General Motors Co. CEO Mary Barra has just stepped on the accelerator pedal of electric vehicles. Call it the Biden effect.
Six months ago, the automaker backed the Trump administration in a legal battle that could have offset California’s long-standing right to set its own stricter carbon rules. About two weeks after Trump lost, GM he withdrew from that fight and, two weeks after leaving office, she was has committed to fulfilling the state’s mandate to sell only electric vehicles starting in 2035 – and to do so across the US
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Why 180? The bar takes a leap over President Joe Biden’s policies, which are expected to help GM and its rivals build and sell more electric vehicles in the United States. He wants to restore the $ 7,500 tax incentives that companies, including GM and Tesla Inc. has run out under Trump’s supervision, and Biden plans to build 500,000 charging stations across the country. This could make electric vehicles more accessible and alleviate potential buyers’ concerns about the range of battery-powered cars.
Some consider the GM side of clean car policy to be less of a calculated political move than a long-term recognition of global forces in the workplace.
“It wouldn’t make such a substantial announcement just for political purposes,” said Joe Britton, executive director of the Zero Emission Transportation Association, a Washington lobby group pushing for the full adoption of electric vehicles by 2030. it is a clear sign that electric vehicles will be the future and that we are in a bullfighting market for innovation right now. ”
Believe it or not, Biden’s position was met with a collective sigh of relief in some areas of Detroit. The rest of the world is moving toward electric vehicles, and the Trump administration has had no interest in easing this transition in the United States.
Behind China, the EU
As Trump seeks to prolong the gas guzzler era by reducing clean air rules and resisting efforts to expand vehicle tax credit, the Chinese government has adopted rules and incentives that have boosted electric vehicle sales in the world’s largest auto market. . Almost all 27 Member States of the European Union have purchase or tax incentives for consumers who buy electric vehicles and rapidly increase emissions restrictions to penalize carmakers that do not sell enough electric vehicles in Europe.
As a result, China and the EU have come a long way ahead of the US in terms of EV adoption rates. Last year, of the 3.2 million electric vehicles sold globally, 1.3 million were in China and 1.2 million in the European Union and the United Kingdom accounted for only 328,000 sales, according to Swedish researcher EV Volumes.com .
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China and Europe are far ahead of the US in terms of electrifying transport
Source: BloombergNEF
That put Detroit carmakers together. They get most of their income and profits at home in the US, where sales of electric vehicles have been minimal. And they need help with enough economies of scale to reduce battery costs and create profit margins.
The bar has been moving in this direction since 2017, when GM announced plans to build 20 different electric vehicles by 2023, but most of them were destined for the Chinese market. GM accelerated this change in November, promising 30 models by 2025 and a $ 27 billion investment in multi-model electric and autonomous cars planned for the US Ford Motor Co. it has also stepped up its efforts, budgeting $ 11 billion for electric vehicles and more fuel-efficient vehicles.
Biden’s victory has put a bit of wind behind the car industry and makes the commitment to electric powertrains more enjoyable for their risk-averse corporate cultures.
Read more: Canada’s EV agenda grows like the US, Trump’s Detroit Pivot
Political convenience
Even so, there is also a strong dose of political convenience involved in the decision to go all-in on electric vehicles. GM, Toyota Motor Corp. and Fiat Chrysler Automobiles NV – now part of Stellantis NV – went with Trump in his legal fight with California, throwing a bone at a temperamental president and therefore expand their ability to reveal carbonated beverages.
Officially, GM said it always wants a national standard instead of different rules in Washington and Sacramento. It happens that the company chooses the option to reduce Trump.
Critics of government subsidies have quickly seen the GM move as a sign that the electric vehicle market is maturing fast enough that no additional incentives are needed.
“GM is a publicly traded business and makes a strategic and calculated market decision,” Tom Pyle, a former Trump adviser and current chairman of the American Energy Alliance, a free market advocacy group, said in a statement. “Under no circumstances should any taxpayer be responsible for GM’s ability to achieve – or not achieve – the corporate goal of a fully electric lightweight fleet by 2035.”
Large companies have long sought to position themselves in the most favorable light in Washington, regardless of the party’s candidate in the Oval Office. Car manufacturers are no exception. Former Ford CEO Mark Fields has warned then-President Trump that overly harsh mileage rules would put a million jobs in danger, a prelude to Trump’s return. And GM has largely backed its Chevrolet Volt plug-in after the 2009 rescue by the Obama administration, which later set a goal of putting a million electric vehicles on the road by 2015.
Carrots are beaten
Trump and his Twitter account are now silenced. With Democrats running the White House and having a majority in both houses of Congress, the prevailing wind is certainly blowing against Detroit’s status quo dependence on large sports utility vehicles and trucks.
Biden’s plan also comes with a stick. Earlier this week, he he vowed to re-establish vehicle emission standards avoided by the Trump administration and set “new, ambitious ones that our workers are ready to meet.”
Read more: Biden’s Buy-America Dream is based on buying electric vehicles that no one else does
This would help electrify GM and could encourage competitors to follow suit, said Joshua Linn, a senior executive at Resources for the Future, a Washington think tank that focuses on environmental and economic policy.
“Companies don’t want to go too far in front of the market,” he said. “Having more ambitious policies, greenhouse gas standards and perhaps a national zero-emission vehicle program will help support the entire market moving in this direction.”
GM’s worst nightmare is a scenario in which its commitment to electric vehicles does not meet with higher consumer demand, allowing rivals with less ambitious electrification plans to steal business. Biden may provide GM with some of the coverage it needs to continue.
– With the assistance of Will Mathis and Jennifer A Dlouhy