- The United States has embarked on a mission to reduce greenhouse gas emissions.
- To do that, it plans to shore up its electric vehicle industry.
- But, electric vehicles need a lot of power to run, and the country’s energy grid remains inadequate.
- Investments in solar energy can help to meet energy requirements.
We’re witnessing a significant change in the United States - and, indeed, the world. Even though not everyone acknowledges it, climate change is here, posing a substantial threat to our world.
Step by step, the world is plotting a move towards a cleaner future - one where electric vehicles are the norm and alternative sources of energy take more significant importance. The United States is looking to lead this push to a cleaner future, but difficulties in implementation have made it more necessary to invest in solar energy.
Electric Vehicles Solidifying Their Place
This year has been a boon for the electric vehicle industry. Tesla (NASDAQ:TSLA), the company is seen by many as the industry’s leader, has recorded profits on multiple financial quarters this year already, with the company’s deal-making abilities and general appeal causing its stock to skyrocket and deliver a 57.19 percent gain year-to-date.
Source: TradingView
Analysts expect similar returns in the next few years for Rivian Automotive (NASDAQ:RIVN) - another automotive company that went public earlier this month and is already on multiple watchlists.
The Biden Administration also buoys the hype around electric companies. President Joe Biden has stated his desire for the United States to lead the world in moving away from fossil fuels and coal, explaining in a White House statement from August that they had set a national target for electric vehicles to make up 50 percent of all new auto sales by 2030.
Speaking with news sources at the time, Transportation Secretary Pete Buttigieg explained that the White House’s goals aren’t a mandate. Instead, they create the necessary conditions for the country to meet the stated objectives.
The current administration understands the transportation sector's contribution to greenhouse gas emissions, and they believe that actionable steps should be taken now to support EV companies - as well as traditional car manufacturers looking to switch to the electric model.
Problems With the Current Grid
While the White House’s objectives are laudable, significant issues will need to be addressed. One of the most important is the current state of the nation’s power grid.
Earlier this year, Texas was ravaged by severe cold, causing the power grid to collapse. For days, Texans were left stranded without access to some of their most fundamental needs - transportation, food, utilities, etc.
Austin, Texas, the transit agency had apportioned $650 million over two decades for electric buses and their accompanying charging facilities. But, the power grids themselves were poorly maintained. Authorities are trying to address the issues of resilience and redundancy, which will affect the power grid’s ability to support the operation of so many electric vehicles.
Texas’s problem highlights the challenges facing countries that would like to move towards electric vehicle use to combat climate change. An increase in the production and utility of electric vehicles will require an increase in the capacity of your electric grid. The United States government will need to invest in additional capacity while also implementing renewable energy sources to replace fossil fuels.
Estimates show that the United States will need to double its electricity capacity if electric vehicles make up 66 percent of the country’s vehicle market by 2050. At the same time, fossil fuels were the chief contributor to the country’s transportation market’s energy.
Source: Reuters Graphics
A Warning As We Move Forward
Currently, the US government is looking to increase its electric vehicle market while also cutting its reliance on fossil fuels. For that to happen effectively, investments in alternative energy sources like wind and solar are more than necessary.
The International Electric Agency (IEA) forecasts that the share of electric vehicles could grow by 15 percent as early as 2030. We’ve already seen companies like General Motors (NYSE:GM) and Ford (NYSE:F) betting hugely on electric vehicles as they hope to compete better with Tesla and other first movers.
At the same time, they anticipate that stricter restrictions will be put on emissions. So, to protect their profits, they’re going electric. But, if no one addresses the glaring need for increased clean energy production, the ultimate goal to combat climate change will be a lost one.