What Does This Mean For Us?
The Inflation Reduction Act was signed into law last week - What does this mean for Xeal?
My dad called me ecstatic to tell me that the Inflation Reduction Act was officially signed into law by the Biden Administration. It took some Larry Summers to Joe Manchin convincing but we are here and a long awaited, but slimmed down, climate bill is officially upon us. Will it reduce inflation as the name suggests? No clue. It does however bode well for the carbon emission reduction story and energy independence angle for America’s future.
Beyond the subsidies and price caps for prescription drug categories, the majority of the bill centered around tax breaks for renewable energy projects and consumer subsidies for electric vehicle purchases - a nice kicker for reticent car buyers.
As we reach price parity in the auto market between new gas and electric vehicles, the subsidies might just be enough to push consumers into the EV market. Not only are the cars more advanced, laden with cutting edge technology, but they have a lower cost of ownership (reduced fueling costs, reduced ongoing maintenance expense and now reduced upfront purchase price). With the IRA new policy of $7,500 subsidies for new EV purchases and $4,000 for used EV purchases until 2032, there’s plenty of time for the consumer market to grow into EV maturity and majority car-ownership. This bill is yet another tool in the governments’ tool belt to reduce friction for the new EV market and further endorses the Biden administrations goals of over 50% of new car sales electric by 2030.
What's this mean for Xeal?
As the bill focuses more on consumer demand, Xeal and other charging infrastructure companies must continue to lay the groundwork on the supply side. At Xeal, we’ve been advising our clients on two major areas in the EV charging infrastructure space:
Reliability
Appropriate Sizing
Reliability
This new bill shines a light on reliability of infrastructure as the surge in EV adoption takes form. The Federal Highway Association (FHA) is working on new standards for electric vehicle charging infrastructure to ensure its reliability so drivers are not stranded or frustrated by inadequacy. Xeal has done a great job of positioning itself in the market as a reliable provider (relative to many of the others) - initially focused on multi-family but overtime expanding to anywhere EV drivers and fleet owners need to charge up.
Appropriate Sizing
Skewmorphism suggests that we should replicate gas stations and install 6-8 charging stations and ask that residents, journeymen and travelers share nozzles. In reality, EV charging is akin to phone charging and willingness to share or wait for a charge is low. It will be incredibly important for site owners to ensure there’s plentiful charging and that they build for the future and near-term demand, not today’s demand. That would suggest laying the infrastructure and deploying enough chargers for a sizable portion of your parking stalls.
As the ink dries on the bill, many of the automakers are sprinting to nationalize their supply chains and prepare for sizable off-take from consumers in time for Christmas specials and into 2023. Soon enough it will no longer be wealthy Californian’s driving Tesla’s and charging in their own garages but rather all Americans’ will have their chance to drive electric. That means we at Xeal need to hurry up and continue to build more stations and you need to lead first!