General Motors Co. CEO Mary Barra just stepped on the electric vehicle’s accelerator pedal. Call it the Biden effect.
Six months ago, the automaker supported the Trump administration in a legal battle that could have undermined California’s old right to define its own stricter carbon emissions rules. About two weeks after Trump lost GM gave up that fight and two weeks after leaving office, pledged to fulfill the state’s mandate to sell only electric vehicles from 2035 – and to do so across the U.S.
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Why the 180? Barra is taking a leap in 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. was exhausted under the supervision of Trump and Biden plans to build 500,000 charging stations across the country. This could make EVs more accessible and alleviate potential buyers’ concerns about the driving range of battery-powered cars.
Some see GM’s turnaround in clean car policy less as a calculated political measure than as a recognition of long-term global forces at work.
“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 lobbying group that is pushing for full EV adoption by 2030. “This is a clear sign that electric vehicles will be the future and we are in a booming market for innovation now. “
Believe it or not, Biden’s position was met with a collective sigh of relief in some Detroit neighborhoods. The rest of the world is moving towards electric vehicles, and the Trump administration had no interest in facilitating this transition in the U.S.
Behind China, EU
While Trump tried to prolong the era of gasoline drinkers by diluting the rules of clean air and resisting efforts to expand EV tax credit, the Chinese government adopted rules and incentives that boosted EV sales in the world’s largest auto market. Almost all 27 EU member states have tax or purchase incentives for consumers who buy electric vehicles, and emissions are rapidly increasing restrictions to penalize car manufacturers that do not sell enough EVs in Europe.
As a result, China and the EU have taken a leap ahead of the US in EV adoption rates. Last year, of the 3.2 million EVs sold globally, 1.3 million were in China and 1.2 million in the European Union and the United Kingdom. The US was responsible for only 328,000 sales, according to Swedish researcher EV Volumes.com.
Playing catching
China and Europe far ahead of the US in electrifying transport
Source: BloombergNEF
This put Detroit’s automakers in a difficult situation. They get most of their revenue and profits at home in the United States, where sales of electric vehicles have been minimal. And they need help with sufficient economies of scale to reduce battery costs and create profit margins.
Barra has been moving in that direction since 2017, when GM announced plans to build 20 different EVs by 2023, but most of them were for the Chinese market. GM accelerated this change in November, promising 30 models by 2025 and an investment of $ 27 billion in electric and autonomous cars with more models planned for the US Ford Motor Co. has also stepped up its efforts, budgeting $ 11 billion for EVs and more economical vehicles.
Biden’s victory put some wind on the back of the auto industry and makes the commitment to power groups more palatable to their risk-averse corporate cultures.
Read more: Canada’s EV agenda is driven like the USA, Trump’s Detroit Pivot
Political Convenience
Still, there is also a great deal of political convenience involved in deciding to move all-in on EVs. GM, Toyota Motor Corp. and Fiat Chrysler Automobiles NV – now a part of Stellantis NV – accompanied Trump in his legal fight against California, throwing a bone on the floor temperamental president and thus extending his capacity to produce large consumers of gas.
Officially, GM said it always wanted a national standard instead of different rules from Washington and Sacramento. It turns out that the company chose Trump’s diluted option.
Critics of government subsidies were quick to see GM’s move as a sign that the EV market is maturing fast enough that no further incentives are needed.
“GM is a publicly traded company and is making a strategic and calculated market decision,” said Tom Pyle, a former adviser to Trump and current president of the American Energy Alliance, a free market advocacy group. “In no way should the taxpayer be responsible for GM’s ability to achieve – or fail to achieve – its corporate goal of a light all-electric fleet by 2035.”
Large companies have long sought to position themselves in the most favorable way in Washington, regardless of which party candidate is in the Oval Office. Automakers are no exception. Former Ford CEO Mark Fields warned then-President Trump that excessively strict mileage rules would generate one million jobs at risk, a prelude to the reversal of Trump. And GM widely praised its Chevrolet Volt plug-in after its 2009 rescue by the Obama administration, which later set a goal of putting one million electric vehicles on the roads by 2015.
Carrot and stick
Trump and his Twitter account have been silenced. With Democrats running the White House and having a majority in both chambers of Congress, the prevailing wind is definitely blowing against the dependence on Detroit’s status quo from large SUVs and trucks.
Biden’s plan also comes with a stick. Earlier this week, he promised to reinstate the vehicle emissions standards eliminated by the Trump administration and set “new and ambitious standards that our workers are ready to meet”.
Read more: Biden’s Buy-America dream depends on buying electric vehicles that nobody makes
Doing so would help GM’s electrification push and could encourage competitors to follow suit, said Joshua Linn, senior researcher at Resources for the Future, a Washington think tank that focuses on environmental policy and economics.
“Companies don’t want to be 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 that is moving in that direction.”
GM’s worst nightmare is a scenario in which its commitment to EVs is not met with increased consumer demand, allowing rivals with less ambitious electrification plans to steal business. Biden may be giving GM some coverage it needs to move forward.
– With the help of Will Mathis and Jennifer A Dlouhy