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Are you a highway user who wants to travel on safe, less congested roads?
Join Andrew Stasiowski, President and CEO of the American Highway Users Alliance, as he speaks with leading experts about the latest policies impacting the transportation community. Each month, Andrew will cover topics of critical importance to the highway user community, from reducing congestion on roads, to reforming highway trust funds, to increasing global competitiveness.
Listen to new episodes of “Driving Forward” wherever you get your podcasts.
The American Highway Users Alliance is a nonprofit organization advocating for public policies that promote roadway safety, increase freedom of movement, and preserve opportunities for all people to live, work, shop, and travel unencumbered.
To learn more about AHUA, you can visit our website.
Andrew Stasiowski [00:00:00]:
Welcome to the Driving Forward podcast. I'm your host, Andrew Stasioski of the American Highway Users Alliance. Today's episode will focus on one of the most interesting topics facing the highway users community. We are going to be talking about electric vehicles. Incorporating those new vehicles into the national fleet has brought unique challenges for our policymakers and the driving public in general. We are going to touch on some of those subjects today, including what they mean to the Highway Trust Fund, what the public reaction has been to them, and what long term impact electric vehicles will have on the automotive industry. I hope you enjoy this wide ranging conversation today. And now onto our episode.
Andrew Stasiowski [00:00:42]:
Joining us today is John Bozzella. John is the president and CEO of the alliance for Automotive Innovation. The alliance is the unified voice for the automotive industry.
Andrew Stasiowski [00:00:52]:
John, welcome to the Driving Forward podcast.
John Bozzella [00:00:54]:
Andrew, good to be with you.
Andrew Stasiowski [00:00:55]:
Thank you for joining us. This is a really fun topic. You know, I think there's a lot of discussion going on both on the hill and off the hill, obviously on, you know, EVs, what the market's looking like, what's the regulatory framework, all of these things going on. And I, you know, I think you're the perfect person to have on today to talk about this. So just kind of wanted to level set with the market a little bit. So what is the state of the electric vehicle market? You know, how many vehicles are on the road today? Are sales increasing, decreasing? You know, where do you see the EV market market right now?
John Bozzella [00:01:24]:
Yeah, so let's, it's always good in the auto industry to start with the customer and work back. So I love that you are starting with the market. Right. So let me talk about the trend first and then we'll get into the numbers a little bit. So what we've seen over the last three or four years is fairly dramatic growth of EV sales as a percentage of the new car market. But as of the last year or so, that growth has really slowed. Right. And it makes sense when you think about it.
John Bozzella [00:01:56]:
Right. We're starting from a very, very low base. Right. And so, you know, you could say from, you know, model year 20 to 21 and then 20 to 22, you saw sales almost double. But these are like from 2 to 4%, from, you know, 4 to 8%. But now we're a little bit less than 10% of new vehicle sales on an annual basis.
Andrew Stasiowski [00:02:18]:
Okay.
John Bozzella [00:02:18]:
And so that first 10% in the scheme of things was fairly easy. Right. Because those are early adopters, people who have the means to have the latest, greatest Technology in their garage, it might be their second or third car. And so this next phase, from say 10% of the market to 20% of the market, is much more challenging because these are people who are probably going to have to make decisions about the utility of their vehicle, you know, and how far they travel. So that's, that's kind of what's going on right now as a percentage of overall vehicles on the market. We're still very small. Right. It's a couple % of the 290 million vehicles or so in the US on US roads today.
Andrew Stasiowski [00:03:07]:
So a couple million vehicles over. I mean, how, how long ago did EVs really start, you know, penetrating the market in general and enter the marketplace?
John Bozzella [00:03:14]:
If you want to do the popular science answer, you could go back to the dawn of the automotive era and you would have seen three types of vehicles competing for dominance. Steam powered vehicles, electric vehicles, and gasoline powered vehicles. And gasoline powered vehicles won out in that early race for a whole number of reasons we don't have to get into now. In the modern era, we had EVs on the road with big, big lead acid battery arrays in them 25 years ago. But really, it was, what really accelerated the market was the adaptation of lithium ion batteries. Right. So the same batteries that are in our laptops and in our phones applied to transportation. That really accelerated the market.
John Bozzella [00:04:07]:
And that's really only been in the last, you know, five, six, seven years.
Andrew Stasiowski [00:04:11]:
Okay, that seems right. With just kind of my anecdotal notice and of the vehicles and all that. So, you know, you're seeing about 10% of sales right now, and the next 10% to get to 20%. There's kind of some hurdles. What, what do you think some of those hurdles may be?
John Bozzella [00:04:26]:
Yeah, so first and foremost, the most important by far hurdle is, is charging infrastructure. Okay, so if you go to a dealership today and you ask a customer who's considering the purchase of an electric vehicle, what's the first question on your mind? The very first question on their mind is going to be, how far does this thing go on a charge? And the second question is going to be, where do I charge it? Right. The first question's been answered. Like there are all sorts of vehicle ranges on the market today. Just like there are all sorts of internal combustion engine vehicles with various, you know, ranges of, you know, how far they can go in a tank of gas. And so, you know, you have vehicles on, on the market today that go 200 miles up to 300 miles, even more than 300 miles, a few high end vehicles that are even beyond that. And so, so range is not the issue. It's really where do I charge it? And so what's holding sales back to a significant degree is that there isn't enough, there aren't enough charging stations on the road today.
John Bozzella [00:05:32]:
Now after that you get to price, right? People say, well, okay, the average transaction price of an electric vehicle today is higher than the overall average transaction price of all vehicles right now, by the way, it's expensive to buy a vehicle today, right? The average transaction price of all vehicles is about $48,000. For EVs, the average transaction price is about $55,000. The reason for that is people are buying premium EVs, they're buying Mercedes, they're buying BMWs, they're buying Teslas, they're buying EV pickup trucks from companies like Ford and General Motors, they're buying Nissan CUVs, they're buying Volkswagen. Fancy, nicer, larger vehicles. But there are vehicles offered for sale today that are in the $35,000 category. And you see them offered by companies like GM and others. But the EVs that people are buying today tend to be more prem.
Andrew Stasiowski [00:06:30]:
Now is that kind of a byproduct of the customer itself or is it they just want, you know, you see, EVs have a lot of technology in them. Is that, is it more they want all the bells and whistles or is it more of just the customer wants the higher end model in terms of, you know, their, their level of wealth and all that?
John Bozzella [00:06:47]:
Yeah, I think it's a combination of things. I, I think we tend to, this market tends to be a higher end market like our US Consumers want the bells and whistles. So that is, that is part of it. The other part of it is ra. The longer range vehicles tend to be in more premium vehicles. Right?
Andrew Stasiowski [00:07:07]:
Okay.
John Bozzella [00:07:08]:
But again, that's changing. And then, so I do think the average transaction price is going to come down. So these are all temporal things, right? I think more charging infrastructure will come into the market, prices are going to come down and EV sales will, you know, accelerate. Just one thing to note, you know, there are well over 100 different models for sale EV models for sale today. And they range from small cars to large pickup trucks. And so, so there's plenty of choice out there, but prices are coming down and, and I would say charging infrastructure is the number one barrier to increase sales.
Andrew Stasiowski [00:07:43]:
So, you know, I think that makes a lot of sense and I think that kind of ties with what we've Seen, you know, our policymakers doing with some of the investments in charging and, and all that. As we talk about the policies around EVs, obviously there's been a lot of regulatory efforts to mandate vehicles or kind of try to increase sales. You know, what is kind of the, the regulatory framework we're looking at right now both at the federal level. I know there's been an effort with some of the, what Biden did, but also at the different states. So, you know, what's the state there?
John Bozzella [00:08:14]:
Yeah, it's really interesting that you say that. Right. Because what I've told you might sound like a fairly positive story. Hey, more choice on the roads. People can buy what they want. They could buy an internal combustion engine or an electric vehicle. There's more electric vehicle choices on the road. Prices are starting to go down.
John Bozzella [00:08:29]:
Like that sounds like a good story. Right, right. But if you look at the disconnect between where the market is today, that 10% growing at a couple of percent versus what the regulatory requirements are, there's this massive gap. And so right now, at 10% of the market, there are states that require manufacturers to be selling a share of 35% of the market. These are states that follow California's EV mandate rules. So in New York, for example, where EV share is actually below the national average at about 9%.
Andrew Stasiowski [00:09:11]:
Interesting.
John Bozzella [00:09:12]:
In this, in this calendar year, which is in our world, in the automotive world, model year 2026, automakers have to sell 35% EVs. And so it would take a miracle for that to happen in New York. And so there's a huge amount of stress between where the regulators, certainly the state regulators are trying to force manufacturers to be, and where the market reality is today, at the federal level, the mandates themselves, it's not a device requirement sell this many EVs, it's an emissions reduction requirement, which is also very stringent, very stringent. And so that big gap between market realities and where the regulators, at least up to this point, think we should be, needs to be addressed because it's going to create distortions in the market. Here's the concern I have. The concern I have is if it's a ratio I gotta be at 35%, then car companies may have to start to restrict the sale of internal combustion engine vehicles or other vehicles that a certain consumer might want. And so getting this balance right between the regulation and the market realities is going to be really important. So if you believe in an EV future, the balance has to be right.
John Bozzella [00:10:29]:
If you believe in customer choice, the Balance has to be right. If you believe that customers should still have choices that include internal combustion engine vehicles and hybrids. Got to get the balance right, right?
Andrew Stasiowski [00:10:41]:
Yeah. It seems to me we've seen this a lot in here in D.C. obviously, you know, the politicization of specific topics or whatever it may be, I think, you know, allowing the market to kind of figure itself out seems to be the better policy. Right. Like letting people buy what they want versus trying to force it. I don't know, it just seems to me like that you're making it harder for the vehicles to sell sometimes.
John Bozzella [00:11:04]:
Yeah, I think that's generally right. But I want to propose like a point of view that it's a little bit more. Not the pick a fight with you, Andrew. I love you. But to present a broader strategic challenge, we, the auto industry in the United States are going to face an increasing competitive threat from Chinese automotive manufacturers. And we are going to be competing with them all around the world and I think ultimately in the United States. And so in order to do that, we've got to be a cutting edge industry and we've got to be producing all sorts of technologies. Super efficient gasoline engines, hybrids, plug in hybrids, battery electric vehicles, everything.
John Bozzella [00:11:53]:
And so I do think it helps to have policy and regulation that supports the transformation of the industrial base because we want to compete with China. However, if the regulators push too fast, China will win because they have a head start on EVs. But if, if we go too slow, we will fall further behind China and lose the competitive race. And so, so I, you know, I worry that, that too fast China wins. Too slow China wins. And so we have to have some progress and some balance. And so that's kind of where I think we land. And I do think that's achievable, especially in a new administration here in Washington, that I think that right now the regulatory framework for vehicles is too far too aggressive.
Andrew Stasiowski [00:12:45]:
Okay, that makes sense. So more on maybe helping manufacturing less than deciding what the, what the end product should be.
John Bozzella [00:12:53]:
Absolutely. And that's the bright line. I don't think the government should be in the business of telling customers what type of vehicle they want they should buy. Like, so if that's where the state regulations that have been set by California that some states are following, like New York and Maryland and other states, if you are forcing the customer to buy a certain product that you think they should buy, that's a problem. And by the way, I think it's a problem for customers. How do I know it's what customers tell Us. Right. And we saw it with Governor Wes Moore in Maryland in recent days make a decision to pause the EV mandate that Maryland had signed up to, the California mandate that Maryland had signed up to.
John Bozzella [00:13:39]:
And he said, look, let's just take a two year pause here. We're not where we need to be with infrastructure, those types of things. I think that's, that's an example of a reasonable reaction to customers who are saying, don't force me to buy something that might not fit my needs.
Andrew Stasiowski [00:13:56]:
Yeah, that's a great point. He brought up a word that actually I wanted to talk to you about, and that's infrastructure. And kind of one of the things we haven't really talked about, I think at the policy level and we've talked about the highway users and we've had a lot or last couple of episodes have talked about this is, you know, the impact of the Highway Trust Fund that fuel efficiency has had. And you know, I think when we're talking to people on the hill or when we're having our conversations, you know, one of the things we try to stress is, look, we have a significant shortfall in the trust fund. And it's not because of EVs. You know, EVs didn't create the shortfall. You know, fuel efficiency standards did, increased costs of construction did. But currently we have, you know, this growing market that's not paying in.
Andrew Stasiowski [00:14:37]:
So kind of how can we incorporate EVs or hybrids or others that are paying less or not paying into the trust fund so that we had the revenue to kind of improve our infrastructure to incorporate more of these vehicles into the fleet?
John Bozzella [00:14:52]:
Actually, yeah, this is a really important question. And by the way, the work that the highway users are doing in this space to make sure that we have a sustainable Highway Trust Fund is critically important. It's important to the users, the people driving, the businesses that need an efficient road and highway system. But it's also, it's important to automakers too. So we really appreciate the work you're doing. Okay, so you're exactly right. The reason it's overall efficiency of the fleet, like more fuel efficient gasoline engines and hybrids that are reducing the power of the gas tax. Right.
John Bozzella [00:15:31]:
We fill up less. I mean, which is a good story for every other part of society except maybe the Highway Trust Fund. So what do we do about that? So I do think we have to look to the future and we have to imagine, reimagine a funding system that recognizes those realities. And in that system, EVs must pay their share. There's no question about that. I would just hope though that EVs would not pay more than their share. Right. So in other words, it is a choice that a customer made.
John Bozzella [00:16:08]:
It's not a good choice or a bad choice, it's an individual choice. And so they shouldn't be rewarded, meaning don't pay into the trust fund, but they shouldn't be punished. Pay more into the trust fund. And so to me, I think where you gotta get is to a balance, pay their fair share. And that's what we gotta think about. So it's true of EVs, it's true of hybrids, plug in hybrids, all of these fuel efficient technologies.
Andrew Stasiowski [00:16:33]:
Yeah, and I appreciate that. You know, I think we're hearing now in the coming hours, we're looking at reconciliation. We're looking at some kind of an EV fee and even potentially, you know, making sure that that money even just goes into the Highway Trust Fund, I think is something that, you know, we're concerned about. And taxing EVs can't go for just dealing with the debt and the deficit. It has to go into our roads and bridges.
John Bozzella [00:16:54]:
I absolutely share your concern in this space. Right. Like EVs should pay their share into the Highway Trust Fund. And if we do sort of cross that Rubicon, for lack of a better term, where we decide that a vehicle fee is going to go into the general fund, I think that raises significant questions about whether we can ever have a sustainable Highway Trust Fund again. I think it raises big, big questions. And so I really do hope that the discussion about EV fees and what a fair share is, is contained within the Highway Fund reauthorization process and not, you know, in the reconciliation, the budget reconciliation process.
Andrew Stasiowski [00:17:41]:
Yeah, no, I totally agree. I mean we spent, you know, we're spending $70 billion a year in formula funds out of IIJA, which is great. We're seeing actually, you know, we are starting to see some, some good benefits from those investments in iija. But if we're taking away funding sources from trust fund and tying policymakers hands a little bit more as they try to do the next highway build, you know, next year, you know, we want to make sure that all, you know, revenue from the user base is available to the Highway Trust Fund and not going, you know, towards other things, I think that's a big concern we have as well.
John Bozzella [00:18:12]:
Yeah, I agree with that.
Andrew Stasiowski [00:18:13]:
So, you know, I think we've talked about infrastructure a little bit, but you've also touched on kind of just getting the infrastructure ready for EVs just future vehicles. So, you know, what are some of the long term infrastructure, you know, needs that could be helpful as, you know, new vehicles are coming into the market, new types of vehicles, as we're looking to invest in the next highway Bill, what are some things that, you know, you guys at the automotive see as, as potential benefits to the new new vehicles that are entering the market?
John Bozzella [00:18:40]:
Yeah, I think there's three broad areas where if you look at the industry as it is and as it's developing into the future from a technology perspective, I see three broad areas. One infrastructure area we've already touched on, which is charging infrastructure. Right. So the ability for consumers of electric vehicles to find a place to plug them in public charging is a really important aspect of this. We've gotten into that a little bit. I think there are two other areas that we haven't really touched on yet. One is what we would call infrastructure for intelligent vehicles. Okay, right.
John Bozzella [00:19:22]:
And so this is infrastructure to support more highly automated and connected vehicles. Right. When you think about the levels of automation that are on the roads today, what we would call automated driver assist systems, adas, you've heard that terminology. A normal customer would be like, what the heck is adas? What we're talking about, for those of you scoring at home is adaptive cruise control, you know, where the vehicle kind of keeps up with the traffic around it, or lane keeping assist, where the vehicle can actually begin to steer itself, stay in the lanes. And now you're seeing companies now expanding that into a kind of a hands off highway driving or city driving phenomenon. Those technologies require very, very clear road markings, lane markings, signage, roadside sensors, those types of things. And so as you think about where road infrastructure needs to go, those are some basic things that we need to continue to keep in mind. And then if you think about connectivity, vehicle to vehicle communications and vehicle to infrastructure communications, then you get into sensing capability.
John Bozzella [00:20:41]:
We're seeing the application of cellular V2X, what we call CV2 chips, and vehicles that connect with other vehicles and road devices. So that type of infrastructure is going to be increasingly, I'm sorry, increasingly important. And then also smart signage. You know, there are companies you work with every day that are developing signage that is more visible to the sensing, the visual sensing capabilities of smart vehicles. And so those are some areas where I think as we get into discussions about what road infrastructure needs to look like going forward, those would be really the three big, what I would call smart road infrastructure things in addition to the basics. And we should never skip the basics. Right. We need dependable Roads and bridges, not only for customers of ours to travel on, but for getting our vehicles to market and for getting parts to our assembly facilities.
John Bozzella [00:21:46]:
And so, you know, it's all of that, the basics and then the smart infrastructure on top.
Andrew Stasiowski [00:21:52]:
Yeah, I know we had Hillary from your team on a year ago and we kind of talked about a lot about kind of autonomous had connected. And I think she was talking about, you know, there's products coming to market at this time last year where you could push a button and it would kind of drive the vehicle for you in traffic. And I think I even asked about driving, reading a book while sitting in traffic on the highway, and she laughed a little bit. But, you know, how is that, you know, one year since that, where, how is the technology kind of increasing or improving or being adapted?
John Bozzella [00:22:21]:
Yeah, where you're seeing significant growth is in this area of ADAs. So these are driver assistance systems. So these are not the systems where you could take your eyes off the road. These are systems that help the driver from a safety and a convenience perspective. In this last year though, we are seeing what we would call sort of the next level of this technology where on a highway you can have hands off or a city driving situation, you know, bumper to bumper traffic, for example, you can have hands and feet off. And so those technologies are developing. They still do require some level of customer engagement. So if you're, if you're asking, where is the car, where I can go to sleep and wake up, you know, go to sleep in Albany and wake up in Buffalo, or go to sleep in Washington and wake up and Richmond, we're not there yet.
John Bozzella [00:23:18]:
Where you see that completely driverless system right now is in very clearly defined urban settings generally being tested as in a robo taxi context or a campus transportation context. But in the personal mobility space, it's still in the driver assistance and temporary hands off phase.
Andrew Stasiowski [00:23:44]:
That makes sense. And I think, you know, testing and getting more of these vehicles out there on the road to learn, I think is, is important.
John Bozzella [00:23:51]:
That's essential because you've got to do this with safety first and foremost. Like, you cannot jump ahead on the safety, you know, in the safety space. You got to, because that, that is, this technology should be and will be absolutely safer than human drivers. We have to make sure that as we continue to test systems on public roads, that that is in fact the case.
Andrew Stasiowski [00:24:14]:
Yeah, no, I think we've got a great opportunity with this next highway. We'll really start advancing forward on some of the reforms and the policies we need to put in place to help make that safe driving future a possibility.
John Bozzella [00:24:27]:
Yeah, if I could just jump in on that, because I think that's such an important point that you're making. I think some people might think of what we call the highway bill, or what I used to call the highway bill because I'm old enough to remember when it was the highway bill. But this big sort of highway funding infrastructure bill, there are elements of that bill that don't speak to or address road building directly. Right. And it is important that we recognize as we're developing this bill that one of the biggest things that's holding us back with regard to advancing more highly automated vehicles into the marketplace is there is policy uncertainty, There's a lack of clarity right now. And so we got to get the rules right. You know, what are the rules at the state level? What are the rules at the federal level? How do we make it more efficient and effective for vehicles to bring safe, highly automated vehicles onto public roads? And so I'm hopeful that one of the things we can do is get more clarity on the policy framework in this bill.
Andrew Stasiowski [00:25:38]:
Yeah, no, I totally agree. I think that's a big priority of ours is to kind of build out this innovation technology, virtual infrastructure type policies that we can kind of create the framework for the vehicles and the technology to really be incorporated into the system. So moving on to our last question. This is something we've asked every guest and I always enjoy this answer. But if you had one opportunity, one policy that you could wave your magic wand and kind of put in place, there's no barriers to this, what would it be?
John Bozzella [00:26:08]:
Wow. Really? I'm. I'm. What I was going to say king for a day. I'm the chairman of the Senate Commerce Committee for a day. Is that what I am?
Andrew Stasiowski [00:26:19]:
Whatever that person is with.
John Bozzella [00:26:20]:
With. With apologies to Senator Cruz. I like. Great respect for. For Chairman Cruz. I'm not, I'm not. I'm not raising my hand for his job. He's excellent at it.
John Bozzella [00:26:30]:
So I would say to my mind, it's the point I just made, which is we've got to get a process that allows manufacturers to safely and effectively test and deploy highly automated vehicles on public roads. That's maybe the biggest barrier I see now. And how you do that. There are a number of different ways. And we could spend it. A whole nother podcast on that.
Andrew Stasiowski [00:26:58]:
Exactly.
John Bozzella [00:26:58]:
But if I could wave my policy wand, I would want to fix that right now. Because it isn't. It's not R and D. That's holding us back. We're ready to deploy, we're ready to commercialize, but we don't have the policy.
Andrew Stasiowski [00:27:10]:
Clarity, the regulatory and legislative certainty.
John Bozzella [00:27:13]:
You got it.
Andrew Stasiowski [00:27:14]:
Awesome. Well, John, thank you so much for coming on. This was a great discussion. I hope everyone learned a lot. I know I did. And hope to have you on again sometime soon.
John Bozzella [00:27:23]:
I love it. Andrew, thanks so much.
Andrew Stasiowski [00:27:25]:
Thanks, John. All right. John has just left and I wanted to thank him once again, again for joining us today. I think that was a great conversation. Touched on a lot of important subjects, especially as we're looking at not only a reconciliation bill, but also a highway bill coming up. Like John, I still use the term highway bill, not surface transportation reauthorization, but highway bill I think sounds a little better. So this was a great interview. I hope everyone learned a lot.
Andrew Stasiowski [00:27:49]:
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