The Ripple Effect of Strategic Incentives

I recently called on the federal government to implement “75 and more for 55 and less,” a point-of-sale rebate of $7,500 plus $10.00 per mile of certified driving range for battery electric vehicles (BEVs) priced at $55,000 and less. What is so magical about these numbers, and why could they unlock new industrial opportunities for the United States? 

With a $7,500 rebate plus the range incentive, access to BEVs becomes more widespread as a simple function of a reduced transaction price, especially when received at the time of sale, and not as a delayed tax credit. That driver of demand is magnified when applied to vehicles with a sticker price of less than $55,000. According to Cox Automotive, the average selling price of a new vehicle in the United States is $41,000, and over 80%  are transacting under $55,000. With the raft of exciting, more affordable BEVs coming from many manufacturers, the tipping point for widespread consumer adoption of electric vehicles is within sight.

Previous BEV incentive plans have seen financial rewards primarily given to buyers of higher-priced electric vehicles, ironically the group that will see the lowest relative economic benefit. Encouraging the mass market to move to electric vehicles will unlock benefits for our country beyond the environmental impacts. 

Inward investment by automakers – building factories and creating thousands of jobs – is driven by demand.  Over the last 40 years, the likes of Toyota, Nissan, Honda, Volkswagen, and Hyundai all made substantial investments in U.S. manufacturing based on increasing sales as they grew their presence in the market. 

By increasing the mass market for electric vehicles, I am certain we will see Fisker and other automakers investing in battery and vehicle manufacturing in the United States. The opportunity in front of the federal government is nothing less than the retooling and reinvention of our automotive manufacturing sector, which today accounts for over 900,000 jobs and upwards of $400BN in annual revenues.  

Fisker recently signed framework agreements with Foxconn in support of Project PEAR (Personal Electric Automotive Revolution). We will manufacture PEAR in the United States, with a planned start of production in Q4 2023. Following the launch of the Ocean next year, Project PEAR will be the second vehicle in the Fisker range and is set to bring a highly innovative BEV to market at a starting price – before incentives – of less than $30,000. With incentives, that could mean an advanced five-passenger BEV is now potentially accessible from $20,000, representing a substantial opportunity to bring electric vehicle ownership to the mass market.

We expect to select the location of our first US manufacturing site in the next six weeks and start hiring by the end of the year. This development is a direct ripple effect of our ability to bring electric vehicles to the mass market and help our industry accelerate towards a cleaner future for all.