As EVs Gain Speed, Automakers Praise Biden’s Emission Goals

When President Joe Biden said Thursday that the United States would seek to reduce greenhouse gas emissions by at least 50% from 2005 levels by 2030, major U.S. automakers say they got exactly what they wanted.

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(TNS) — When President Joe Biden said Thursday that the United States would seek to reduce greenhouse gas emissions by at least 50% from 2005 levels by 2030, major U.S. automakers say they got exactly what they wanted.

What a difference five years can make. In the final stretch of the Obama presidency, automakers decried the administration's emissions standards as unrealistic, punitive and too expensive. Biden's announcement, however, was met with praise by automakers: some of them actually called for it.

Over the last several years, rising climate fears, quickly advancing technology and a shifting global market have pushed automakers to shift gears. They now see the likelihood that electric vehicles eventually will dominate — and the once-in-a-lifetime opportunity for taxpayer-backed federal funding to help them get there.

"These autos are coming. We know it. It is the future," White House Climate Adviser Gina McCarthy said of electric vehicles. "I'm not talking about it. The auto manufacturers started it. They came to us and said electric vehicles are the future. We know that's the case, and we have to win back the future for the United States of America."

General Motors Co. and Ford Motor Co. are among dozens of major businesses to urge the president to commit to the 50% emissions reduction goal set Thursday, arguing in a joint letter that "new investment in clean energy, energy efficiency, and clean transportation can build a strong, more equitable, and more inclusive American economy."

Both automakers have pledged billions for developing electric vehicles, with GM aiming to sell only zero-emission vehicles by 2035 and Ford planning to offer zero-emission vehicles across most of its European lineup by 2030. Stellantis NV, too, has plans to offer an electrified option for 96% of all its models in the U.S. by 2025.

"The auto industry is committed to a shift to electric-drive vehicles and a net-zero carbon transportation future," said John Bozzella, CEO of the Alliance for Automotive Innovation, a leading industry group representing major automakers that sell vehicles in the U.S. Biden's pledge "highlights the critical importance of taking actions, right now, on market preparedness and on ensuring U.S. competitiveness."

Industry analysts say the chorus of support is the product of changes well beyond U.S. regulators: China and the European Union have implemented strict emissions requirements that make it tough for U.S. and foreign automakers to compete without moving toward electrification, and technology has advanced to make electric vehicles more marketable. Batteries are lighter, longer-lasting and less expensive than in the past, and connected technology has improved to make electric vehicles a better consumer experience.

Now that the market direction is clear, "being part of the solution instead of sitting on the sidelines means you have more control over your own destiny and outcomes," said Stephanie Brinley, an automotive analyst at IHS Markit. The companies have already committed to moving toward carbon neutrality, "and if the U.S. is on board, then you have federal dollars that are going to contribute to the infrastructure."

Automakers have repeatedly said they don't expect to hasten the ascent of electric vehicles all on their own. Zero-emission vehicles still make up a tiny sliver of overall vehicle sales as consumers continue to overwhelmingly prefer trucks and SUVs, especially in the rich U.S. market.

With low gas prices and relatively low prices on gas-powered cars compared with electric vehicles, there's little incentive for consumers today to make the switch, said Sam Fiorani, an industry analyst at AutoForecast Solutions. More stringent emissions regulations will help spark demand by increasing the number of electric vehicle options for consumers.

"It's a bold step, because it's further than we had been going before," Fiorani said. "I can't reiterate enough how much this is important for the eventual competitiveness of the automotive industry in North America on a global scale. If the industry continues to lag behind the rest of the world, they're going to get passed."

As the market has shifted toward electrification and become more technologically and economically viable for automakers, "they've basically given up on trying to fight it," said Sam Abuelsamid, principal research analyst at Guidehouse Insights. "Now they want to make sure that it gets locked in."

With a long-term business model, automakers want stability. A government commitment to spending billions on consumer incentives, charging infrastructure and research and development would help provide that, analysts say.

Biden has proposed $174 billion in his jobs and infrastructure package to "win" the electric vehicle market, including $15 billion to jumpstart his goal to install half a million charging stations nationwide. The Transportation Department also issued guidance Thursday showing how $42 billion of existing federal funding can be used for EV projects.

The economy-wide emissions commitment made Thursday foreshadows the increased vehicle emissions and fuel economy standards that are likely to come in July, as the Environmental Protection Agency and Department of Transportation consider changes to regulations that were rolled back under former President Donald Trump.

The administration also signaled Thursday it plans to withdraw a Trump-era rule that aimed to bar California from setting vehicle emissions rules higher than the federal standard. More than a dozen states follow California's guidelines, and a lawsuit over the Trump administration's rule divided the auto industry as they all sought unified standards.

The transportation sector remains the biggest emitter of greenhouse gas emissions in the country, according to the EPA, which means autos will surely "play an important role in delivering" the 2030 pledge, said Peter Zalal of the Environmental Defense Fund's Climate and Air legal team.

The federal proposals and automaker commitments mean the country is "well-poised" to actually reach the emissions goal set by the administration, Zalal said, despite the fact that greenhouse gas emissions in 2020 were 10% below 2005 levels, according to the Environmental Protection Agency.

"We're seeing a real explosion of electric vehicle sales. All the investments by companies and commitments to introducing new models — there's just a level of dynamism supported by state and federal policies, including the the important (emissions) announcement that makes that totally possible."

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