There has been a growing trend for governments as a matter of public policy to favor EVs. This has taken the form of initiatives aimed at improving transit as well as financial incentives for the purchase of EVs and for the manufacturing of EVs.

Many localities try to reduce or regulate traffic, and particularly in places where there is high population density, chronic congestion, narrow roads and limited urban space. While these initiatives might be onerous to owners of traditional internal combustion engine vehicles, they often exempt or partially exclude EVs. These initiatives include various forms of congestion charging (which often exempt or provide discounts for EVs), priority lanes for high occupancy vehicles and EVs, restrictions on new registrations of vehicles (excluding EVs) and subsidies for the installation of public charging stations for EVs. In fact, some European countries and cities are formulating programs that would actually ban vehicles fueled by petrol or diesel. Norway's Minister for the Environment has expressed an indication that they expect to implement a ban on the sale of cars that are not EVs by 2025. President Macron of France has expressed an indication that they will eliminate the sale of cars with internal combustion engines in France by 2040, and city hall in the municipal government of Paris has expressed an indication calling for a ban on all cars with traditional combustion engines from its streets by 2030. In the United Kingdom, the government has announced a strategy that calls for sales of new gas and diesel cars and vans to end by 2040.

On May 23, 2019, the Province of British Columbia passed the Zero-Emission Vehicles Act ("ZEV Act") which requires automakers to meet an escalating annual percentage of new light-duty ZEV sales and leases, reaching 10% of light-duty vehicle sales by 2025, 30% by 2030, and 100% by 2040. In 2020, there were 15,451 new ZEVs registered in BC, which represented 9.4% of all new light-duty vehicles in BC. As a result, BC is well on its way to exceeding the 2025 ZEV sales target set out in the ZEV act.

On September 23, 2020, California Governor Gavin Newsom issued an executive order requiring sales of all new passenger vehicles to be zero-emission by 2035 and implemented additional measures to eliminate harmful emissions from the transportation sector. Following the order, the California Air Resources Board will develop regulations to mandate that 100% of in-state sales of new passenger cars and trucks are zero-emission by 2035 - a target which would achieve more than a 35% reduction in greenhouse gas emissions and an 80% improvement in oxides of nitrogen emissions from cars statewide. In addition, the Air Resources Board will develop regulations to mandate that all operations of medium- and heavy-duty vehicles shall be 100 percent zero emission by 2045 where feasible, with the mandate going into effect by 2035 for short distance trucking.

The Biden administration has announced plans to replace the government's current fleet of cars and trucks with EVs assembled in the U.S. In doing so, the US is offering tax credits of 10% up to $2,500 for 3-wheeled EVs, and individual states like Oregon and California are offering subsidies up to $5,000. The Indian government has budgeted $1.5B US in subsidies towards helping buyers acquire 500,000 3-wheeled e-vehicles. In Norway, the country with the largest per-capita penetration of EVs, there are many government incentives in place including; zero purchase/import taxes; exemption from 25% value added tax; no annual road tax; no charges on toll roads or ferries and free municipal parking, among many others.

To promote the purchase of EVs, many state and local governments offer financial incentives to purchasers. These incentives can take the form of rebates, tax credits or the elimination or reduction of sales tax.

More than half of the United States now have EVSE in place. California is making the greatest investment in infrastructure deployment, with targets to deploy 250,000 charging points by 2025. An estimated 4% of outlets are expected to be DC fast chargers. In addition, many other states are investing in charging infrastructure. For instance, New Jersey, California and New York have combined to invest nearly $1.3 billion, which would bring total investments across the Unites States to around $3.5 billion between 2017 and 2027. BC is making similar strides in improving public charging infrastructure by expanding the network of public fast-charging and hydrogen fueling stations. For example, as of December 2020, BC had 205 fast-charging sites built or underway. Further, BC's 2021 budget provided an additional $8.5 million to continue expanding BC's public charging network through numerous programs and rebates.

To promote the manufacture and development of EVs, many federal, state and local governments provide financial incentives to EV companies. These incentives can take the form of tax credits or grants.

The Advanced Technology Vehicle and Alternative Fuel Infrastructure Manufacturing Incentives offer manufacturers of ultra-efficient vehicles, which includes fully electric vehicles, direct loans for up to 30% of the cost of establishing manufacturing facilities in the United States used to produce advanced technology vehicles, components and infrastructure, including hardware and software.

The U.S. Department of Energy provides Advanced Energy Research Project Grants to fund projects that will reduce U.S. energy emissions and promote a switch to advanced energy technologies, including vehicle technologies. The Advanced Energy Research Project Grants are administered through the Advanced Research Projects Agency - Energy ("ARPA-E").

ARPA-E was established within the U.S. Department of Energy with the mission to fund projects that will develop transformational technologies that reduce the nation's dependence on foreign energy imports; reduce U.S. energy related emissions, including greenhouse gases; improve energy efficiency across all sectors of the economy; and ensure that the United States maintains its leadership in developing and deploying advanced energy technologies. It looks for projects that can be meaningfully advanced with a small amount of funding over a defined period of time. ARPA-E focuses on various concepts in multiple program areas including, but not limited to, vehicle technologies, biomass energy, and energy storage. ARPA-E has approved Advanced Energy Research Project Grants for various types of technologies relating to electric vehicles, specifically relating to EV batteries, charging systems, and software.

ARPA-E issues periodic open funding solicitations for a broader range of projects that do not fall into a single technical area to address the full range of energy-related technologies, as well as targeted funding solicitations aimed at supporting America's small business innovators. ARPA-E also funds projects on a rolling basis through 'special projects' funding opportunities that are meant to inform potential new program areas for the future.

The California Alternative Energy and Advanced Transportation Financing Authority ("CAEATFA") provides the Advanced Transportation Tax Exclusion under the Sales and Use Tax Exclusion Program, a full sales and use tax exclusion for manufacturers that promote alternative energy and advanced transportation in California (the "STE Exemption").

In California, sales taxes are imposed on sellers of goods within the state of California. Although services are generally excluded, they may be subject to sales tax if they result in the production of a retail good. A use tax differs in that it applies where a good is purchased from an out-of-state retailer who is selling the good within California but does not have a sales nexus within California such that they are required to collect sales tax. The applicable tax rate is the same for both sales and use taxes.

Qualifying manufacturers of advanced transportation technologies are eligible for a sales and use tax exclusion under the category of "general public benefit". The STE Exemption excludes purchases of Qualified Property (defined below) from sales and use taxes if the qualified property is used to manufacture Advanced Transportation Technologies. The STE Exemption provides sales and use tax exclusions to manufacturers that promote alternative energy and advanced transportation.

"Qualified property" includes manufacturing machinery and equipment with an estimated useful lifespan of over one year, as well as information technology used to operate or control the machinery and equipment. Qualified purchases may also include tangible personal property required for infrastructure improvements to the manufacturing facility, such as foundation, reinforcement, piping, and fire safety.

"Advanced transportation technologies" are defined as emerging commercially competitive transportation-related technologies capable of creating long-term, high value-added jobs for Californians while enhancing the state's commitment to energy conservation, pollution and greenhouse gas emissions reduction, and transportation efficiency. The STE Exemption has approved several electric vehicle manufacturers for this tax exclusion, including Tesla Motors, Inc.; Electric Vehicles International, LLC; Atieva USA Inc; and Green Vehicles, Inc.

Further, the Manufacturing and Research & Development Equipment Exemption (the "Manufacturing Exemption") provides certain manufacturers and research and developers with a partial exemption from sales and use tax on the purchase or lease of qualified machinery and equipment primarily used in manufacturing, research and development, and electric power generation or production, storage or distribution. The partial exemption rate is currently 3.9375 percent. Accordingly, when the partial exemption applies, the sales or use of the qualifying tangible personal property is taxed at a rate of 3.3125 percent (7.25 percent current statewide tax rate minus 3.9375 percent partial exemption rate) plus any applicable district taxes.

The Manufacturing Exemption applies to manufacturers across different industries, including those with the Company's NAICS code (336110 automobile and light-duty manufacturing) and offers a partial exemption on the purchase or lease of machinery, equipment, operational equipment, and special purpose buildings or foundations. The table below is from the California Department of Tax and Fee Administration webpage titled "Tax Guide for Manufacturing and Research & Development Equipment Exemption", which sets out a comparison of the Manufacturing Exemption and the STE Exemption: