons. These include consistently high gas prices, an increased awareness of environmental issues, and federal measures designed to make EV ownership more accessible. These combined factors have resulted in EV sales tripling since President Biden took office.

The most impactful of these measures is the Clean Vehicle Tax Credit, a rule that introduces a credit of up to $7,500 toward the purchase of some EVs. Recent updates to this rule allow buyers to claim cash at the point of sale, resulting in an immediate discount.

Additional federal measures include the Advanced Manufacturing Production Tax Credits to support domestic battery production, $2 billion in grants to help convert automotive plants, and the Commercial Electric Vehicle and Fuel Cell Electric Vehicle Tax Credit to offset the cost of purchasing an EV for commercial buyers.

These incentives also set the tone for an environment favorable to EVs, prompting states, municipalities, and utilities to develop their own incentives for buying or leasing an electric vehicle, purchasing an EV charger, and even benefits for EV charger installation performed by a licensed electrical contractor. Typically, these incentives can be combined for even greater savings, but it’s important to review any requirements to ensure you meet all qualifications such as income, vehicle manufacturing, and appropriate permitting for EV charger installation by a licensed electrician.

EV Charging Infrastructure Development

Increased EV adoption rates mean a growing demand for a reliable EV charging infrastructure. The federal government is actively developing this network with EV charger installations across the country thanks to a $5 billion investment in the National Electric Vehicle Infrastructure project introduced by the Bipartisan Infrastructure Law.

This program awards funding at the state level to develop a modern EV charging infrastructure that emphasizes connectivity and EV charging along Alternative Fuels Corridors, and requires that all EV charger installations meet certain standards in safety and efficiency, such as uptime requirements that ensure this network will provide a reliable EV charging experience for drivers.

The Bipartisan Infrastructure Law also created the Charging and Fueling Infrastructure Discretionary Grant Program. This project will invest a total of $700 million to build an EV charging infrastructure in residential neighborhoods.

Additional measures include the creation of a National Charging Experience Consortium to improve EV charging reliability. It will also spearhead efforts to strengthen the electric grid and use carbon-free power sources with Executive Order 14057.

Emission Standards and Federal Regulations

Federal regulations are also encouraging EV adoption through emission standards. Automakers must meet strict standards, and current targets could be reduced by half, dropping to an average of 82 grams of CO2 per mile across the 2032 lineup.

Meeting these proposed standards could require automakers to roll out lineups where EVs represent 67% of new vehicle sales.

These regulations to reduce emissions are consistent with global moves by governments across the world in a shared effort to create a more sustainable future with fewer pollutants and environmental hazards, and the worldwide trend toward electrification is driving incredible innovation as brands around the globe move to create new EVs, faster EV charging solutions, and other energy transition technologies that will change how we live, travel, and experience the world around us.

Federal Fleet Transition to EVs

In December 2021, Executive Order 14057 set the ambitious goal of making 100% of new vehicle acquisitions for federal fleets electric.

This measure has already prompted the United States Postal Service (USPS) to develop a plan to purchase over 66,000 EVs by 2028. This is a major step in electrifying federal fleets, and the USPS is not alone. The National Park Service has a similar plan with the Green Our Rides initiative, and U.S. military groups are also looking to electrify their fleets, in addition to installing other energy transition technologies at bases and government buildings around the world.

The federal government is also encouraging the electrification of public fleets at the local level. An important part of this effort is the Grants for Buses and Bus Facilities Program, which is already seeing positive results as school buses and public buses around the country are being replaced with electric vehicles.

Federal Funding for EV Research and Development

The future of electrification depends on innovations that will make EVs and EV charging technologies more affordable and better performing.

The federal government is actively supporting electrification research and development through a number of grants and incentives, such as the Advanced Energy Research Project Grants, the EV Charging and Clean Transportation Grants, or Innovative Research and Development Competitive Prizes awarded through the American-Made Challenge program.

The Department of Transportation is also managing a National Multimodal Cooperative Freight Research Program and a Public Transportation Research, Demonstration, and Deployment fund. These will support the electrification of the supply chain and public transit networks, respectively.

Challenges and Opportunities for EV Adoption

These federal incentives are having a positive impact on EV adoption rates, but barriers to adoption remain.

With range anxiety being a concern for 79% of consumers, there’s still work to do to educate the public and deliver a better EV charging experience. A modern charging plan entails rethinking urban design and public spaces to accommodate the need to leave EVs parked for hours while they charge and updating the infrastructure to support fast charging with DCFC charging stations.

The initial purchase price of electric vehicles and EV charger installation costs are another barrier. The EV tax credit doesn’t apply to all models, and prices have increased due to inflation and other factors.

Additionally, many homes across the country are unprepared for electrification and will need infrastructure updates to support EV charger installation or other energy transition technologies. But even with all of these challenges toward the future of electrification, businesses and individuals who make the move toward a more sustainable, electrified transportation future realize incredible benefits for enhanced safety, boosted operations, and even savings on fuel.

Partnerships between federal agencies, automakers, municipalities, businesses, and other players are needed to address these challenges and balance federal incentives and sustainable market growth, but this is already happening, and areas where these stakeholders work together are already witnessing the profound impact of a unified electrification movement.

Are You Ready to Go Electric?

The federal government is supporting EV adoption rates. Tax credits, grants, strict requirements for manufacturers, and other programs all contribute to a cleaner, more sustainable future. These efforts represent an unprecedented investment in building a cleaner future.

Is it the right time to make the switch and get an EV? There are many benefits to going electric now, and with recent changes, the EV tax credit is available at the time of purchasing an EV—helping reduce the upfront costs of going electric. There are more EV models to choose from than ever, and the EV charging infrastructure grows every day with public EV charger installation increasing EV chargers on the roads and at-home EV charger installation making it easier than ever before to conveniently charge your EV at home.

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Author: Greg Sowder

Greg Sowder

President, Qmerit Network