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With Volkswagen payout, states have $2.7 billion to boost EV adoption

The new Tesla Motors showroom and service center in the Red Hook neighborhood of Brooklyn, New York.
The Tesla Motors showroom and service center in Brooklyn, New York. Photo: Richard Levine/Corbis via Getty Images

In the wake of its 2015 emissions scandal, Volkswagen reached a settlement with the EPA to pay $2.7 billion across all 50 states to make up for unaccounted emissions from non-compliant vehicles. States have been instructed to use these funds to subsidize the purchase of zero-emissions vehicles, as California and New York are already doing.

Why it matters: The trucks, buses, planes and trains that drive the U.S. economy and get us from point A to point B are taking a hazardous toll on the environment, producing 28% of the country's greenhouse gas emissions. But with the Volkswagen payout, states will have new means to clean up their transportation sectors, laying the foundation for nationwide electrification.

The details: Each state will take aim at the form of transit most harmful to their immediate environment.

What’s next: With the means to tackle EVs’ notoriously high sticker price, America’s EV market is likely to see a major uptick. Here’s how the industry might change:  

  • 2018–2019: California has been incubating EV technology with existing incentive programs that have accelerated its development and will continue to do so.
  • 2020–2021: Volkswagen funding will spur the nationwide deployment of medium- and heavy-duty EVs, in addition to other zero-emission vehicle technologies (buses, boats, rail, etc.).
  • 2022 and beyond: Battery costs will decrease and EV sticker prices will fall below those of diesel vehicles.

Dakota Semler is the co-founder and CEO of Thor Trucks.

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