The latest round of tax breaks for electric vehicles could change where our cars are assembled, electric semi-truck makers are fighting to be the first on the road, and flight delays top pre-pandemic levels. All that and more in The Morning Shift for August 15, 2022.
1st Gear: Tax Credits Could Reshape Supply Chains
Last week, lawmakers here in the US passed a bill that would bring a raft of new tax credits to electric vehicle buyers. But, those handouts for upgrading to a shiny new EV don’t come without their caveats, and those caveats could impact the way automakers build their cars.
The new tax breaks for EVs remove the sales limits on such products, bringing the $7,500 handout back to many manufacturers. But in return for this, the government is demanding that any EV serving of the credit must be made in America. And now, Automotive News reports that this request might impact the very way we build our cars. According to the site:
The old $7,500 tax credit — with no limits on price, income or battery content — will remain in effect until the end of 2022. However, industry experts said it immediately will be modified to apply only to vehicles assembled in North America.
Manufacturers of EVs — battery-electrics, plug-in hybrids and fuel cells — now must decide whether they’ll chase all, some or none of the new tax credit. Depending on their strategies, it could mean reshaping their supply chains sooner than anticipated to rely more on credit-friendly countries and potentially seeking alternative battery chemistries to rely less on credit-excluded ones.
At present, about 70 percent of the EVs that currently qualify for tax credits will be ineligible once the new law comes into force. Analysts predict that it could take several years for manufacturers to shift their sourcing and production to the US in order to qualify for the incentives.
With the next round of credits set to expire in 2032, one analyst told Automotive News news that the “worst-case scenario” could see automakers spend the next five years shifting their supply chain and be left with just four or five years to sell EVs that comply with the new incentives.
2nd Gear: Fisker Eyes US Factory
And just like that, one EV startup is already suggesting that it might be able to shift some of its production to the US in order to qualify for these new tax breaks.
Reuters reports that electric-vehicle startup Fisker was “exploring options to manufacture in the United States in 2024.” If the company could do this, then its next model, the Ocean, would qualify for the next round of EV tax credits.
Currently, California-based Fisker will assemble its Ocean electric SUV at a plant in Austria. Production of this model is slated to begin in November. With the new tax credits thought to be signed into law as soon as this Friday, Fisker Ocean buyers may be about to miss out on the tax break. According to Reuters:
Over the weekend, Fisker said it had reached out to US customers who have pre-ordered to ensure they have the opportunity to retain eligibility for the $7,500 federal tax credit for EVs should the Inflation Reduction Act be signed into law.
What’s more, if you did want to sneak in and buy a Fisker before the tax credits change, you can’t. Fisker says it has sold out of the Sport and Ultra variants of the Ocean SUV that were scheduled to arrive in the US
3rd Gear: Electric Semi Trucks Could be Here Soon
If that wasn’t enough tax credit news for a Monday, here’s one final nugget to kickstart your week. The new bill also includes allowances for electric haulage vehicles, with “roughly $374 billion in climate and energy spending for cleaner commercial vehicles.”
It should come as no surprise, then, that two of the loudest parties in the race to built a fleet of electric semis have perked up again. Shortly after the Senate passed the Inflation Reduction Act, Elon Musk tweeted that the Tesla Semi was coming this year, and Nikola announced that automotive veteran Michael Lohscheller would be promoted to CEOsignaling its renewed desire to succeed in the space.
According to Bloomberg:
As will be the case with passenger cars, trucks will need to meet tough requirements to be eligible for incentives. Battery materials need to come from countries the US has free trade agreements with, and not nations of concern, such as China. While it’s unclear how many will meet the criteria, battery-powered big rigs are definitely coming.
In March, shipping giant Maersk said it will buy 110 electric Class 8 rigs from Volvo Trucks. Nikola plans to deliver at least 300 trucks this year, and Daimler Truck also has electric models on the road.
Under the new tax breaks, each electric truck sold will be eligible for a $40,000 rebate. But despite this hefty incentive, Musk previously said that he wasn’t thinking “at all about Biden’s signature economic package.” I guess his sudden acceleration of the Semi timeline is all just a pleasant coincidence, then?
4th Gear: Usain Bolt Left His Electric Scooters All Over
If it’s not electric cars and trucks taking over our streets, then it’s nifty new modes of electric personal mobility. Things like electric bikes, skateboards, and scooters have been filling city streets as commuters look for new ways to get around town. But despite their rising popularity, one electric scooter company has been struggling in the US
Founded by Olympic gold medallist Usain Bolt, Bolt Mobility has left cities across the US literate with non-functioning electric scooters and e-bikes. The company has been forced to cut back its scooter rental business in several US markets as funding dried up. According to Automotive News:
Bolt Mobility, in an Aug. 3 statement on its website, said investors had failed to deliver on commitments to the company, forcing it to ‘significantly scale back operations.’ It said franchisees were continuing to operate in 25 markets but that it had to leave eight that were under corporate control.
TechCrunch reported that the markets Bolt abandoned include Portland, Ore.; Burlington, South Burlington and Winooski, Vt.; Richmond, Calif.; and St. Augustine, Fla. Officials in several of the cities said the company disappeared without warning or explanation.
The company, founded by the eight-time Olympic gold medallist, has reportedly left hundreds of bikes and scooters in US cities. Bolt Mobility says it is working with local franchises to collect the abandoned bikes from markets where it no longer operates.
In a statement, Bolt Mobility said that 25 out of its 33 markets were now operated by independent owners. For the remaining eight markets, the company is hoping that “forthcoming, agreed-upon investment,” will keep the services running.
5th Gear: US Flight Delays Top Pre-Pandemic Levels
If you want a sign that things are getting back to normal after two years of covid-19, look to airports. After travel numbers plummeted due to lockdowns and restrictions, they began to rise again earlier this year as such measures eased. But now, as passengers flock back to airports, the sector is struggling to keep up with demand, bringing flight delays and cancellations back up to pre-pandemic levels.
That’s right, Reuters reports that in the first seven months of this year, more flights were delayed or canceled in the US than during the same period in 2019. According to Reuters:
US-based carriers scrapped 128,934 flights from January to July, up about 11% from pre-pandemic levels, according to data from flight-tracking website FlightAware. Flight delays have also reached nearly a million this year.
American Airlines Group Inc canceled 19,717 flights, the most among big US carriers, followed by Southwest Airlines Co at 17,381 flights. Delta Air Lines Inc reported the least cancellations at roughly 10,000 flights.
Delays and cancellations have been caused by everything from unpredictable weather to a shortage of pilots and other essential airline staff. The surge in cancellations comes as traveler numbers approach pre-pandemic levels once again.
And it’s not just in the US where such issues are taking hold. In recent months, London’s Heathrow Airport has been struggling to keep up with passenger numbers, despite previously being one of the busiest airports in the world.
Reverse: I Found a Shortcut
Neutral: What Would Make a Good Taxi?
I’ve got family visiting from the UK for a few days, and they were disappointed that their taxi from the airport into NYC wasn’t a Crown Vic. Is there a car on sale today that could fill the void it left behind? Anything has to be better than the Toyota SUVs and Nissan vans.