General Motors Co. CEO Mary Barra stepped on the electric vehicle’s accelerator pedal. Call it the Biden effect.
Six months ago, the automaker backed the Trump administration in a legal battle that could have neutralized California’s right to set its own tougher carbon standards. About two weeks after Trump lost, GM he retired from that struggle and two weeks after leaving office, he retired pledged to coincide with the state’s mandate to sell only electric vehicles from 2035 – and to do so across the United States
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Why the 180? Barra is making a leap into the policies of President Joe Biden, who is expected to help GM and its rivals build and sell more electric vehicles in the U.S. He wants to restore the $ 7,500 tax incentives that include companies like GM and Tesla Inc. has run out under Trump’s control and Biden plans to build 500,000 charging stations nationwide. This could make electric vehicles more affordable and alleviate the concerns of potential buyers regarding the field of practice of battery-powered cars.
Some see GM’s rough view of clean car policy as less a calculated political move than a recognition of the long-term working world forces.
“They wouldn’t make such a substantial announcement just for political purposes,” said Joe Britton, executive director of the Zero Emission Transportation Association, a Washington-based lobby that is pushing for the full adoption of electric vehicles by 2030. it is a clear signal that electric vehicles will be the future and right now we are in a bullish market for innovation. “
Believe it or not, Biden’s position has met with a collective sigh of relief in some neighborhoods in Detroit. The rest of the world is moving toward electric vehicles and the Trump administration had no interest in facilitating this transition in the U.S.
Behind China, EU
While Trump was trying to prolong the gas consumer era due to the regulation of clean air standards and resisting efforts to expand the tax credit for electric vehicles, the Chinese government has adopted rules and incentives that increase sales of electric vehicles. electric vehicles in the largest automotive market in the world. Almost all of the 27 member states of the European Union have tax or purchase incentives for consumers who buy electric vehicles and rapidly increase emissions. restrictions to penalize car manufacturers that do not sell enough electric vehicles in Europe.
As a result, China and the EU have come a long way above the United States in terms of electric vehicle adoption. Last year, of the 3.2 million electric vehicles sold worldwide, 1.3 million were in China and 1.2 million in the European Union and the United Kingdom. The U.S. accounted for only 328,000 sales, according to Swedish researcher EV Volumes.com.
Playing Catch-up
China and Europe are well ahead of the US in electrifying transportation
Source: BloombergNEF
This put Detroit carmakers in one place. They get most of their income and profits at home in the United States, 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.
Barra has been heading in this direction since 2017, when GM announced plans to build 20 different electric vehicles by 2023, but most were heading to the Chinese market. GM accelerated this change in November, promising 30 models in 2025 and a $ 27 billion investment in electric and autonomous cars with more models planned for the US Ford Motor Co. it has also intensified its efforts, budgeting $ 11 billion for electric vehicles and more fuel-efficient vehicles.
Biden’s victory put a bit of a wind on the back of the auto industry and makes the bet on electric motors more enjoyable for their risk-averse corporate cultures.
Read more: Canada’s EV agenda is rising as Trump’s American pivot
Political convenience
However, there is also a strong dose of political expediency that involves the decision to integrate electric vehicles. GM, Toyota Motor Corp. and Fiat Chrysler Automobiles NV – now part of Stellantis NV: went along with Trump in his legal fight with California, throwing a bone at a temperamental president and thus expanding its ability to produce cash cow gas messes.
Officially, GM said it always wanted a national standard rather than different rules from Washington and Sacramento. It just so happens that the company chose Trump’s watery option.
Critics of government subsidies quickly saw GM’s move as a sign that the electric vehicle market is maturing fast enough that no additional incentives are needed.
“GM is a publicly traded company and is making a strategic and calculated market decision,” Tom Pyle, a former Trump adviser and current president 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 meet (or fail to achieve) the corporate goal of a fully electric light fleet by 2035.”
Big companies have long tried to position themselves in the most favorable light in Washington, regardless of which party’s candidate is in the Oval Office. Vehicle manufacturers are no exception. Former Ford CEO Mark Fields warned then-President Trump that overly harsh mileage rules would mean a million jobs at risk, a prelude to Trump’s setback. And GM made public its Chevrolet Volt addition after its 2009 bailout by the Obama administration, which later set itself the goal of putting a million electric vehicles on the road in 2015.
Carrot and stick
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 definitely blowing against Detroit’s status quo dependence on large sports utility vehicles and trucks.
Biden’s plan also includes a stick. Earlier this week, he he pledged to reset vehicle emission standards removed by the Trump administration and set “ambitious new ones that our workers are prepared to meet”.
Read more: Biden’s Buy-America Dream is confident in buying electric vehicles that no one else does
Doing so would help drive GM’s electrification and could encourage competitors to follow suit, said Joshua Linn, a senior member of Resources for the Future, a Washington-focused think tank in politics and economics. environmental.
“Companies don’t want to go too far ahead 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 in that direction.”
GM’s worst nightmare is a scenario in which its commitment to electric vehicles is not achieved with increased consumer demand, allowing rivals with less ambitious electrification plans to steal business. Biden may give GM some of the coverage he needs to continue.
– With the assistance of Will Mathis and Jennifer A Dlouhy