The electric vehicle (EV) industry has a friend in the Biden administration, Transportation Secretary Pete Buttigieg tells Yahoo Finance Presents.
"So we think it is important to continue incentivizing and encouraging electric vehicle adoption. We got to make sure that electric vehicles are not just a luxury item, especially because the fuel savings from not having to pay to fill it up with gas will be especially meaningful to lower and middle income American car owners," Buttigieg says. "But first, we got to make sure that we're producing them at scale, drive those costs down. And again, we don't have time for that to simply play out on its own. We got to make some smart investments as a country to make sure it happens sooner so that the electric vehicle future really is made in America and that the workers creating that future are American workers."
The Biden administration recently laid out plans to spend $174 billion over eight years to support the surging EV industry. The administration is rumored to be eyeing an expansion of the tax incentive to consumers, which would help bring the cost of the often expensive autos down. In turn, that could be a big tailwind to sales at EV leader Tesla and newbie challengers in Ford and General Motors.
Currently, the electric vehicle tax credit is $7,500. But it's phased out after an automaker sells 200,000 battery-powered vehicles. Tesla and General Motors have surpassed the threshold. Tesla bull and Wedbush analyst Dan Ives recently told Yahoo Finance his contacts in D.C. believe the EV tax credit will increase to $10,000.
Meanwhile, the Biden administration is also pledging support to build out 500,000 charging stations and bolster the battery production supply chain.
Buttigieg acknowledges China has taken pole position in the EV space, led by surging demand for Tesla vehicles and those from newer rivals Nio, Xpeng and Li Auto. But the investment in the EV space outlined by the administration will go a long way to bringing the U.S. to a leadership position, Buttigieg says.
"We definitely have our work cut out for us. Look, the 20th century was defined by American leadership in the auto industry, especially in places like the industrial Midwest where I grew up. There's no guarantee that'll be true in the 21st century. That's why it's so important that the electric vehicle future be one that's made in America. And that doesn't just happen, that actually requires not just excellent work by industry in the private sector, but the right investments by the public sector. And the best example of that is the president's vision for installing half a million charging stations around the country. Doing this will help America not just catch up and keep up, but once again, lead the world as we should. Otherwise China will," Buttigieg explained.
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