President Biden’s signature climate law has driven a substantial increase in investment in electric vehicle production across the United States. There are now tens of billions of dollars being poured into battery plants in the Southern states and new assembly lines being developed near the Great Lakes. This is a significant achievement, especially given that economists have long considered growing a new industry to be a difficult and costly task when relying solely on the power of the government.

The growth in the electric vehicle industry is important for convincing more consumers to purchase electric vehicles. Mr. Biden’s law has effectively linked the future affordability of electric vehicles to the willingness of automakers to manufacture and source them in the United States. At present, the law has not had a major impact on electric vehicle sales, with an expected one million electric cars and trucks set to be purchased in the U.S. this year. The most noticeable immediate impact of the law has been its unexpected effect on the market, causing many electric car shoppers to lease vehicles instead of buying them in order to take advantage of the federal tax break for models not covered by the law’s domestic content requirements.

Electric vehicle sales are projected to increase substantially over time, but this is dependent on several factors. Automakers will need to continue investing in battery and assembly plants, while administrative officials must facilitate the deployment of charging stations to enhance the practicality of owning and driving an electric vehicle. The Biden administration is attempting to boost the electric vehicle market in response to the accelerating global shift towards cleaner fuels. This shift includes a move towards electric vehicles, which are an essential part of efforts to reduce emissions in the transportation sector of the U.S. economy.

Importantly, the administration’s policies focus not only on climate change but also on creating middle-class jobs for Americans in the auto industry. Ideally, the administration aims to have both these goals aligned, as it believes that more automakers will meet the requirements of the climate law, resulting in a faster growth of the electric vehicle industry and improved control over the U.S. auto market. The law demands an American supply chain for electric vehicles to qualify for the full federal tax credit, thereby making electric vehicles more affordable to consumers. Without the full credit, electric vehicles remain more expensive than traditional cars.

The law has led to increased investment in electric vehicle production and battery plants by American automakers. However, they’ve been slow to invest in raw materials and parts required for batteries. To address this, the Biden administration is expected to issue more rules in the coming weeks concerning the sourcing of materials and parts for batteries. The administration’s overall aim is to ensure that two-thirds of all new passenger cars sold in the U.S. will be all-electric within a decade. However, there is currently little evidence of the law significantly altering the landscape of electric vehicle sales.

In conclusion, while the climate law has not drastically affected sales of electric vehicles, it has had mixed effects for consumers and automakers. It has led to an increase in investment but also a shift in consumer preferences from buying to leasing electric vehicles.