In addition to its tragic human cost, COVID-19 has exposed the importance of the transportation sector, our energy industry and the supply chains that feed the U.S. economy are to the United States—and how fragile these key pillars are.
The drastic change in usage shows just how vital our nation’s transportation sector is to powering the U.S. economy
The drastic change in usage shows just how vital our nation’s transportation sector is to powering the U.S. economy. On a typical day, 100 million-plus commuters drive to work, 24 million people ride public transit, and more than 3 million truck drivers drive over half a billion miles. As the pandemic forces us to stay home, however, this activity has ground to a halt: Personal travel has fallen 46 percent, public transit ridership is down 73 percent, and trucks are traveling 13 percent fewer miles. The economy shrank 4.8 percent in the first quarter, and 30 million Americans have lost their jobs.
Moreover, the pandemic has illuminated the shortcomings of our heavy reliance on China for critical products. This presents immediate problems in critical industries, such as pharmaceuticals and PPE, but has also affected supplies of technologies and batteries critical to the next generation of transportation technology and the connected, autonomous, shared and electric vehicles this future will consist of.
The United States must respond by creating a more resilient economy. To achieve this, SAFE last week released Get America Moving Again (GAMA), a detailed report that contains comprehensive recommendations that rescue and recover the nation’s transportation system, stimulates the economy by encouraging American production of the transportation technologies of the future, and preparing the economy for what lies ahead.
The plan consists a series of short-term and long-term targets. An immediate priority is to provide federal funding to sustain transportation projects and offset fare revenue losses for transit agencies, which have found themselves in the position of urging riders not to use their services. The transit industry is anticipating a $48.8 billion shortfall due to the pandemic.
Economic stimulation will take center stage once the pandemic passes, and encouraging the next generation of transportation technology of the future here in the United States will help bolster our nation’s critical automotive industry. Supporting almost 10 million jobs, contributing 3.5 percent of U.S. GDP and representing our nation’s advanced manufacturing backbone, the auto industry has struggled as sales are expected to fall 25 percent this year versus 2019, and product launches have been deferred.
To foster this future transportation development, GAMA proposes reforming the popular 30D federal electric vehicle (EV) tax credit, as well as expanding such credits to medium- and heavy-duty EVs. The report also advocates for a trade-in program to incentivize drivers to switch to more efficient, fuel-diverse vehicles, similar to Cash For Clunkers.
In the commercial sectors, expanding the oversubscribed Low- or No- Emissions Grant Program to electrify transit and school buses, and allowing medium- and heavy-duty EV manufacturers access to the Advanced Technology Vehicle Manufacturers Loan Program would accelerate more fuel-diverse vehicles in all classifications.
In addition to their economic benefits, stimulating investment in these transportation technologies also has a strategic aim. For the United States, this century will be defined by its relationship with China, a nation that has emerged as its biggest rival on the world stage. Through its Made In China 2025 strategy, Beijing aims to gain greater global authority through ownership of a variety of emerging industries of global significance. Electric vehicles, and the batteries that power them, are central to this effort.
As the transportation sector shifts away from a gasoline and analog past to an electrified, digitized future, the United States must race to catch up with China—which already exerts vast influence and control over the entire EV supply chain, from minerals to markets. If the United States does not develop its own supply chain, as advocated for in GAMA through a $500 million rare earths cooperative, it risks becoming dependent upon China for its transportation future at the expense of the U.S. auto industry. Ramping up measures to induce EV demand would not only stimulate American automakers, but also generate the impetus for the development of a U.S. EV supply chain that minimizes a reliance on Chinese minerals, components, batteries or vehicles themselves.
The pandemic has exposed a variety of frailties in the American economy; but, like many crises, it has also created an opportunity for advancement. Recovery from COVID-19 will require tremendous amounts of money to be spent. It is upon us to make sure it is spent smartly and with an eye on the future.
Read the report to learn more.