Jump-starting the domestic supply chain for EVs

Transcript

NIALA: Good morning! Welcome to Axios Today.

It’s Thursday, February 2nd.

I’m Niala Boodhoo.

Here’s what we’re covering today: Tyre Nichols is laid to rest in Memphis. Plus, the West’s fight over water. But first, jump starting the domestic supply chain for electric vehicles. That’s today’s One Big Thing.

Jump starting the domestic supply chain for electric vehicles

NIALA: President Biden's plan to scale up domestic battery manufacturing for electric vehicles is proving to be popular. But the new incentives may end up costing the government more than originally planned. Axios’ Joann Muller has to scoop. Hi Joann.

JOANN MULLER: Hi Niala.

NIALA: So when we say popular, what exactly are we talking about?

JOANN: Well, these particular tax credits are for manufacturers who open factories to produce electric vehicle batteries in the United States. But this was part of a big pot of incentives that were approved by Congress, and the one that a lot of people have heard about is the $7,500 tax credit for buying an electric vehicle. But this other tax credit just for manufacturers is the real sleeper in the bill I think. Because it really, is gonna add up to a lot of money going back to manufacturers, carmakers, battery companies, those kinds of companies.

NIALA: So why is that?

JOANN: Right now, most of the batteries for electric vehicles are made in China, and the Biden administration and Congress really want to build a domestic supply chain. So what they've done is they've offered a tax credit to car makers for every battery that they produce in the U.S. And basically the way this credit works is it shaves about one third of the cost of the battery off of the price. And so if that is passed onto consumers, that also helps to make electric vehicles more affordable.

NIALA: So what is the cost then to taxpayers for this if these are government incentives?

JOANN: When this bill was being debated, the Congressional Budget Office estimated that it was gonna cost about $30 billion over 10 years. But, there have been so many companies that have announced new battery factories and the amount of batteries that they plan to produce is so large that they will qualify for a lot more than $30 billion. And in fact, we worked with a consultant to figure this out and estimate that these battery rebates are gonna cost taxpayers $136 billion over 10 years, which is, you know, more than four times what Congress estimated.

NIALA: Joann, even if more people start buying electric vehicles, there is still the issue of accessibility of charging stations. Where are cities and towns across the country on having stations available?

JOANN: Well, charging is still kind of spotty. They are, tend to be in wealthier neighborhoods, whiter neighborhoods. But, this is another big government policy right now under the Infrastructure Act from 2021. $7.5 billion being spent to put chargers all across the highways. And then after the highway, get all the chargers then they'll start filling in to neighborhoods, disadvantaged communities, rural areas, apartment buildings. So there's a lot of work to do in charging for sure.

NIALA: Joann Muller covers the Future of Transportation for Axios joining us from Detroit. Thanks, Joann.

JOANN: Thanks Niala.

Tyre Nichols is laid to rest in Memphis

KAMALA HARRIS: We mourn with you (clapping)

NIALA: Vice President Kamala Harris joined the family and friends of Tyre Nichols and national civil rights leaders, for Nichols’ funeral in Memphis, Tennessee yesterday. Nichols was brutally beaten by police officers during a traffic stop…and died three days later.

KAMALA HARRIS: This is a family that lost their son and their brother through an act of violence at the hands and the feet of people who had been charged with keeping them safe.

NIALA: His family remembered him as polite and peaceful. Here’s Nichols’ sister Keyana Dixon.

KEYANA DIXON: You know, being the oldest of three boys, I had to watch my brothers take them places that I probably didn't want to take them. Watch them at times when I didn't want to watch them. But with Ty, I didn't mind. He never wanted anything but to watch cartoons in a big bowl of cereal, so it was pretty easy to watch him.

NIALA: George Floyd’s family was also at the funeral. Tyre Nichols’ mother, RowVaughn Wells – and VP Harris – called for passage of the George Floyd Justice in Policing Act, a bill which would reform policing nationally - including by banning techniques such as chokeholds.

ROWVAUGH WELLS: We need to get that bill passed. Amen. Because if we don't, that blood, the next child that died, that blood is going to be on their hands.

NIALA: In a moment – states at a stalemate on the Colorado River.

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The West’s fight over water

NIALA: Welcome back to Axios Today. I'm Niala Boodhoo.

The Colorado River Basin is dealing with a massive 23-year drought that's the worst the region’s seen in more than 1000 years. The surrounding seven states are struggling to figure out an agreement in California's the lone holdout on a proposed framework that's been months in the making. Here with the story is Axios’ Phoenix Reporter Jeremy Duda.

Jeremy, before we get into the details can you give us the big picture here? What's going on with this drought?

JEREMY DUDA: Well, because the drought has, uh, been going on for so long and it's continually getting worse. What we're seeing is lower and lower water levels in Lake Powell and Lake Mead, which are the major reservoirs that pool that water from the river. And Lake Mead in particular is what Arizona and California, Nevada are especially reliant on. And so as they drop to a certain level, then Hoover Dam and Glen Canyon Dam reach what's known as deadpool status and can no longer generate electricity. So that's a very critical tipping point that everyone needs to avoid. And so as that gets closer and closer, conserving that water in those two lakes becomes more and more critical.

NIALA: So Tuesday was the deadline for seven river basin states, Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming to reach an agreement on this, what happened?

JEREMY: Well, everyone's been negotiating, you know, since last year when the Bureau of Reclamation announced the agency wanted to see some information from the states for what's known as an environmental impact statement. It is analyzing what different outcomes may look like based on, you know, whether no changes are made, whether the feds impose their solution, which none of the states know what that'll be, and then whatever the states propose. The six of the states all agreed, but California would not sign onto that framework. And I don't want to call it an agreement. There is no hard and fast agreement there. But this is a framework that these six states proposed to conserve just under 2 million, additional acre feet of water. And an acre foot of water, by the way, is about 326,000 gallons. It's enough to serve, you know, two to three houses for a year. And so, you have to remember that the states are negotiating, but every state has a lot of users within the state. You know, here in Arizona we have the Central Arizona project, which, uh, pipes in water from the Colorado River. You have a lot of tribes, cities. In California you have major agriculture districts, you have the Metropolitan Water District that serves the Los Angeles area. Under the current situation, California's water rights are very high priority, and so they are very resistant, I think, to the notion of, uh, agreeing to more severe cuts than they feel like they have to.

NIALA: So you said that six states have an agreement, even if California is the holdout, what does that mean going forward then?

JEREMY: It's hard to say. There's still maybe time from what one expert tells me that, you know, she feels like there's still time simply because whatever final resolution happens simply can't look too much different than what the six states have already proposed. Cause there's only so many ways to get to, keep that water on the river, there's only so many ways those cuts can be apportioned. But the clock is, uh, very much ticking here.

NIALA: Jeremy Duda is a reporter for Axios Phoenix. Thanks, Jeremy.

JEREMY: Thank you.

NIALA: That’s it for us today! I’m Niala Boodhoo - thanks for listening - stay safe and we’ll see you back here tomorrow morning

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