SPRINGFIELD – With a pair of major policy victories in hand, Gov. J.B. Pritzker traveled to the United Nations Climate Change Conference in Glasgow, Scotland, at the beginning of the month and shared a vision for his home state: “Illinois intends to become the best place in North America to drive and manufacture an electric vehicle.”
It’s a message he’s repeated on countless occasions in recent public appearances, and one that he brought to international business leaders in a trip to London prior to the U.N. conference. And it’s one that, if realized, the governor believes can yield victories for his administration on a pair of his campaign cornerstones – economic growth and carbon reduction.
“This is about economic development as much as it is about saving our planet,” Pritzker said during a panel discussion at the U.N. conference with governors from Washington, Oregon and Hawaii.
Numerically, that vision amounts to putting 1 million EVs on state roads by 2030, a goal written into the Climate and Equitable Jobs Act, or CEJA, a wide-ranging decarbonization bill that Pritzker signed into law in September.
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But how can Illinois increase the number of EVs on state roads to 1 million from just the 34,363 licensed in the state as of the end of October?
For the Pritzker administration, CEJA and an EV manufacturing tax credit package known as the REV Act make up the backbone of a push to lure private investment while breaking down well-documented consumer barriers to EV adoption as the industry stands on the cusp of an explosion.
“We have sent a very clear market signal not just in the United States, but now across the world, that this is going to be the place if you want to make, manufacture or drive an electric vehicle, to do it,” Deputy Gov. Christian Mitchell, who accompanied Pritzker on his European trip, said in a phone call.
With the new laws passed, the focus turns to implementation and distributing more than $200 million in state and federal funding for the rollout of charging infrastructure.
‘Jobs, jobs, jobs’
The key to Illinois’ approach to penetrating the EV market, Mitchell said, is that it addresses the supply and demand sides of the industry.
“It's incredibly important if we are going to be successful as a state and environmentalists are to be successful across the country, that we couch this issue in jobs, jobs, jobs,” Mitchell said.
On the supply side, CEJA includes credits of up to 80% for the installation of charging infrastructure. Money for that will come from a $70 million allotment from the state’s 2019 Rebuild Illinois infrastructure plan. Another $149 million sent to Illinois from a recently-passed federal infrastructure plan will also aid in the buildout.
On the demand side, CEJA includes a $4,000 rebate for those who buy electric vehicles in the state. The governor’s office said there’s about $5.1 million in the fund that will supply those rebates beginning in July 2022, and as of now it has only a “rough estimate” that “thousands” of Illinoisans will be able to receive the rebate.
For companies like EVgo, one of the largest public charging networks in the U.S., policies like CEJA serve as a market catalyst, said Sara Rafalson, vice president of market development and public policy at the company.
“The most important thing that came out of the legislation at the state level, is that Illinois is really poised for success, because we have in place now both the complementary policies to support vehicle sales as well as sustained long-term investments in charging infrastructure,” she said. “For a business like ours, when we see higher vehicle sales, that sends a strong signal to the market that we need to build more chargers.”
The REV Act, which passed with near-unanimous bipartisan support in the fall session, creates payroll tax credits ranging from 25% to 100% of income tax withheld for new or retained EV manufacturing jobs, depending on factors such as company location and number of employees hired. It also creates a 10% credit for training expenses and credits for construction wages and building materials.
That measure also provides the incentives to manufacturers of electric vehicle parts, such as batteries.
At a bill signing event for the REV Act, Jim Chen, vice president of public policy of Rivian Automotive, which has the massive EV manufacturing plant Normal and recently went public, said the bill will be a major support for the company that already employs more than 3,000 Illinoisans in its 3.5 million square feet of manufacturing space.
“Today's bill signing represents the next step in promoting Illinois as the Silicon Valley of EVs, as we work together to attract new investment from suppliers and other supporting players in this industry,” he said.
The REV Act is also an effort to lure new manufacturers here while encouraging existing companies, such as the Stellantis manufacturing company in the Rockford area, to retool their existing plants.
“The fact that the governor was able to go to Glasgow, not just with a climate bill in hand that provides a $4,000 incentive to consumers to buy an electric vehicle, but also an incentive package to get more of those sites here to manufacture EVs as well as all the downstream materials that are necessary, is a way of creating a new, modern, reinvigorated manufacturing sector in the state of Illinois,” Mitchell said.
Addressing consumer concerns
The rebate is aimed at addressing one of two major barriers to EV adoption – cost.
A study from the national automobile service association AAA, recently cited in a Belleville News-Democrat report on the EV market, found that in 2019, an EV costs about $590 more annually than a gas-powered car over a five-year period due to higher initial prices on EVs.
Jessica Beverly, a renewable energy advocate with the Sierra Club of Illinois who helped push for CEJA’s passage, said while EVs are more expensive, they also cost less to maintain, and purchasers may be eligible for a $7,500 federal tax credit that could be increased to $12,500 if President Joe Biden’s domestic spending agenda passes Congress.
The AAA study corroborated the maintenance cost claim, finding that at 75,000 miles of driving, an EV cost about $330 less to maintain and about $700 less to fuel annually than a gas-powered car.
But that study also found that 58% of respondents cited the availability of charging infrastructure as their main concern, while just 51% cited price.
Beverly noted the market itself is, to a large extent, addressing those concerns. The current median range for a single EV charge is 250 miles, with high-end models of major brands like Tesla offering ranges up to about 400 miles. The average was just 90 miles six years ago.
“You can’t really travel more than 50 miles in Illinois without coming across a gas station,” she said. “But it's not the same for an electric charger. And, yes, while range is improving significantly as new vehicles are developed, it's still our habit that you need to know where you can fill up.”
But the charging process is inherently different than filling up at a gas station, largely because the vast majority of EV drivers do their charging at home. That means most people will be able to handle their daily driving without needing public charging, except when they’re going on longer road trips.
When needed, public charging stations can sometimes be found for free at grocery stores or parking garages as an enticement to customers. But the vast majority of public charging is offered by private charging networks like EVgo, or ChargePoint, which have varying pricing and subscription models that generally amount to about 22-29 cents per minute for a charge.
As of now, there are two types of chargers on the market, a Level 2 charger that takes about 6-8 hours to fully charge, and DC fast chargers, which take about 30 minutes.
According to the U.S. Department of Energy, there are 919 electric charging station locations in Illinois with 2,306 charging ports, 1,815 of which are Level 2 and 478 of which are fast charge.
As the state aims to put another 970,000 EVs on its roads in the next nine years, the need for public charging is going to increase significantly, particularly in rural areas where it is currently sparse and in densely-populated areas with a lot of multi-family housing where at-home charging isn’t available.
Andrew Barbeau, an advocate with the Clean Jobs Coalition which helped push CEJA through the General Assembly, said that’s why lawmakers included a “beneficial electrification” process in the bill aimed at determining where charging is needed most to accelerate EV adoption.
It’s also why the state created the position of electric vehicles coordinator through the Illinois Environmental Protection Agency, a position that Mitchell said the administration is working to fill.
“So what the legislature wanted to focus on with this legislation was not just looking at where the market is today, but it wanted to fill in the kind of gaps in the market,” Barbeau said in a phone call. “It wanted to ensure that people who live in apartments or condos, or they live in dense areas where parking is mostly on the streets, would have access to the electric vehicle market too.”
Barbeau pointed to a Department of Energy study which showed if 88% of people charge at home, one public Level 2 charger would be needed for about 25 EVs. But if that number drops to 82% charging at home, there would need to be one Level 2 charger for 13 vehicles.
“So that’s a big difference based on some behavior,” he said. “And then you have to think about emergency situations as well. So that's where these DC fast charge stations come in.”
At the 88% charge-at-home mark, one DC fast charge station would be needed for 588 vehicles, but at 82%, that falls to just 227 vehicles supported.
The main vehicle for EV adoption
The Illinois Commerce Commission will oversee that “beneficial electrification” process aimed at determining where new charging infrastructure is needed most in order to accelerate EV adoption.
But there are a number of factors the ICC will consider as well: Will rapidly adding EVs to the grid overwhelm it? Are there times of day when EV charging can be synergized with the rates at which solar or wind energy output is higher? How can the state quicken electrification of its public transit sector? How can EVs be made more accessible in low-income areas?
“The idea is that we are using these dollars in the best way to move Illinois toward electric transportation and in an equitable way,” Beverly, of the Sierra Club, said of the process.
A workshop process to determine how to best move forward kicked off on Nov. 3, with more than 170 participants, according to ICC spokesperson Britney Bouie. There will be eight more meetings as part of the process that runs through February, all of which will be open to the public, with information available at the ICC website.
The ICC must prepare a report at the end of March outlining what steps the state should take to most efficiently accelerate EV adoption.
After that workshop process, the state’s largest two public utilities – Commonwealth Edison in northern Illinois and Ameren in the southern two-thirds of the state – are required to submit beneficial electrification plans to the ICC by July 2022 for policies they can enact beginning in 2023.
Those plans would have to be approved by the ICC, and they would be funded by a net 1% charge on the distribution portion of a ratepayer bill for a customer of either of the two utilities, Barbeau said.
That’s expected to annually yield about $35 million in the ComEd territory and $6 million in Ameren territory, although it could scale up over time as more EVs hit the state’s roads. The utilities must then spend that funding in accordance with their state-approved electrification plans.
The utilities would have to update their plans in July 2024, then every three years thereafter, according to the bill.
“So in the next decade, that's going to be the main vehicle for the ongoing EV support and policy, rather than having to go back to do a new bill every few years,” Barbeau said.
While the process is open-ended to some extent, there are a number of loose parameters in place, such as a goal that 40% of infrastructure investment is to be targeted to low-income communities or environmental justice communities that are historically subject to greater pollution. Another 5% is to go toward electrifying medium- to heavy-duty vehicles such as school buses in those communities.
The administration has taken other actions in an effort to accelerate EV adoption as well, including by entering into a memorandum of understanding with governors of four other Midwestern states – Michigan, Indiana, Minnesota and Wisconsin.
Advocates called that a good first step toward addressing some of the range anxiety challenges that arise with interstate travel and are otherwise more difficult to address in state policymaking, such as propagating charging corridors and ensuring standardization of charging plugs.
As well, in April, the administration released a new plan for the spending of funds through a federal settlement with the car manufacturer Volkswagen for its violations of the Clean Air Act.
That plan included $9 million in grant opportunities for electrification of school buses in Chicago and the Metro East, $33.6 million in other funds for electrifying school buses, and $13.3 million for light-duty electric charging infrastructure.
Mitchell said publicizing the various policies the state has enacted, as well as continuing its aggressive courtship of business leaders reached during the overseas trip, will be essential to breaking down some of the barriers to EV adoption.
“So I think it's both about letting people know about what we've done, what incentives are in place when you make individual purchases, but also what does the investment look like, so that people can have confidence that they can use this vehicle in the everyday course because that's what's going to help drive adoption,” he said.