FILE PHOTO: A Tesla vehicle is charged at a Tesla supercharging station in Kettleman City, California, U.S., January 25, 2023. REUTERS/Mike Blake/File Photo
By Jarrett Renshaw and Hyunjoo Jin
(Reuters) – The Biden administration on Wednesday issued long-awaited final rules on its national electric vehicle charger network that require the chargers to be built in the United States immediately, and with 55% of their cost coming from U.S.-made components by 2024.
The Biden administration hopes the new rules, issued after nearly eight months of debate, will jump-start the biggest transformation of the U.S. driving landscape in generations. It seeks to give consumers unfettered access to a growing coast-to-coast network of EV charging stations, including Tesla (NASDAQ:TSLA) Inc’s SuperChargers.
Companies that hope to tap $7.5 billion in federal funding for this network must also adopt the dominant U.S. standard for charging connectors, known as “Combined Charging System” or CCS, and use standardized payment options that are smartphone-friendly.
Tesla, the nation’s largest EV maker and charging company, plans to adopt the CCS standard and expand beyond its proprietary connectors, the administration said.
“No matter what EV you drive, we want to make sure that you will be able to plug in, know the price you’re going to be paying and charge up in a predictable, user-friendly experience,” Transportation Secretary Pete Buttigieg told reporters in a preview of the rules.
The first tranche of the billions in federal funds will now be rolled out to states in upcoming weeks, forcing companies like Tesla, EVgo Inc and ChargePoint Holdings Inc to jockey for their share of the funds from state governments.
The network is a central part of U.S. President Joe Biden’s plan to tackle climate change by converting 50% of all new U.S. vehicle sales to electric by 2030. A dearth of chargers on U.S. roads has slowed the growth of EV sales and the positive environmental impact, advocates say.
Manufacturers warned before the rules were released that imposing a domestic components quota too soon in the program rule would slow the rollout.
White House National Climate Adviser Ali Zaidi said that under Biden’s leadership the number of EV models being offered to consumers has doubled, along with the number of charging stations and EV sales.
“So this is not pie in the sky. It’s literally steel in the ground. We are seeing the Biden climate vision on wheels,” Zaidi said.
‘BUILD AMERICA, BUY AMERICA’
Under the 2021 bipartisan infrastructure law, federal infrastructure projects like EV chargers must obtain at least 55% of construction materials, including iron and steel, from domestic sources and have all manufacturing done in the United States starting immediately.
However, the Department of Transportation requested a waiver for EV charging stations and initially proposed that at least 25% of the chargers’ overall cost come from American-made components starting in July of this year and then 55% by Jan. 1, 2024.
The new rules ditch the two-step process and start imposing the component cost provision in July 2024 at 55%. The chargers must be assembled at a U.S. factory, and any iron or steel charger enclosures or housing must be made in the United States, starting immediately.
The United States and its allies Mexico and the European Union (EU) have clashed over protectionist policies implemented by Biden. The United States and the EU set up a task force last year to look at American laws that Europeans fear will discriminate against foreign electric car makers.
EV chargers require iron and steel for some of their most crucial parts, including the internal structural frame, heating and cooling fans and the power transformer. Chargers with cabinets that house the product require even more steel, making up to 50% of the total cost of the chargers in some cases.
Global demand for EV chargers is putting strain on the supply chain that makes it difficult, if not impossible, to meet the made-in-America standards and expedite construction of new chargers, states and companies warned in comments to the Department of Transportation.
Tesla told the DOT that the plan was “aggressive” and “could lead to a shortfall in the number of compliant charging stations available given the pace and scale of deployment,” records show.
However, labor advocates argue that delaying or skirting the requirements undercuts congressional intent and punishes companies that moved early to comply with the rules.
“This is a once-in-a-lifetime shot to get this right,” said Scott Paul, president of the Alliance for American Manufacturing. “The challenge with extensions is it becomes habit-forming and the herd will always fight and delay.”