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Here’s where Biden’s climate law is having the biggest impact on the automotive industry — and where it’s falling short.
Around this time last summer, it seemed more apparent than ever that 2023 would be the year the gasoline-free automotive future was set to begin. After a decade that included electric vehicle fits and starts, Volkswagen’s diesel cheating scandal, the rise of Tesla, the EV boom in China, and a whole new generation of car buyers more aware of their personal impact on the climate than ever, it felt like the dawn of an EV-focused tomorrow was just around the corner. All it needed was a spark.
The Inflation Reduction Act, an admittedly poorly named piece of legislation packed with climate and green energy provisions, was meant to be exactly that. On the automotive front, the Biden administration’s signature legislation package included massive subsidies for EV battery plants, strict rules around where cars are produced and batteries are sourced, and a reset on America’s outdated EV tax incentive scheme for car buyers. It seemed grand on a scale not seen since the Johnson years: thousands of jobs, some $100 billion in funding, and a chance for America to kneecap China in the EV arms race.
So a year after the IRA’s passage, is all this investment working? The definitive answer is this: mostly, kinda.
While it’s highly questionable that the IRA has successfully Reduced Inflation, the effect of the legislation on America’s automotive manufacturing landscape has already been palpable. A recent report from the Environmental Defense Fund shows EV industry investments in the U.S. rising in 2021 around the passage of the Bipartisan Infrastructure Law, before taking off in a near-vertical fashion after the IRA was passed.
I decided to grade the IRA’s impact on America’s automotive sector — not just the Big Three U.S. automakers, but all companies who make cars here and support them — in a few key areas.
What I found is that a year in, the IRA feels like it could permanently reset our car industry. But in some key areas, its effects aren’t even close to being seen, and on other fronts, the IRA has caused a number of unintended consequences that will play out for years to come.
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This is arguably the biggest shift we’ve seen thanks to the IRA, and it’s certainly working.
Making batteries for tomorrow’s EVs won’t be as simple as turning car engine plants into battery plants; the supply chain, manufacturing process, and labor needs are entirely different. And so new facilities are springing up left and right to meet this moment.
The Electrification Coalition, a nonprofit policy organization that advocates for EV adoption, identified more than a dozen battery manufacturing and recycling factories that have been announced or are under construction thanks to IRA incentives. These projects are, on average, $3 billion or more, and they’ll provide batteries for future cars from General Motors, Rivian, Hyundai, Tesla, Volkswagen’s new electric Scout brand, and more.
Would this new battery ecosystem have happened without the IRA? Maybe. But certainly not this quickly or at this scale. The automakers may be moving in the direction of electrification, but it’s doing so begrudgingly and these incentives — coupled with state and local ones as well — gave them a reason to move quicker than “the market” would’ve done.
That’s good news for batteries. What about the cars themselves? Since the IRA heavily incentivizes batteries and EVs to be made locally — which I’ll touch on in a moment — it’s kicking off a surge in U.S. car manufacturing the likes of which haven’t been seen in decades.
While battery factories themselves are getting the lion’s share of the attention and money, automakers are adding new factories, expanding existing ones, and retooling lines to scale up their EV outputs.
Granted, many automakers are still investing heavily into (or hedging their bets on) their profitable gasoline models, especially big trucks and SUVs. But EV production is ramping up in America and that scale should eventually drive prices down. Simply put, if a car company — GM, Ford, Nissan, BMW, Hyundai, all of them — builds in the U.S., they’re about to start making EVs here too.
There’s an undercurrent that can be found across all of the Biden administration’s climate and tech investments: cutting off a rising China in countless areas. It’s why only EVs with “final assembly” in North America, that don’t source batteries or components from China, qualify for tax incentives. China has made huge investments into not only its own EV industry but controlling the supply chain around it, and America doesn’t want to cede that to a potentially hostile, non-allied peer state that has a horrific record on human rights and civic freedoms.
Is it working? So far, yes. However, it’s not going to happen overnight. Just as the Center for Strategic and International Studies called it last year, “in the short term it will be difficult to avoid Chinese supply chains.” That’s true of chips, minerals, and everything else.
Moreover, don’t expect automakers to give up the potential of exporting Chinese-made cars. Tesla already sells China-made EVs in Canada, and Volvo has found a George Washington-era loophole to sell the affordable EX30 electric crossover in America without steep tariff penalties. IRA rules may keep Chinese batteries out of our country and stiff tariffs hamper automakers like BYD for now, but this side of things is far from settled.
Now, it’s time for our lesson in unintended consequences. The new $7,500 EV tax credits have strict requirements; essentially, the cars and their batteries have to be built in North America. Given the long-term nature of these investments, not every automaker with an EV lineup can meet those rules for now, leaving a lot of cars out of the credit. (South Korea’s Hyundai Motor Group, in particular, got pretty burned here, leaving its excellent EVs on the expensive side.)
Long-term, these cars and their batteries will be built locally and more cars will qualify for the tax credit. For now, the high cost of EVs is proving to be a major deterrent to adoption. Buyers, squeezed by interest rates and the rising cost of everything, are having trouble justifying the switch. So far the biggest winner is Tesla, which has always been building EVs and batteries in America.
I think a better approach would’ve been to allow all EVs to qualify for the full tax credit until, say, 2026 or so; after that, and perhaps after a gradual phase-in, automakers would have to build local or charge higher prices. That would’ve given them time to ramp up these factories and pushed EV adoption harder at the same time. At the start of the year, before a ton of EVs and hybrids got kicked out of the program, that’s exactly the trend we saw.
That’s what I would’ve done. But, to date, Joe Biden has not put me in charge of such things.
This one is due to be an objective win for the IRA. That Environmental Defense Fund report counts 84,800 jobs that have been announced for the EV industry in America since the IRA’s passage.
According to their data, nearly all of those are located in Southern states. Georgia’s the biggest winner here, believe it or not. And Tennessee, South and North Carolina, and Kentucky are all seeing, or will soon see, big booms in EV-related job growth. The same is true for Michigan, the home of America’s auto industry, as well as lithium-rich Nevada, where Tesla has had a foothold for years.
Again, there’s another universe where the IRA didn’t pass and all of those jobs went to China instead as America’s automakers put their patriotism on the back burner to chase lower labor costs and easy profits. The U.S. is getting a major employment boost instead.
But there’s a difference between “jobs” and “good jobs.” Take a newly militant United Auto Workers union, currently locked into unusually bitter contract negotiations with the Big Three American automakers. One thing they’re mad about: those battery factories going up everywhere, especially the joint-venture ones, don’t automatically lead to union jobs. (One GM-LG battery plant in Ohio voted to unionize with the UAW last year but doesn’t have a contract yet.)
The result is that those battery plant workers could make considerably less money than America’s unionized auto workers, as my colleague Emily Pontecorvo reported in June. Adding insult to injury, EVs generally need fewer parts and labor than conventional cars to assemble; indeed, those battery plant jobs could one day form the bulk of America’s automotive labor force.
The UAW did support the IRA’s passage last year. But that also happened before the union’s much tougher current leadership came in; I’m not convinced it would have gone the same way today. In general, the law doesn’t do a ton for labor, and that’s why the reliably Democratic UAW has held off on endorsing Biden.
So far, the Biden administration doesn’t have a great answer for this, either. The president himself is doing the “Can’t we all just get along?” dance, but that may be the best he can do as he navigates climate, geopolitical, industry, and labor needs at the same time. And the move to EVs is expected to define the automotive labor world — here and globally — for the next few decades.
As Ryan Cooper astutely noted this week, the IRA’s biggest problem is arguably one of awareness. Very few people seem to know about these investments or what’s coming from them. That lack of awareness could be the IRA’s biggest threat.
Maybe that’s a problem more for Biden than the EV industry, America’s supply chain, or the climate, but when nobody knows about the president’s biggest achievement — especially in all those red states where the jobs are going — you have to wonder what a change at the White House next year could mean for all of this momentum. It’s not like those battery plants under construction will just disappear, but I wouldn’t put it past a less climate-focused White House (or Congress) to find a way to thwart all this progress.
There’s also the rising right-wing backlash to EVs in general, predicated more on the messaging power of the fossil fuel industry and our own endlessly stupid culture wars. In short, though these investments do take time, very few people seem to know about them or see the benefits that will come from them.
Auto industries are always heavily subsidized and regulated by the countries they come from. It was true of Japan after World War II, it’s been true of China for the past 20 years, and it’s certainly been true in various ways in America for a century. The IRA is just the biggest such move the U.S. has seen to modernize, compete and innovate in a world where gas cars could eventually be discarded as obsolete technology.
The groundwork has been laid. Now we’ll find out if it has staying power.
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It would have delivered a gargantuan 6.2 gigawatts of power.
The Bureau of Land Management says the largest solar project in Nevada has been canceled amidst the Trump administration’s federal permitting freeze.
Esmeralda 7 was supposed to produce a gargantuan 6.2 gigawatts of power – equal to nearly all the power supplied to southern Nevada by the state’s primary public utility. It would do so with a sprawling web of solar panels and batteries across the western Nevada desert. Backed by NextEra Energy, Invenergy, ConnectGen and other renewables developers, the project was moving forward at a relatively smooth pace under the Biden administration, albeit with significant concerns raised by environmentalists about its impacts on wildlife and fauna. And Esmeralda 7 even received a rare procedural win in the early days of the Trump administration when the Bureau of Land Management released the draft environmental impact statement for the project.
When Esmeralda 7’s environmental review was released, BLM said the record of decision would arrive in July. But that never happened. Instead, Donald Trump issued an executive order as part of a deal with conservative hardliners in Congress to pass his tax megabill, which also effectively repealed the Inflation Reduction Act’s renewable electricity tax credits. This led to subsequent actions by Interior Secretary Doug Burgum to freeze all federal permitting decisions for solar energy.
Flash forward to today, when BLM quietly updated its website for Esmeralda 7 permitting to explicitly say the project’s status is “cancelled.” Normally when the agency says this, it means developers pulled the plug.
I’ve reached out to some of the companies behind Esmeralda 7 but was unable to reach them in time for publication. If I hear from them confirming the project is canceled – or that BLM is wrong in some way – I will let you know.
It’s not perfect, but pretty soon, it’ll be available for under $30,000.
Here’s what you need to know about the rejuvenated Chevrolet Bolt: It’s back, it’s better, and it starts at under $30,000.
Although the revived 2027 Bolt doesn’t officially hit the market until January 2026, GM revealed the new version of the iconic affordable EV at a Wednesday evening event at the Universal Studios backlot in Los Angeles. The assembled Bolt owners and media members drove the new cars past Amity Island from Jaws and around the Old West and New York sets that have served as the backdrops of so many television shows and movies. It was star treatment for a car that, like its predecessor, isn’t the fanciest EV around. But given the giveaway patches that read “Chevy Bolt: Back by popular demand,” it’s clear that GM heard the cries of people who missed having the plucky electric hatchback on the market.
The Bolt died at the height of its powers. The original Bolt EV and Bolt EUV sold in big numbers in the late 2010s and early 2020s, powered by a surprisingly affordable price compared to competitor EVs and an interior that didn’t feel cramped despite its size as a smallish hatchback. In 2023, the year Chevy stopped selling it, the Bolt was the third-best-selling EV in America after Tesla’s top two models.
Yet the original had a few major deficiencies that reflected the previous era of EVs. The most egregious of which was its charging speed that topped out at around 50 kilowatts. Given that today’s high-speed chargers can reach 250 to 350 kilowatts — and an even faster future could be on the way — the Bolt’s pit stops on a road trip were a slog that didn’t live up to its peppy name.
Thankfully, Chevy fixed it. Charging speed now reaches 150 kilowatts. While that figure isn’t anywhere near the 350 kilowatts that’s possible in something like the Hyundai Ioniq 9, it’s a threefold improvement for the Bolt that lets it go from 10% to 80% charged in a respectable 26 minutes. The engineers said they drove a quartet of the new cars down old Route 66 from the Kansas City area, where the Bolt is made, to Los Angeles to demonstrate that the EV was finally ready for such an adventure.
From the outside, the 2027 Bolt is virtually indistinguishable from the old car, but what’s inside is a welcome leap forward. New Bolt has a lithium-ion-phosphate, or LFP battery that holds 65 kilowatt-hours of energy, but still delivers 255 miles of max range because of the EV’s relatively light weight. Whereas older EVs encourage drivers to stop refueling at around 80%, the LFP battery can be charged to 100% regularly without the worry of long-term damage to the battery.
The Bolt is GM’s first EV with the NACS charging standard, the former Tesla proprietary plug, which would allow the little Chevy to visit Tesla Superchargers without an adapter (though its port placement on the front of the driver’s side is backwards from the way older Supercharger stations are built). Now built on GM’s Ultium platform, the Bolt shares its 210-horsepower electric motor with the Chevy Equinox EV and gets vehicle-to-load capability, meaning you’ll be able to tap into its battery energy for other uses such as powering your home.
But it’s the price that’s the real wow factor. Bolt will launch with an RS version that gets the fancier visual accents and starts at $32,000. The Bolt LT that will be available a little later will eventually start as low as $28,995, a figure that includes the destination charge that’s typically slapped on top of a car’s price, to the tune of an extra $1,000 to $2,000 on delivery. Perhaps it’s no surprise that GM revealed this car just a week after the end of the $7,500 federal tax credit for EV purchases (and just a day after Tesla announced its budget versions of the Model Y and Model 3). Bringing in a pretty decent EV at under $30,000 without the help of a big tax break is a pretty big deal.
The car is not without compromises. Plenty of Bolt fans are aghast that Chevy abandoned the Apple CarPlay and Android Auto integrations that worked with the first Bolt in favor of GM’s own built-in infotainment system as the only option. Although the new Bolt was based on the longer, “EUV” version of the original, this is still a pretty compact car without a ton of storage space behind the back seats. Still, for those who truly need a bigger vehicle, there’s the Chevy Equinox EV.
For as much time as I’ve spent clamoring for truly affordable EVs that could compete with entry-level gas cars on prices, the Bolt’s faults are minor. At $29,000 for an electric vehicle in the U.S., there is practically zero competition until the new Nissan Leaf arrives. The biggest threats to the Bolt are America’s aversion to small cars and the rapid rates of depreciation that could allow someone to buy a much larger, gently used EV for the price of the new Chevy. But the original Bolt found a steady footing among drivers who wanted that somewhat counter-cultural car — and this one is a lot better.
“Old economy” companies like Caterpillar and Williams are cashing in by selling smaller, less-efficient turbines to impatient developers.
From the perspective of the stock market, you’re either in the AI business or you’re not. If you build the large language models pushing out the frontiers of artificial intelligence, investors love it. If you rent out the chips the large language models train on, investors love it. If you supply the servers that go in the data centers that power the large language models, investors love it. And, of course, if you design the chips themselves, investors love it.
But companies far from the software and semiconductor industry are profiting from this boom as well. One example that’s caught the market’s fancy is Caterpillar, better known for its scale-defying mining and construction equipment, which has become a “secular winner” in the AI boom, writes Bloomberg’s Joe Weisenthal.
Typically construction businesses do well when the overall economy is doing well — that is, they don’t typically take off with a major technological shift like AI. Now, however, Caterpillar has joined the ranks of the “picks and shovels” businesses capitalizing on the AI boom thanks to its gas turbine business, which is helping power OpenAI’s Stargate data center project in Abilene, Texas.
Just one link up the chain is another classic “old economy” business: Williams Companies, the natural gas infrastructure company that controls or has an interest in over 33,000 miles of pipeline and has been around in some form or another since the early 20th century.
Gas pipeline companies are not supposed to be particularly exciting, either. They build large-scale infrastructure. Their ratemaking is overseen by federal regulators. They pay dividends. The last gas pipeline company that got really into digital technology, well, uh, it was Enron.
But Williams’ shares are up around 28% in the past year — more than Caterpillar. That’s in part, due to its investing billions in powering data centers with behind the meter natural gas.
Last week, Williams announced that it would funnel over $3 billion into two data center projects, bringing its total investments in powering AI to $5 billion. This latest bet, the company said, is “to continue to deliver speed-to-market solutions in grid-constrained markets.”
If we stipulate that the turbines made by Caterpillar are powering the AI boom in a way analogous to the chips designed by Nvidia or AMD and fabricated by TSMC, then Williams, by developing behind the meter gas-fired power plants, is something more like a cloud computing provider or data center developer like CoreWeave, except that its facilities house gas turbines, not semiconductors.
The company has “seen the rapid emergence of the need for speed with respect to energy,” Williams Chief Executive Chad Zamarin said on an August earnings call.
And while Williams is not a traditional power plant developer or utility, it knows its way around natural gas. “We understand pipeline capacity,” Zamarin said on a May earnings call. “We obviously build a lot of pipeline and turbine facilities. And so, bringing all the different pieces together into a solution that is ready-made for a customer, I think, has been truly a differentiator.”
Williams is already behind the Socrates project for Meta in Ohio, described in a securities filing as a $1.6 billion project that will provide 400 megawatts of gas-fired power. That project has been “upsized” to $2 billion and 750 megawatts, according to Morgan Stanley analysts.
Meta CEO Mark Zuckerberg has said that “energy constraints” are a more pressing issue for artificial intelligence development than whether the marginal dollar invested is worth it. In other words, Zuckerberg expects to run out of energy before he runs out of projects that are worth pursuing.
That’s great news for anyone in the business of providing power to data centers quickly. The fact that developers seem to have found their answer in the Williamses and Caterpillars of the world, however, calls into question a key pillar of the renewable industry’s case for itself in a time of energy scarcity — that the fastest and cheapest way to get power for data centers is a mix of solar and batteries.
Just about every renewable developer or clean energy expert I’ve spoken to in the past year has pointed to renewables’ fast timeline and low cost to deploy compared to building new gas-fired, grid-scale generation as a reason why utilities and data centers should prefer them, even absent any concerns around greenhouse gas emissions.
“Renewables and battery storage are the lowest-cost form of power generation and capacity,” Next Era chief executive John Ketchum said on an April earnings call. “We can build these projects and get new electrons on the grid in 12 to 18 months.” Ketchum also said that the price of a gas-fired power plant had tripled, meanwhile lead times for turbines are stretching to the early 2030s.
The gas turbine shortage, however, is most severe for large turbines that are built into combined cycle systems for new power plants that serve the grid.
GE Vernova is discussing delivering turbines in 2029 and 2030. While one manufacturer of gas turbines, Mitsubishi Heavy Industries, has announced that it plans to expand its capacity, the industry overall remains capacity constrained.
But according to Morgan Stanley, Williams can set up behind the meter power plants in 18 months. xAI’s Colossus data center in Memphis, which was initially powered by on-site gas turbines, went from signing a lease to training a large language model in about six months.
These behind the meter plants often rely on cheaper, smaller, simple cycle turbines, which generate electricity just from the burning of natural gas, compared to combined cycle systems, which use the waste heat from the gas turbines to run steam turbines and generate more energy. The GE Vernova 7HA combined cycle turbines that utility Duke Energy buys, for instance, range in output from 290 to 430 megawatts. The simple cycle turbines being placed in Ohio for the Meta data center range in output from about 14 megawatts to 23 megawatts.
Simple cycle turbines also tend to be less efficient than the large combined cycle system used for grid-scale natural gas, according to energy analysts at BloombergNEF. The BNEF analysts put the emissions difference at almost 1,400 pounds of carbon per megawatt-hour for the single turbines, compared to just over 800 pounds for combined cycle.
Overall, Williams is under contract to install 6 gigawatts of behind-the-meter power, to be completed by the first half of 2027, Morgan Stanley analysts write. By comparison, a joint venture between GE Vernova, the independent power producer NRG, and the construction company Kiewit to develop combined cycle gas-fired power plants has a timeline that could stretch into 2032.
The Williams projects will pencil out on their own, the company says, but they have an obvious auxiliary benefit: more demand for natural gas.
Williams’ former chief executive, Alan Armstrong, told investors in a May earnings call that he was “encouraged” by the “indirect business we are seeing on our gas transmission systems,” i.e. how increased natural gas consumption benefits the company’s traditional pipeline business.
Wall Street has duly rewarded Williams for its aggressive moves.
Morgan Stanley analysts boosted their price target for the stock from $70 to $83 after last week’s $3 billion announcement, saying in a note to clients that the company has “shifted from an underappreciated value (impaired terminal value of existing assets) to underappreciated growth (accelerating project pipeline) story.” Mizuho Securities also boosted its price target from $67 to $72, with analyst Gabriel Moreen telling clients that Williams “continues to raise the bar on the scope and potential benefits.”
But at the same time, Moreen notes, “the announcement also likely enhances some investor skepticism around WMB pushing further into direct power generation and, to a lesser extent, prioritizing growth (and growth capex) at the expense of near-term free cash flow and balance sheet.”
In other words, the pipeline business is just like everyone else — torn between prudence in a time of vertiginous economic shifts and wanting to go all-in on the AI boom.
Williams seems to have decided on the latter. “We will be a big beneficiary of the fast rising data center power load,” Armstrong said.