Ky. electric vehicle adoption lags behind major manufacturing investments
Kentucky’s transportation secretary drives a Tesla.
“I tried it out and I was smitten,” said Jim Gray. “It’s like an iPhone on wheels.”
Gray’s Tesla is one of about 3,000 to 5,000 battery-powered electric vehicles on the road in Kentucky. That’s only about one-tenth of 1% of all motor vehicles registered in the state in 2020.
But Gray is far from discouraged by those numbers. He says Kentucky is at the forefront of what will be the electric vehicle revolution, and the conditions for that revolution are only beginning to take shape.
“As much as it sounds like it’s going to take a while, this build-up, this ramp-up is coming at almost warp speed in terms of the industrial change,” Gray said.
Last August, President Joe Biden announced a new target to make half of all new vehicles sold electric by 2030.
In the last seven months, Ford, Toyota and others have announced historic investments in electric vehicle manufacturing in Kentucky.
Last September, Ford Motor Co. and SK Innovation announced a $5.8 billion project in Hardin County to build twin battery plants for Ford and Lincoln Electric vehicles. Then in April, Envision AESC announced a $2 billion factory in Bowling Green to produce battery cells for the next generation of electric vehicles for multiple manufacturers.
Toyota Motor Manufacturing of Kentucky has announced a nearly $500 million investment to prepare for the future of vehicle electrification, while Nemak Kentucky and Firestone Industrial Products have both made multi-million investments in the state to support the growth of the industry.
“Kentucky has become and will be the leading manufacturing center for electric vehicle batteries in America,” Gray said.
Taxes and incentives to drive electric in Kentucky
To date, the state has done more to encourage EV industry manufacturing than it’s done to encourage drivers to make the switch to electric vehicles.
Take, for example, consumer incentives to buy the vehicles. At least 45 states and Washington, D.C. offer them, according to the non-partisan non-profit the National Conference of State Legislatures.
They can include financial incentives for buying electric, emissions test exemptions, parking incentives and utility rate reductions. But Kentucky hasn’t done any of those. Instead, the legislature recently passed new laws increasing taxes on electric vehicles.
Beginning January 2024, local county clerks will annually charge electric vehicle owners $120, and electric motorcycle and hybrid vehicle owners $60 when they go to renew their registration.
Separately, the Department of Revenue is planning to charge a new three cent-per-kilowatt hour excise tax to charge electric vehicles in Kentucky. This will be levied on businesses that provide electric charging stations. They’ll be required to report how much power they distribute each month and pay the appropriate taxes to the Department of Revenue.
Both of the new taxes will generate additional revenue for the General Fund and the road fund to help offset declines in motor fuel taxes as people make the switch to electric vehicles.
For his part, Gray doesn't think the added taxes will be a deterrent for would-be electric drivers like him. Kentucky drivers with gas-powered vehicles are already paying these taxes when they fill up their tanks.
Gray said the new taxes are necessary to pay for the upkeep of the state’s roads, especially as more people buy electric.
“What we’re talking about here is electric vehicles and the owners of electric vehicles paying their fair share for the maintenance on our roads,” he said.
The future of electric vehicles in Kentucky
Charging stations for electric vehicles are another area where Kentucky lags behind most nearby states.
The U.S. Department of Energy estimates Kentucky has 223 charging stations and more than 500 ports. Meanwhile, Illinois and Ohio have around 1,000 stations, Tennessee has more than 600 and Indiana has more than 300.
But state officials are hoping to improve upon the number of charging stations in the state with help from Biden’s infrastructure bill, which includes a $5 billion national plan to build out the charging stations necessary to allow electric vehicle owners to drive coast to coast.
Back in February, Gov. Andy Beshear announced the state’s intention to chase after more than $10 million in federal grants to install, operate and maintain charging infrastructure. Gray said Kentucky is planning to build nearly 40 new charging stations, approximately one every 50 miles along major highways, in the first phase of the project.
Jesse Toprak is chief analyst at Autonomy, an electric vehicle subscription service. He estimates Kentucky actually has a pretty decent ratio of chargers to electric vehicles.‘
“If you look at it that way, it’s not that bad. It’s actually slightly better than average,” he said.
He said that's because there are just fewer early adopters of electric vehicles than there are in places like California. That is driven, in part, by the rural nature of Kentucky, he said. Bigger cities where commute distances are shorter tend to see higher rates of electric vehicle adoption. Cities are also likely to have more charging stations.
“We see a very high correlation between population density and EV adoption,” he said.
But Toprak expects that will change in the coming years as the charging infrastructure develops and it makes better economic sense for Kentuckians to purchase electric vehicles. The options need to grow too.
“If you need to drive a sturdy pick-up truck for your business, you’re not going to be tempted by a tiny, little EV,” he said.
Ford’s 2022 F-150 Lightning is electric, and it’s so popular that the current year model isn’t available for retail orders anymore. Toprak says it’s these kinds of options that change the equation from “I want to do the best thing for the environment” to “This is the better economic decision for me.” That sort of shift is essential to get to widespread adoption, Toprak says.
Kentucky electric vehicle aficionado Mike Proctor bought his first one in 2012 and says he hasn’t bought a drop of gas since. He estimated he’s saved around $10,000 on fuel in that time. Proctor sits on the board of Evolve Ky., a group of electric vehicle owners.
“They are coming. It’s good for the planet and it’s good for national security. I think we’ve got a winning combination here, we just have to get them out there and let people see what’s going on."