The IRA has brought the first wave of EV onshoring
Hi, hello, hey. Your Protocol Climate team is happy to be with you today, a perfect one to play hooky from work, take a drive to peep some leaves, and pick some apples. We would never do that of course, but nothing is stopping you! For inspiration, we’re diving into all things EV from the IRA’s impact to GM’s new energy endeavor. Plus, a look at the new IMF World Economic Outlook for good measure.
The first wave of EV onshoring is here
Some automakers were a little cranky about the Inflation Reduction Act’s $7,500 electric vehicle tax credit being tied to manufacturing battery components in North America and sourcing critical minerals from there. But their tune changed pretty quickly after the bill passed.
Fast-forward a few months, and companies are moving almost in lockstep to bring large-scale operations to the U.S. in anticipation of car buyers looking to take advantage of the IRA’s EV incentives. Tesla, Honda, GM, and Toyota are among the heavy hitters bringing billions to bear on EV manufacturing in the U.S.
The U.S. EV industry was basically a backwater before the IRA. Sara Baldwin, the director of Energy Innovation’s electrification program, said the country’s auto manufacturers played a negligible role in making EVs. Mining and processing critical minerals as well as the production of battery components amounted to basically nada.
- Meanwhile, countries like China have long been ramping up for the EV expansion, dominating manufacturing and securing not only the intellectual property to serve the market, but also the mining operations critical to their growth.
- “We weren’t prepared for this or planning for this,” Baldwin said of the U.S.
The IRA is helping the country play catchup. The Alliance for Automotive Innovation, a trade group representing some of the biggest automakers, said in a blog post the act was “going to be a major setback to our collective target of 40-50 percent electric vehicle sales by 2030” prior to it passing. And yet …
- It’s undeniable we’re already starting to see the first wave of EV and battery manufacturing onshoring.
- “This is just the beginning of a long-term shift that’s going to take place,” said Rachel Patterson, a policy lead at climate advocacy group Evergreen Action.
- Some state-level policies like California banning the sale of gas-powered cars by 2035 could help spread EV adoption even further while still other states offer incentives for manufacturers to set up shop. That could convince more automakers to build plants and source minerals from the U.S.
This year, automakers have announced over $13 billion in domestic EV manufacturing investments and $24 billion in batteries. That’s triple the amount invested in domestic EV manufacturing in 2020 and 28 times the investment in batteries, according to a White House analysis.
Read on to see what auto and battery manufacturers have made commitments to invest in U.S. operations since the IRA passed.
— Michelle Ma
GM is getting into the energy business
The demands of electric vehicle charging are blurring the line between the auto and energy industries. General Motors is erasing the line altogether.
On Tuesday, the company announced a new business unit dedicated to grid resiliency and energy management called GM Energy.
GM Energy is promising a lot. The company said the division will develop both hardware and software to help customers manage energy use, from individuals charging their car at home to corporations operating an entire fleet.
- The company’s new and in-development hardware will allow for vehicle-to-home and vehicle-to-grid systems that essentially treat GM EVs like giant batteries that can keep the lights on if the power goes out or provide extra baseload for the grid when needed.
- The new division cares about more than cars as batteries and will also look at stationary storage paired with solar panels and more speculative technology like hydrogen fuel cells to keep the lights on.
- The products will be connected via a cloud-based management interface, which GM promises will allow customers to, among other things, charge during periods of low energy demand.
Bidirectional charging will be a huge piece of the puzzle. Very few EV models currently have bidirectional capability, which lets owners pass electricity back onto the grid when power demand surges (and theoretically be paid by their utility for the privilege).
- GM is banking on that being a major selling point, though some utilities have fought similar measures with rooftop solar, and it remains to be seen how many will get on board with GM’s vision.
- But it’s going to be an increasingly important tool as more cars sit in garages charging, putting more pressure on the already shaky grid.
- “It’s important for us … to make sure we’re providing this clean flow of energy back and forth with utilities to help manage resiliency and reliability for the electric grid,” Mark Bole, who heads GM’s vehicle-to-everything and battery division, said during a press briefing.
- GM has several utility partners, including Northern California’s PG&E, which is promising to pilot bidirectional charging for a small group of residential customers next year.
The rollout of GM Energy comes as the company doubles down on its EV commitment in other ways as well. The automaker announced three binding battery supply agreements in July, which it says will secure all of the raw materials needed to achieve its goal of producing 1 million EVs per year by the end of 2025.
Read the full story here.— Lisa Martine Jenkins
A MESSAGE FROM QUALCOMM
Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.
One big number: 20%
The hippies at the IMF are once again advocating for sound climate policy. The group’s leaders put down their hacky sacks and left the drum circle long enough to release their World Economic Outlook on Tuesday. The findings make it clearer than ever that the world needs an orderly transition to a clean energy economy, to both protect the climate and also keep the economy from going up in smoke.
Among the slew of findings is one on the value of a “credible” approach to climate policy. In the IMF’s analysis, “credible” means that policies are laid out clearly for years to come and the policies it considers are a price on carbon and subsidies for clean energy that “provide powerful incentives to unleash private green investment.”
Doing so allows companies to plan for the transition, whether it’s, say, Google investing in more clean energy projects knowing costs will come down, or your local utility deciding not to build a new methane gas plant because it would be a terrible investment. And most importantly, credibility also ensures carbon pollution falls as rapidly as possible, keeping the Paris Agreement targets within reach.
But if those policies are more piecemeal or thrown together slapdash, then the transition will slow down. The report finds this “partial credibility” approach would result in carbon cuts that are 20% lower than the full-credibility scenario. It would also result in lower GDP around the world, with a particularly big dip in China.
Now, we can debate whether a price on carbon is ever going to be a thing in most economies, especially in the tax-averse U.S. But the report’s finding that policy chaos will slow the transition is a major warning bell, especially policy in the chaotic U.S. The IRA is a major piece of climate policy. But if Republicans take control of Congress following next month’s midterms, or control of the White House in 2024, the climate policy landscape will likely get a lot less credible. And when it comes to tech companies making smart decisions about their clean energy investments, that could slow their climate plan roll.
— Brian Kahn
Apple make an e-bike challenge. Your Protocol Climate team loves this proposal, which would be more climate-friendly (and fun! And faster to market!) than the company's reported self-driving EV dream.
The aviation industry is planning to at least try to get to net zero. The 200 members of the U.N.’s aviation organization adopted an “aspirational goal” of zeroing out their net emissions by 2050, though (side-eye) they did not set country- or airline-specific targets.
OK, what about a frequent flier tax? The nonprofit International Council on Clean Transportation is proposing a tax that could fund the industry’s transition to sustainable aviation fuel.
There’s a Rivian-shaped hole in the EV market. The startup recalled nearly all of its cars after reports emerged of a possible loose fastener in the steering mechanism.
Amazon will spend $972. million on its electric delivery network in Europe. The funds will bring its delivery footprint from roughly 3,000 to 10,000 vehicles by 2025.
Sweden gets its own Silicon Valley. Near the Arctic Circle, a collection of Swedish clean energy mobility startups are making the country a hub for sustainability innovation.It's the final day of Fat Bear Week. OK, it's not tech, but whatever. Just go vote.
A MESSAGE FROM QUALCOMM
If we want our nation’s rich history of innovation to continue, experts say, we must create an IP protection ecosystem that helps ensure that tech innovation will thrive.
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