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What Will It Take for Electric Vehicles to Create Jobs, Not Cut Them?

  • September 22, 2021

Mr. Bivens and his co-author, James Barrett, an economic consultant, examine the effects of doing both. They note that roughly three-quarters of the parts in the powertrain for a U.S.-made gasoline vehicle are produced domestically, versus less than half of the parts in the powertrain of a U.S.-made electric vehicle.

Raising the proportion of domestic content in electric vehicles so that it mirrors gas-powered ones could save tens of thousands of jobs a year, they estimate — potentially more than half the likely job losses that would arise without additional government action.

But to transform likely job deficits into job gains, Mr. Barrett and Mr. Bivens find, it is necessary to increase the market share of vehicles made in the United States. According to the study, the percentage of vehicles sold in the United States that are made domestically has hovered around 50 percent over the past decade. If it were to rise to 60 percent, the authors conclude, the industry could gain over 100,000 jobs in 2030.

If market share were instead to drop to 40 percent by the end of the decade and there were no increase in the domestic content of electric vehicle powertrains, the industry could lose more than 200,000 jobs, the report finds.

Under the Democratic plan circulating in Congress, a current $7,500 tax credit for the purchase of a new electric vehicle would rise as high as $12,500. An extra $4,500 would apply to vehicles assembled at unionized factories in the United States. Consumers would receive the final $500 if their vehicle had a U.S.-made battery. The details could change in the face of opposition from automakers with nonunion U.S. plants.

Democrats are also discussing subsidies to encourage manufacturers to set up new factories or upgrade old ones.

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