Electric vehicle charger producers and operators in the US are preparing for a slowdown in deployment as they struggle to meet the "Made in America" requirements of a $7.5 billion federal program intended to accelerate the industry.
President Joe Biden's initiative to build an electric-friendly highway system by 2030, combat climate change, and generate local employment is supported by long-awaited regulations announced by the White House last month.
Many in the EV charging industry have been caught off guard, according to company executives and industry experts, by requirements to start assembling the chargers right away at American factories and to use iron or steel enclosures made in the United States.
Tesla Inc., ChargePoint Holdings Inc., EVgo Inc., and Electrify America are the largest manufacturers and network operators of EV charging stations.
Businesses and some state officials who will oversee the federal funds have expressed concern that the country does not currently have the capacity for domestic production, particularly in the area of high-speed chargers, and that strict enforcement will delay implementation, increase costs, and possibly harm the industry Biden wants to support.
"Everyone was hoping that there would be a waiver on the Buy America and Made in America," said Aatish Patel, co-founder of XCharge North America, which imports chargers from its manufacturing plant in Beijing. "That throws a wrench in a lot of people's plans."
Executives anticipated deferrals in other terms as well, but the requirement to source 55% of the cost of components from the United States was postponed until mid-2024.
Patel noted that setting up a U.S. facility to comply with the regulations was being expedited by XCharge, one of the largest sellers of EV fast chargers in the European Union, which may result in a 25–30% cost increase. Patel stated that it typically takes 12–18 months to move production from another country.
States will receive about two-thirds of the federal plan's funding, with cities, counties, and Native American tribes competing for the remaining three-quarters.
The Arizona Department of Transportation is spearheading efforts to construct charging stations and anticipates receiving $76.5 million in federal funding over the following five years.
"Buy America is likely to be another constraint in terms of how fast we can get the stations out," Thor Anderson, a project manager at the Arizona Department of Transportation, told Reuters. "Everybody is going to be looking to install new charging stations at once so that's going to put a lot of pressure on the manufacturing of chargers."
But even as the program expands, the federal government stated that it anticipates there will be enough chargers to meet the "limited" initial demand.
Fast chargers can extend a vehicle's range by hundreds of miles in under an hour. Comparatively, it takes the less expensive Level 2 chargers about five hours to fully charge a vehicle. About 60% of the nation's fast-charging stations, which total about 30,000, are produced and run by Tesla, the leading EV manufacturer. The price of the more powerful charger models can exceed $100,000.
They are produced by Tesla at its factory in Buffalo, New York, and satisfy the criteria for final assembly. For other businesses that have not yet established their manufacturing facilities in the United States and rely heavily on the federal program for their funding, the stakes are higher.
The U.S. government ordered Tesla to start allowing non-Tesla vehicles to use its charging stations, but it is unclear if it will apply for federal funding. Requests for comment from Tesla were not answered.
The highway fast chargers are the sole focus of the $1.25 billion first phase of the Biden buildout. Later phases will also include slower chargers for overnight charging, for example.
There is a procedure for each individual to request a deferral of the "Made in America" rules, but EVgo Inc., a charging network operator with more than 850 fast-charging locations, is unsure if the government will grant that. By 2026, the South Korean company that makes the chargers, SK Signet Inc., plans to build a factory in Texas to produce up to 10,000 direct-current fast chargers annually.
However, according to Jonathan Levy, chief commercial officer of EVgo, there is a chance that 2023 projects may be delayed while the supply chain catches up.
"You have this uncertainty. Am I going to get that waiver? Do I need to hold off? What does it look like?"
Shares of EVgo jumped nearly 10% on Feb. 15, when the U.S. government announced the new rules for chargers. Since then, they have lost about a quarter of their value. Rivals ChargePoint (CHPT.N), Wallbox , Blink Charging Co (BLNK.O) and Tritium (DCFC.O) have dropped about 30% over the same period compared with a drop of near 5% in the S&P 500.
The new regulations are frustrating but are merely speed bumps, according to Elliot Johnson, chief investment officer at Evolve ETFs, which oversees over $4 billion in assets, including investments in EVgo and Tesla.
"It only makes those who are successful more valuable," he told Reuters.
(Source:www.theprint.in)
President Joe Biden's initiative to build an electric-friendly highway system by 2030, combat climate change, and generate local employment is supported by long-awaited regulations announced by the White House last month.
Many in the EV charging industry have been caught off guard, according to company executives and industry experts, by requirements to start assembling the chargers right away at American factories and to use iron or steel enclosures made in the United States.
Tesla Inc., ChargePoint Holdings Inc., EVgo Inc., and Electrify America are the largest manufacturers and network operators of EV charging stations.
Businesses and some state officials who will oversee the federal funds have expressed concern that the country does not currently have the capacity for domestic production, particularly in the area of high-speed chargers, and that strict enforcement will delay implementation, increase costs, and possibly harm the industry Biden wants to support.
"Everyone was hoping that there would be a waiver on the Buy America and Made in America," said Aatish Patel, co-founder of XCharge North America, which imports chargers from its manufacturing plant in Beijing. "That throws a wrench in a lot of people's plans."
Executives anticipated deferrals in other terms as well, but the requirement to source 55% of the cost of components from the United States was postponed until mid-2024.
Patel noted that setting up a U.S. facility to comply with the regulations was being expedited by XCharge, one of the largest sellers of EV fast chargers in the European Union, which may result in a 25–30% cost increase. Patel stated that it typically takes 12–18 months to move production from another country.
States will receive about two-thirds of the federal plan's funding, with cities, counties, and Native American tribes competing for the remaining three-quarters.
The Arizona Department of Transportation is spearheading efforts to construct charging stations and anticipates receiving $76.5 million in federal funding over the following five years.
"Buy America is likely to be another constraint in terms of how fast we can get the stations out," Thor Anderson, a project manager at the Arizona Department of Transportation, told Reuters. "Everybody is going to be looking to install new charging stations at once so that's going to put a lot of pressure on the manufacturing of chargers."
But even as the program expands, the federal government stated that it anticipates there will be enough chargers to meet the "limited" initial demand.
Fast chargers can extend a vehicle's range by hundreds of miles in under an hour. Comparatively, it takes the less expensive Level 2 chargers about five hours to fully charge a vehicle. About 60% of the nation's fast-charging stations, which total about 30,000, are produced and run by Tesla, the leading EV manufacturer. The price of the more powerful charger models can exceed $100,000.
They are produced by Tesla at its factory in Buffalo, New York, and satisfy the criteria for final assembly. For other businesses that have not yet established their manufacturing facilities in the United States and rely heavily on the federal program for their funding, the stakes are higher.
The U.S. government ordered Tesla to start allowing non-Tesla vehicles to use its charging stations, but it is unclear if it will apply for federal funding. Requests for comment from Tesla were not answered.
The highway fast chargers are the sole focus of the $1.25 billion first phase of the Biden buildout. Later phases will also include slower chargers for overnight charging, for example.
There is a procedure for each individual to request a deferral of the "Made in America" rules, but EVgo Inc., a charging network operator with more than 850 fast-charging locations, is unsure if the government will grant that. By 2026, the South Korean company that makes the chargers, SK Signet Inc., plans to build a factory in Texas to produce up to 10,000 direct-current fast chargers annually.
However, according to Jonathan Levy, chief commercial officer of EVgo, there is a chance that 2023 projects may be delayed while the supply chain catches up.
"You have this uncertainty. Am I going to get that waiver? Do I need to hold off? What does it look like?"
Shares of EVgo jumped nearly 10% on Feb. 15, when the U.S. government announced the new rules for chargers. Since then, they have lost about a quarter of their value. Rivals ChargePoint (CHPT.N), Wallbox , Blink Charging Co (BLNK.O) and Tritium (DCFC.O) have dropped about 30% over the same period compared with a drop of near 5% in the S&P 500.
The new regulations are frustrating but are merely speed bumps, according to Elliot Johnson, chief investment officer at Evolve ETFs, which oversees over $4 billion in assets, including investments in EVgo and Tesla.
"It only makes those who are successful more valuable," he told Reuters.
(Source:www.theprint.in)
