EV charger makers brace for slowdown as new Made In America rules kick in

Manufacturers and operators of electric vehicle chargers in the United States are preparing for a slowdown in production and deployment as they rush to comply with “Made in America” provisions of a $7.5 billion federal program aimed at accelerating the industry. A limitation on sourcing enclosures from the US and an immediate need to begin manufacturing the chargers at US factories have taken many in the EV charging industry by surprise, according to company executives and industry experts. The new regulations, which are part of President Joe Biden’s plan to create an electric-friendly highway system, fight climate change and create jobs locally, were issued by the White House last month. Some companies warn that the domestic production capacity, especially for high-speed chargers, is insufficient and that enforcing the rules strictly will slow rollout, raise costs, and perhaps harm the industry that Biden intends to promote.

The most extensive EV charging station providers and network operators include Tesla, ChargePoint Holdings, EVgo, and Electrify America.

Aatish Patel, co-founder of XCharge North America, which imports chargers from its manufacturing plant in Beijing, said, “Everyone was hoping that there would be a waiver on the Buy America and Made in America. That throws a wrench in a lot of people’s plans.”

Some state officials who will manage federal funds and companies warn that the country’s present domestic production capacity is inadequate, particularly for high-speed chargers, and that strict enforcement will impede the launch, increase costs, and perhaps hinder the industry Biden seeks to nurture. However, the first $1.25 billion round of funding from the Biden project focuses solely on highway fast chargers, with subsequent rounds prioritising slow chargers for overnight charging, among other types.

Tesla is the leading EV maker in the US, with around 60% of the nation’s approximately 30,000 fast-charging machines made and run by the company. The remaining manufacturers and network operators, however, rely heavily on the federal project for much of their development. Nevertheless, some companies warn that strict enforcement will slow the rollout, drive up costs, and jeopardise the industry that Biden aims to help.

The federal government, on the other hand, stated that it anticipates there will be enough chargers to address “limited” initial demand, even as the initiative expands.

Jonathan Levy, chief commercial officer of EVgo, a charging network operator with more than 850 fast-charging locations, stated that there is a method to seek a deferral of the “Made in America” regulations, but it is uncertain if the government will allow it. His South Korean charger maker, SK Signet, plans to establish a Texas facility that can produce up to 10,000 direct-current fast chargers per year by 2026.

The stakes are higher for other EV charging companies that have yet to establish their manufacturing in the US and depend on the initiative for a substantial portion of their income. Elliot Johnson, chief investment officer at Evolve ETFs, which owns over $4 billion in assets, including investments in EVgo and Tesla, believes that the new laws are aggravating barriers rather than serious roadblocks.