Automakers urge greater government investment to meet Biden’s EV sales target

President Joe Biden is expected to set an ambitious new target for half of all new auto sales in the U.S. to be low- or zero-emission by 2030, a plan that has received tentative support from the Big Three automakers pending what they say will require hefty government support.

General Motors, Ford and Stellantis (formerly Fiat Chrysler) issued a joint statement Thursday that they had shared aspiration[s]" to achieve a 40% to 50% share of electric in new vehicle sales by the end of the decade, with the caveat that such a target can be achieved only with the timely deployment of the full suite of electrification policies committed to by the Administration in the Build Back Better Plan."

Some of the investments they list include consumer incentives, a national EV charging network of sufficient density," funding for R&D and manufacturing and supply chain incentives.

Biden's target, which will come in the form of an executive order on Thursday, will be nonbinding and entirely voluntary. The target includes vehicles powered by batteries, hydrogen fuel cells or plug-in hybrids.

Executives from the three OEMs, as well as representatives from the United Automobile Workers union, are expected to attend an event on the new target at the White House Thursday. Tesla, it seems, was not invited, according to a tweet from CEO Elon Musk.

Yeah, seems odd that Tesla wasn't invited

- Elon Musk (@elonmusk) August 5, 2021

Biden will also be calling for new fuel economy standards for passenger and medium- and heavy-duty vehicles through model year 2026, which were rolled back under President Trump's tenure, according to a White House factsheet released Thursday. The new standards, which will be crafted under the jurisdiction of the Department of Transportation and the Environmental Protection Agency, should come as no surprise to automakers: They were included in Biden's so-called Day One Agenda" and mark a cornerstone of his strategy to combat climate change.

The new standards will likely borrow from those passed by California last year, which were finalized in concert with a coalition of five automakers: BMW AG, Ford, Honda Motor Co., Volkswagen AG, and Volvo AB. Those automakers, in a separate statement Thursday, said they supported the White House's plan to reduce emissions. However, like the Big Three, they said that bold action" from the federal government will be needed to achieve emission reductions targets.

The road to 2030

While Biden's nonbinding order is more of a symbolic one, the targets are likely achievable, Jessica Caldwell, Edmunds' executive director of insights said in a statement. She added that automotive industry leaders have seen the writing on the wall for some time now" regarding electrification, regardless of who has been in the White House.

Thanks to the relatively long product development lead time, many of the major automakers have already announced multibillion-dollar investments in EVs and AVs at least through the middle of the decade. That includes a $35 billion investment through 2025 from GM and $30 billion through the same year from Ford - not to mention similar announcements from Stellantis and many billions earmarked for battery R&D from Volkswagen, and even Volvo Cars' shift to all-electric by 2030.

Auto giant Stellantis to invest 30B in electrification through 2025

These massive numbers follow the automakers' own sales targets, which are for the most part in line with Biden's goal.

Fuel economy rules, however, have historically garnered slightly more mixed reactions from automakers. GM, Fiat Chrysler (now Stellantis) and Toyota had previously supported a Trump-era lawsuit that sought to strip California's authority to set its own emissions standards - but each company eventually made an about-face, leaving the road open for Biden to introduce his own standards this year.

In a very real sense, Biden's announcement is as much about geopolitics as it is about climate change. He, too, has seen the writing on the wall regarding EVs. His administration notes in the factsheet that China is increasingly cornering the global supply chain" for EVs and EV battery materials. By setting clear targets for electric vehicle sale trajectories, these countries are becoming magnets for private investment into their manufacturing sectors - from parts and materials to final assembly."

While three times as many EVs were registered in the U.S. in 2020 versus 2016, America still lags behind both Europe and China in terms of EV market share, according to the International Energy Agency.

The news has garnered a slew of mixed reactions, with some environmental groups urging more decisive action on the part of the administration. Carol Lee Rawn, senior director of transportation at Ceres, said in a statement that future standards should target a 60% reduction in emissions and a clear trajectory" to 100% vehicle sales by 2035.

Although the UAW will be joining Biden at the White House on Thursday, President Ray Curry said in a statement that the group is not focused on hard deadlines or percentages, but on preserving the wages and benefits that have been the heart and soul of the American middle class."

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