Automakers Call for Increased EV Investment to Meet Biden's Goals

Biden Administration Announces New EV Sales Goal

President Joe Biden is anticipated to announce a significant new objective: for 50% of all new vehicle sales within the United States to be low- or zero-emission vehicles by the year 2030.

This initiative has garnered preliminary backing from the major American automakers – often referred to as the “Big Three” – contingent upon substantial governmental financial assistance.

Automaker Response and Conditions

General Motors, Ford, and Stellantis (previously Fiat Chrysler) jointly released a statement on Thursday.

They expressed a shared ambition to attain a 40% to 50% market share for electric vehicles in new car sales by the decade's end.

However, they stipulated that achieving this target is dependent on the prompt implementation of comprehensive electrification policies outlined in the Build Back Better Plan.

Required Government Support

The automakers highlighted several key investment areas crucial for success:

• Consumer incentives to encourage EV adoption.
• Development of a nationwide EV charging network with adequate coverage.
• Funding for research and development (R&D) and manufacturing processes.
• Incentives to strengthen the electric vehicle supply chain.

Details of the Executive Order

President Biden’s target will be formalized through an executive order issued on Thursday.

It’s important to note that this target is non-binding and voluntary for automakers.

The goal encompasses vehicles powered by batteries, hydrogen fuel cells, or plug-in hybrid technologies.

Representatives from the three major automakers, alongside the United Automobile Workers union, are scheduled to participate in a White House event concerning this new target.

Notably, Tesla’s CEO, Elon Musk, indicated via Twitter that his company was not extended an invitation.

Reinstating Fuel Economy Standards

Furthermore, President Biden will advocate for the reinstatement of stricter fuel economy standards for passenger vehicles, as well as medium- and heavy-duty trucks, through the 2026 model year.

These standards were previously relaxed during the administration of President Trump, as detailed in a White House factsheet released Thursday.

Collaboration with California and Other Automakers

The new standards will be developed by the Department of Transportation and the Environmental Protection Agency.

They are expected to align closely with the standards adopted by California last year, which were established in collaboration with BMW AG, Honda Motor Co., Volkswagen AG, and Volvo AB.

These automakers also voiced their support for the White House’s emission reduction plan, emphasizing the necessity of “bold action” from the federal government to meet the established targets.

Looking Ahead to 2030

Despite being a nonbinding directive, President Biden’s stated objectives are likely attainable, according to Jessica Caldwell, Executive Director of Insights at Edmunds. She indicated that leaders within the automotive sector have long anticipated the shift towards electrification, irrespective of the current administration.

Due to the extended timelines inherent in automotive product development, numerous major manufacturers have already committed substantial investments – totaling billions of dollars – to both electric vehicles (EVs) and autonomous vehicles (AVs), with plans extending through at least the mid-2020s.

Significant Investments in EV Technology

• GM has pledged $35 billion through 2025.
• Ford has allocated $30 billion through the same period.
• Stellantis and Volkswagen have also made comparable commitments.
• Volvo Cars intends to transition to an all-electric lineup by 2030.

These considerable financial outlays align with the automakers’ own sales projections, which generally support Biden’s overarching goals.

Historically, regulations concerning fuel economy have elicited more varied responses from automotive companies. Previously, GM, Fiat Chrysler (now Stellantis), and Toyota participated in a legal challenge during the Trump administration aimed at limiting California’s ability to establish independent emissions standards.

However, each of these companies ultimately reversed their position, paving the way for the Biden administration to introduce revised standards this year.

Biden’s announcement reflects not only environmental concerns but also geopolitical considerations. His administration recognizes the growing dominance of China in the global supply chain for EVs and the essential materials used in EV batteries.

The factsheet released by the administration highlights that countries establishing clear targets for EV adoption are attracting significant private investment into their manufacturing industries, encompassing components, materials, and final vehicle assembly.

While EV registrations in the U.S. tripled between 2016 and 2020, the nation still trails both Europe and China in terms of overall EV market share, as reported by the International Energy Agency.

The announcement has prompted a range of reactions, with some environmental organizations advocating for more aggressive action from the administration. Carol Lee Rawn, Senior Director of Transportation at Ceres, suggested that future standards should aim for a 60% reduction in emissions and a definitive path towards 100% EV sales by 2035.

The United Auto Workers (UAW) will join President Biden at the White House; however, President Ray Curry emphasized that the union’s focus remains on safeguarding the wages and benefits crucial to the American middle class, rather than adhering to specific deadlines or percentage targets.