circumstances may have reached a new junction as one main project is underway on u.s. soil, and a $205 billion national hsr system proposal was recently introduced into congress. more importantly, studies show that hsr is a smart, economic and green plan; a case analysis for one proposal found that the system would create an 8:1 return on investment. 

what remains is determining which player is going to take on this long-awaited task: should the government or private entities fund development?  

why trains are so bad in the united states 

it may be hard to believe, but the u.s. was once the global poster child of railway transportation. cities were filled with street cars, and most people did not yet live in suburbs or own a car, making it sensible to travel from city to city on steam engines. 

but according to andy kunz, the president of the national high speed rail association (nhsra), that began to change after the world war ii economic-boom. the american lifestyle became associated with living far away from city centers and owning an automobile to get from place to place. by 1940, 60 percent of americans owned a car, and the government began relocating money in 1955 to build our current interstate highways.

“amtrak is basically the remnants of our history: leftovers after cuts from this and that,” kunz said. “since the government has spent trillions of dollars on building highways that connect every inch of america, there has been an anti-rail bias coming from congress, the white house, and the u.s. department of transportation.”

it was not until former president barack obama’s administration that $8 billion was set aside for the development of an hsr system. kunz said although he is more than appreciative of the funding, that money is just a fraction of what would be needed for a trans-continental system. 

unlike construction in other parts of the world, american developers face several bureaucratic hurdles and costs when building such large-scale projects, kunz added, namely environmental regulations and private land battles. 

“it’s like building a new highway: you can’t do it overnight,” he said.

the projects currently underway

despite bureaucratic and political pushback, enthusiasm from leaders like obama and rep. alexandria ocasio cortez has transformed american hsr from some fantasy into an expected service within the next couple of decades. 

the most ambitious publicly led effort is the california high speed rail association’s project, which is currently under phase one construction in the state’s central valley. according to boris lipkin, the authority’s northern regional director, the current goal is to have the train connect san francisco with los angeles by 2033 and expects to run on 100 percent clean energy, which would reduce between 1.5 to 1.8 million tons of carbon dioxide emissions by 2040. 

“i know california certainly likes to compare itself to other countries, but this kind of state-wide scale and magnitude is equivalent to what other nations have done,” lipkin said. 

once in operation, california’s trains will operate at over 200 miles per hour, which would be among the fastest in the world. to take on such a tremendous project, lipkin said the authority already has created 50,000 job years (which also represents employees who only worked for a few months), including 4,000 construction workers. 

the director added that despite covid-19 hurdles, california gov. gavin newsome’s executive order designates construction workers as essential employees. there are currently about 1,000 construction workers on site every week. 

“this is having big effects in the central valley, where many people in these communities have been hit hard and have been historically poorer than the rest of the state,” he said. 

although there are no private companies to break ground on a brand-new hsr system, the two most prominent efforts underway are the texas central railway to connect houston with dallas and virgin trains’ (formerly brightline trains) xpress west project connecting las vegas with los angeles. nevada recently allocated a $200 million bond to virgin trains, and the company said it plans to break ground by the end of 2020.

today’s debate: public or private hsr?

the question now isn’t whether we should be developing hsr: it’s now about who should oversee the development. 

some potential american hsr users, like transit-geek nathaniel zhu, believe american technological development is rooted in capitalism, and he said he believes hsr initiatives should observe current american space technology programs, where several private actors like virgin galactic, spacex, and boeing compete among one another to produce the best and most affordable technology. 

“the united states would be such a more efficient country if it had a high speed rail system,” zhu said. “for such a technologically advanced country, it’s a shame we don’t already have one.”

however, he said there is a distinction between innovation and economic sustainability and added that an american hsr would probably not help reduce automobile and plane use if ticket prices are not competitive.

having lived in both china and europe, he said the reason he used hsr in both places was because it was often a much more affordable and convenient alternative to flying or driving, and he acknowledged that publicly operated hsr systems do make hsr cheaper.

“until it’s treated as a public service and (while) ticket prices are still expensive, i don’t think i would even take a train from say chicago to minneapolis,” he said. 

others, like california’s boris lipkin, argue that the public sector is necessary for development because the government has a strong incentive to economically link together several communities it tresspasses, not just create a link between two cities.

unlike the project in texas, where both the houston and dallas stations are planned to be constructed on the city outskirts, lepkin said the california project will provide easy access to downtown stations and stop along smaller cities between san francisco and los angeles.

although more expensive, lipkin said the goal is to provide economic opportunities for the historically marginalized communities in the central valley — an investment that will offset the costs tremendously. 

“from an economic, equity, and connectivity standpoint, we want fresno to be an hour away from san jose; we want bakersfield to be an hour away from los angeles,” lipkin said. “that changes the entire way the state operates; it changes the way our economy works.” 

and in a few decades, it is quite possible that americans could have an hsr that would connect them from cities all across the country. in may, rep. seth moulton introduced a $205 billion economic recovery bill into congress that would provide the foundations for a national high speed rail system.

ultimately employing up to 1.16 million people, moulton’s plan would build off existing federal transit administration plans to provide new transportation alternatives for business commuters between large, innovative cities like chicago to milwaukee, portland to seattle, and dallas to oklahoma city.  

lipkin added the federal government historically has helped navigate transportation projects like the interstate system, so he said he would not be surprised if a future administration or congress would take on the project.

“federal funding will be a necessary component to finishing that project — i have no doubt in my mind about that,” he said.

but electric vehicles are not expected to face the same financial impact as internal combustion engine vehicles. according to one new york consulting firm, ev markets in europe and china are doing surprisingly well, with ev sales in europe up 25% just within the first business quarter of 2020. 

although american ev figures are not as reassuring, experts believe that if the u.s. begins implementing similar measures as found throughout europe and asia, american ev markets are expected to rebound and increase over the next several years. but this requires u.s. policy to stimulate both ev supply and demand.

why european and chinese ev markets are doing fine 

according to colin mckerracher, the head author of bloombergnef’s 2020 ev outlook, ev markets in europe have largely have stabilized because of pre-pandemic ev policies and the development of more efficient and inexpensive technology. 

“while the internal combustion engine vehicle market is on a downward trajectory, despite covid, evs are on an upward trajectory,” mckerracher said. 

he added the most prominent mechanisms that have cushioned the ev markets are shifting national and sub-national policies that now focus on influencing the supply of evs. in addition to already existing tax incentives for new ev owners, european countries have pushed for strict fuel economy standards. 

“the policies are really saying ‘we don’t care how you do it, but you really need to bring down your emissions,’” mckerracher said. “the most compelling ways for a lot of automakers to do that is by selling a lot of plug-in vehicles.”

unsurprisingly, european automakers have generally expressed economic optimism. volvo ceo hakan samuelsson said at a conference earlier this year that he predicts the pandemic will accelerate future demand for evs, echoing volvo’s commitment to sell an all-electric and hybrid fleet by 2025. and unlike american automakers, volvo’s stock price was higher than it was at pre-pandemic levels.

likewise, as battery technology improves, evs have become more affordable in europe and china, making them fierce competitors with traditional vehicles. chinese automakers have introduced updated lithium iron phosphate batteries, which are cheaper to produce because they do not require metals like cobalt or nickel, according to one analyst from roskill, a london-based global metal trade consulting firm.  

supply localization efforts also have helped avoid tariffs and trade costs that accumulate on ev price tags. according to mckerracher, there is no significant difference between battery production costs among geographic locations, which also means that the overall carbon footprint made as a result of ev production has actually improved.

but more importantly, localization efforts have also helped drive the economies of europe and china. according to marine gorner, an energy and transport analyst at the international energy agency, localizing battery production and the deployment of ev infrastructure has a higher employment multiplier for every dollar invested compared to conventional vehicle manufacturing. 

“i think this particular point will be a key piece of information for governments to have in mind when they think of this shift,” gorner said. “this shift comes with more economic growth prospects.” 

what the u.s. is doing wrong

the same narrative cannot be told in the u.s., largely because the pandemic continues hammering the americas while europe and asia already have flattened the curve. 

even so, a lack of ev implementation and recovery efforts have reduced national ev sales by 33%. according to genevieve cullen, the president of the electric drive transportation association, this figure may only increase if federal and state governments leave automakers uncertain about what standards their fleet must meet. 

“what global governments do and what the u.s. does as part of their pandemic responses, i think it’ll have a major impact on what that means going forward,” she said.

besides tesla, which has a higher stock price than one year ago, american automakers are more concerned about cash flow and have cut back on ev research and development. when demand for automobiles returns to pre-pandemic levels, many american consumers will not find as many competitive evs in the market. 

recent federal guidelines also have stunted the development of america’s ev market. in march, the trump administration revised fuel economy standard goals by reducing 2026’s goal of 54 mpg to 40 mpg, further disincentivizing automakers to develop ev technology. 

cullen said that the electric drive transportation association has modeled a multi-prong recommendation plan that would reinforce manufacturing, strengthen retail incentives, and construct more ev charging infrastructure to help boost the ev market in the united states, but local governments largely have ignored these suggestions. 

“with these things together, we could essentially grow the entire ev ecosystem,” she said. “providing both that market signal for manufacturers and that accessibility for consumers is key, but we’re not seeing that in the u.s.”

not all that bad

although not as many americans are switching over to evs as fast as in europe and china, the future of the american ev industry remains optimistic. 

if predicted ev adoption rates are not drastically altered by federal litigation, american ev sales are expected to rise and continue rising starting in 2021, according to the bloombergnef outlook.  

moreover, mckerracher said replacing an ev in the united states has more of an ecological impact because current internal combustion vehicles in the american market have lower fuel economy standards than those in europe and china. bloombergnef forecasts that u.s. carbon dioxide emission levels are expected to decrease by more than 25% in the next two decades. 

however, the approach to these figures may decelerate if the federal government continues pushing automakers away from ev production. 

“if trump wins the 2020 election, the u.s. will almost certainly fall behind in ev purchases,” mckerracher said. “if democrats win, that gap will close.”

others also believe that federal and state governments must increase ev demand by enacting innovative policies that entice consumers to purchase new evs. sean mitchell, the president of denver’s tesla owner club, said state governments should enact policies like a carbon tax that make fossil-fueled vehicles less economically viable for the average american.

“i think in a free market it’s important to let products and industries survive on their own,” mitchell said, “but, when you’re talking about a market that is directly related to pollution and emissions, there’s got to be another factor that’s considered there.”

mitchell added that state governments should remove policies that complicate ev sales. for example, texas prohibits customers from purchasing vehicles directly from the manufacturers. removing this policy would increase ev demand because customers would not be forced to shop online for such a large product, mitchell said.

“making it easy for people to purchase electric vehicles is key,” he said. 

but experts also point out that like buying in bulk, the price of ev batteries are expected to decrease as more americans trade in their cars for evs, according to marine gorner of the iea. 

“what’s really important is to get more vehicles on the road so that production and sale volumes are higher,” she said. “this is how we will get an ev’s cost parity — it’s up-front cost — comparable to a conventional vehicle.”