President Biden speaks at the United Auto Workers political convention at the Marriott Marquis Hotel in Washington, DC, on January 24, 2024.
Saul Loeb | AFP | Getty Images
DETROIT — The Biden administration’s decision to ease the adoption timeline for all-electric vehicles and give automakers more ways to meet new emissions standards is expected to be a win for legacy automakers.
New Environmental Protection Agency Regulations Published on Wednesday The goal is to reduce exhaust emissions by 49% between 2027 and 2032. EPA sets remediation goals for electric vehicles At least 35% New car sales by 2032
The standards are less ambitious than proposed rules released last year, which targeted a 56% reduction in emissions by 2032 and required electric vehicles to account for 67% of new vehicles by that year.
Expectations for adoption of electric vehicles, which can cost tens of thousands of dollars more than traditional gasoline vehicles, are lower as sales of electric vehicles are slower than expected.
The EPA’s new strategy to reduce emissions doesn’t just focus on electric vehicles. It takes into account more efficient gasoline engines, hybrid vehicles and plug-in hybrid electric vehicles.
The EPA’s percentage target for electric vehicle adoption is not a mandate, but an expectation for how automakers can meet emissions regulations. The target range for electric vehicle sales market share in 2032 is 35% to 56%.
The EPA says the standards will avoid more than 7 billion tons of carbon emissions and provide nearly $100 billion in net benefits to society annually. The company said that includes $13 billion in annual public health benefits from improved air quality and $62 billion in annual reductions in fuel costs and maintenance and repair costs for motorists.
Here are some takeaways on what the new guidance means for automakers, investors and the environment.
detroit victory
Auto industry officials and Wall Street analysts are touting the changed rules This is a major win for legacy automakers, especially legacy Detroit automakers General Motors, Ford and Chrysler parent company starrelies heavily on large SUVs and trucks to make profits.
Deutsche Bank analyst Emanuel said: “We view this development as positive for U.S. legacy automakers, as the new rules reduce pressure on them to increase electric vehicle production in the near term and may even allow them to further Reduce EV capital expenditures and R&D,” Rosner said in an investor note on Thursday.
President Joe Biden and General Motors CEO Mary Barra look at a Chevrolet Silverado electric vehicle during a visit to the 2022 North American International Auto Show at the Huntington Convention Center in Detroit, Michigan, September 14, 2022 . Biden is visiting the auto show, which highlights electric vehicle manufacturing.
Mandel Yan | AFP | Getty Images
John Bozzella, president and CEO of the Alliance for Automotive Innovation, a lobby group representing most U.S. automakers, agreed.
“Slowing the pace of EV adoption in 2027, 2028, 2029 and 2030 is the right decision because it prioritizes more reasonable electrification targets in the next few years of the EV transition, which are very critical,” he said. .”
The new rules are also a victory for the Detroit-based United Auto Workers union, which has raised concerns about how the transition from internal combustion engines to electric vehicles will affect employment.
“By taking seriously the concerns of workers and communities, the EPA created a more workable emissions rule that protects workers who build (internal combustion engine) vehicles while providing a path forward for automakers to implement a full range of vehicle technologies to reduce emissions. , ” this United Auto Workers says in a statement.
Shares of the Detroit automaker and other automakers including U.S. hybrid leader Toyota AutomotiveShares closed higher on Wednesday following the news.
Tesla, some green groups unhappy
While the new standards are a relief for Detroit, others are less happy.
Chelsea Hodgkins, senior policy advocate at the left-leaning consumer rights group Public Citizen, said the new rules “fall far short of what is needed to protect public health and the planet. The EPA is issuing licenses to automakers who continue to produce polluting vehicle pass”.
Martin Viecha, vice president of investor relations for the largest electric vehicle manufacturer in the United States Teslaagreed in a post on .”
“Just as the official energy consumption ratings of electric cars are getting closer to reality, so should plug-in hybrids,” he added.
The environmental group Sierra Club has condemned automakers such as Toyota for their reliance on hybrids, but it broke with past statements and applauded the standards. The group supports President Biden’s re-election and says the new rules are “one of the most important actions his administration can take on climate change.”
political influence
Several experts and Wall Street analysts were quick to point out that the new standards could help Biden deal with certain groups in his reelection campaign.
“We speculate that this slight leniency is an attempt to appease the lobby representing automakers – or more pointedly, auto unions – who understandably view the Biden administration’s aggressive efforts to ‘electrify’ the auto industry. (For example, the IRA bill became law) “This poses a threat to their jobs in traditional auto manufacturing plants,” Loop Capital analyst Chris Kapsch said in an investor note. “
Morgan Stanley analyst Adam Jonas agreed in a separate report: “Delays and flexibility in the new schedule may be part of an effort to appease the UAW, a key Democratic constituency that has historically been concerned about the rise of electric vehicles.”
The move could help the president UAW, which Endorsed Biden’s re-election in January. It may also be aimed at boosting his support in Michigan – home to General Motors, Ford and many other suppliers – which is expected to play a key role as a swing state in this year’s presidential election.
not over yet
Emissions regulations are just one part of the federal government’s policy aimed at making vehicles more efficient.
Automakers are still waiting for the U.S. Department of Transportation’s National Highway Traffic Safety Administration to roll out “Corporate Average Fuel Economy” (CAFE) standards for model years 2027 to 2032.
CAFE standards dictate how far a vehicle must travel on a gallon of fuel. NHTSA proposes in 2023 that in 2032 model years, the industry-wide average mileage per gallon for passenger cars and light trucks will be approximately 58 miles per gallon, with passenger car fuel economy increasing by 2% per year and fuel economy increasing by 4% per year. For use on light trucks.
The CAFE standards are expected to be finalized later this year.
There’s also the California Air Resources Board, which can set its own emissions and fuel economy standards — a power that former President Donald Trump sought to take away.
For years, automakers such as General Motors have argued that there should be a national standard on fuel economy and greenhouse gas emissions to help them plan and make it easier to comply.
“As we review the details, we encourage continued coordination with the federal government and the California Air Resources Board to ensure the industry can successfully transition to electrification,” GM said in a statement.
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