There's no doubt that electric vehicles (EVs) will be a part of America’s future, providing consumers with low-carbon transportation alternatives and helping the U.S. honor its commitments on climate change. Recognizing this, Colorado lawmakers made the state a national leader in encouraging EVs by passing the nation’s largest and most accessible $5,000 electric vehicle tax credit. This credit adds to the $7,500 federal tax credit outlined in the Inflation Reduction Act with an extra $5,000 incentive for any EV less than $80,000, as well as an additional $2,500 tax credit starting in 2024 for any Coloradan that purchases an EV less than $35,000.
This aggressive support of EVs shows Colorado’s clear commitment on this issue, but these policies alone won’t be enough to ensure the vision of policymakers. Making this vision a reality will also mean taking decisive action on major issues surrounding aluminum, the preferred choice of material for many EV manufacturers because of its ability to reduce vehicle weight without compromising efficiency. Today, Section 232 tariffs passed in 2018, which levied a hefty 10% tariff on some imported aluminum products, threaten the supply and affordability of aluminum and, in the process, jeopardize the manufacture of EV’s.
EV registrations are up 822% since 2016. Combined sales of fully electric vehicles and plug-in hybrid electric vehicles accounted for more than 14% of Colorado car sales in 2023, inching towards a state goal of registering 940,000 EVs by 2030. We joined Alaska and West Virginia as states with the highest growth in alternative-energy vehicles over the past 5 years and our remarkable 15% jump make us the best state for improved miles per gallon over the past 5 years, rising from 23.6 MPG to 27.2 MPG.
Even with the purchase incentives, EV demand is starting to stall in early 2024. Despite the available tax credits, one of the biggest issues continues to be purchase price. And a large portion of that is attributable to the cost of supplies, including aluminum. Section 232 tariffs complicate and restrain EV production because of the way they negatively impact the aluminum supplies that EV manufacturers need. Though prices have started to stabilize, official data from the US International Trade Commission show that Section 232 tariffs caused domestic aluminum prices to jump 1.6%, from about $1600 per ton in 2018 to more than $2,400 per ton today, increasing costs and reducing aluminum supplies for downstream industries that depend on the material. This is a pill that aluminum users, including EV producers, have been forced to swallow since the Congressional Research Service found American aluminum producers can only supply less than a quarter of the aluminum that domestic manufacturers need.
Unfortunately, this problem isn’t going away. A new survey taken by automakers and Tier 1 suppliers suggests that light vehicle production could see an almost 100 net pounds per light vehicle increase in aluminum content between 2020 and 2030. This increased use of aluminum could bring total content levels to 556 pounds per vehicle by 2030, with body-in-white, battery housings, e-motors and drives, doors and rockers using more aluminum to meet long range carbon emissions goals. The Aluminum Association predicts that battery electric light-trucks such as the Ford F-150 Lightning, for example, will use more than 644 pounds of aluminum content by 2030.
This is a serious issue that requires attention and remedy, since all auto manufacturers, not just those making EV’s, suffer from the way Section 232 tariffs impact aluminum. The latest figures show the auto industry in Colorado supports 120,000 jobs and produces nearly $750 million in total state tax revenue. In addition, other major Colorado job producers such as aerospace, food and beverage packaging, breweries, and defense operations use aluminum and have been forced to deal with the various headaches imposed on aluminum supplies forced by Section 232 tariffs.
The good news is that Congress recently reintroduced the Congressional Trade Authority Act. This would roll back aluminum tariffs and require Congressional approval of any future proposal to adjust imports in the interest of national security under Section 232 of the Trade Expansion Act. Congress should support this legislation and strike a win for American aluminum users and consumers alike.
