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President Joe Biden riding around in a Hummer EV during a tour of the General Motors 'Factory ZERO' electric vehicle assembly plant, in Detroit, Michigan, back in 2021.
Biden boosts EVs with new tailpipe emissions rules
As goes the American car market, so goes the world. Or at least large swathes of North America. With the Biden administration’s latest auto regulations, that may mean electric vehicles pull ahead as those with internal combustion engines.
On Wednesday, President Joe Biden introduced tailpipe pollution limits that require automakers to reduce carbon emissions from their vehicles by 56% by 2032 based on 2026 levels.
The new rules also require automakers to ramp up EV production. The administration is aiming for full EVs to account for roughly 35 to 56% of all vehicle sales and for plug-in hybrids to make up 13 to 36% within the next eight years. Full EVs currently account for 7.6% of sales.
Conscious of growing American protectionist impulses – and the coming presidential election – Biden hammed hard on protecting American auto jobs, promising the EVs would be made in the US-of-A. Democrats were concerned about alienating unions or automakers and their workers ahead of November.
In Canada, Prime Minister Justin Trudeau's government is planning for 20% of new light-duty vehicles sold to be zero-emissions by 2026, gradually rising to 100% by 2035. Biden’s move may help his cause as it pushes automakers to speed up production on more environmentally friendly vehicles.Speed bumps on the road to EV dominance
On Thursday, Ford withdrew its full-year results forecast because of uncertainty over cost structures stemming from its tentative deal with the United Auto Workers, which could tack on an additional $900 in labor costs per vehicle. The company is scaling back its investment in EV technology after disappointing earnings — it is losing $36,000 on every EV sold. “The narrative has taken over that EVs aren’t growing. They're growing. It’s just growing at a slower pace than the industry and, quite frankly, we expected,” Ford Chief Financial Officer John Lawler said.
Meanwhile, General Motors recently postponed the construction of a major new EV plant in Michigan in the face of softening demand. Now, the Detroit-based auto giant doesn’t plan to start building until late 2025.
Both developments raise questions about the big bets both Biden and Trudeau have placed on the EV industry, with massive industrial subsidies for battery plants and tax credits for EV purchases. Even with large incentives, consumer adoption is slower than the car companies anticipated. The business challenge may make it harder to argue that the transition to a greener economy offers as much opportunity as hardship, an important argument for progressives in their debate with conservatives over the shape of the economy of the future.