Declaring the US must “move fast” to win the world's carmaking future, President Joe Biden on Thursday announced a commitment from the auto industry to produce electric vehicles for as much as half of US sales by the end of the decade.
Biden also wants automakers to raise gas mileage and cut tailpipe pollution between now and model year 2026. That would mark a significant step toward meeting his pledge to cut emissions and battle climate change as he pushes a history-making shift in the US from internal combustion engines to battery-powered vehicles.
He urged that the components needed to make that sweeping change — from batteries to semiconductors — be made in the United States, too, aiming for both industry and union support for the environmental effort, with the promise of new jobs and billions in federal electric vehicle investments.
Pointing to electric vehicles parked on the White House South Lawn, the president declared them a “vision of the future that is now beginning to happen.”
“The question is whether we lead or fall behind in the race for the future,” he said, “Folks, the rest of the world is moving ahead. We have to catch up.”
In obvious good spirits, the president hopped into a plug-in hybrid Jeep Wrangler Rubicon that can run solely on batteries and took a quick spin around the driveway after the ceremony.
Earlier Thursday, the administration announced there would be new mileage and anti-pollution standards from the Environmental Protection Agency and Transportation Department, part of Biden's goal to cut US greenhouse gas emissions in half by 2030. It said the auto industry had agreed to a target that 40 percent to 50 percent of new vehicle sales be electric by 2030.
Both the regulatory standards and the automakers' voluntary target were included in an executive order that Biden signed as a gathering of auto industry leaders and lawmakers applauded.
The standards, which must go through the regulatory process, would reverse fuel economy and anti-pollution rollbacks done under President Donald Trump. At that time, the mileage increases were reduced to 1.5 percent annually through model year 2026.
The new standards would cut greenhouse gas emissions and raise fuel economy by 10 percent over the Trump rules in car model year 2023. They would get 5 percent stronger in each model year through 2026, according to an EPA statement. That's about a 25 percent increase over four years.
The EPA said that by 2026, the proposed standards would be the toughest greenhouse emissions rules in US history.
Still, it remains to be seen how quickly consumers will be willing to embrace higher-mileage, lower-emission vehicles over less fuel-efficient SUVs, currently the industry's top sellers. The 2030 EV targets ultimately are nonbinding, and the industry stresses that billions of dollars in electric-vehicle investments in legislation pending in Congress will be vital to meeting those goals.
Only 2.2 percent of new vehicle sales were fully electric vehicles through June, according to Edmunds.com estimates. That's up from 1.4 percent at the same time last year.
Biden has long declared himself “a car guy,” his blue collar political persona intertwined with support for union workers and his role, as vice president, in steadying the auto industry after the economic collapse in 2008. He told General Motors CEO Mary Barra that he wanted to reserve a certain test drive.
“I have a commitment from Mary: When they make the first electric Corvette, I get to drive it," Biden said. "Right, Mary? You think I'm kidding. I'm not kidding.”
Dave Cooke, senor vehicles analyst for the Union of Concerned Scientists, said the new rules are close to matching the final year of standards enacted when Barack Obama was president that were rolled back by Trump.
But Cooke said he is concerned that the regulations extend the number of years automakers get double credit toward complying with the standards for every electric vehicle they sell. That allows more emissions from internal combustion vehicles, he said.
Last week, The Associated Press and other news organisations reported that the Biden administration was discussing weaker mileage requirements with automakers, but they since have been strengthened. The change came after environmental groups complained publicly that they were too weak.
Transportation is the single biggest US contributor to climate change.
The deal with automakers defines electric vehicles as plug-in hybrids, fully electric vehicles and those powered by hydrogen fuel cells.
Environmental groups welcomed the movement but also said the administration should move faster.
“Given how climate change has already turned our weather so violent, it's clear that we need to dramatically accelerate progress," said Simon Mui of the Natural Resources Defense Council.
Scientists say human-caused global warming is increasing temperatures, raising sea levels and worsening wildfires, droughts, floods and storms globally.
Several automakers already have announced electric vehicle sales goals similar to those in the deal with the government. Last week Ford's CEO said his company expects 40 percent of its global sales to be fully electric by 2030. General Motors has said it aspires to sell only electric passenger vehicles by 2035. Stellantis, formerly Fiat Chrysler, also pledged over 40 percent electrified vehicles by 2030.
The Trump rollback of the Obama-era standards would require the fleet of new vehicles to get a projected 29 mpg in “real world” driving by 2026. Cooke said under the Biden EPA proposal, the mileage should be similar to the 37 mpg that the Obama rules were to achieve.
General Motors, Stellantis, and Ford said in a joint statement that their recent electric-vehicle commitments show they want to lead the US in the transition from combustion vehicles.
They said such a “dramatic shift” from the US market today can only happen with policies that include incentives for electric vehicle purchases, adequate government funding for charging stations and money to expand electric vehicle manufacturing and the parts supply chain.
The United Auto Workers union, which has voiced concerns about being too hasty with an EV transition because of the potential impact on industry jobs, did not commit to endorsing the 40 percent to 50 percent EV target. But UAW said it stands behind the president to ”support his ambition not just to grow electric vehicles but also our capacity to produce them domestically with good wages and benefits."
Biden on Thursday repeatedly extolled the virtues of American union workers and said that the challenges of climate change could present an opportunity for “good paying union jobs.”
Under a shift from internal combustion to electric power, jobs that now involve making pistons, fuel injectors and mufflers will be supplanted by the assembly of lithium-ion battery packs, electric motors, and heavy-duty wiring harnesses.
Many of those components are now built overseas, including in China. Biden has made the development of a US electric vehicle supply chain a key part of his plan to create more auto industry jobs.
In a bipartisan infrastructure bill awaiting Senate passage, there is $7.5 billion (roughly Rs. 55,630 crores) for grants to build charging stations, about half of what Biden originally proposed. He wanted $15 billion (roughly Rs. 1,11,250 crores) for 500,000 stations, plus money for tax credits and rebates to entice people into buying electric vehicles.
© Thomson Reuters 2021
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