Then Vice President Joe Biden (R) and General Motors CEO Mary Barra take a look at the new Corvette C7 and attend the North American International Auto Show industry preview at Cobo Hall on January 16, 2014 in Detroit, Michigan.
Paul Warner | Getty Images
President Joe Biden will set a new national target for the adoption of electric vehicles on Thursday, calling for them to account for half of all new car sales by 2030, senior administrators said.
The goal is expected to be supported by companies such as General Motors, Ford Motor and Stellantis, formerly Fiat Chrysler. Detroit automaker executives are slated to attend an event at the White House on Thursday and promise electric vehicle sales between 40% and 50% by 2030.
Although the president will sign an executive order, the sales target is not mandatory. Instead, the document encourages the U.S. auto industry and government to promote legislation and the adoption of electrified vehicles. Emission-free vehicles with fuel cell and battery drives as well as plug-in hybrid models with combustion engines are aimed for.
The order “does not work as a mandate, but it creates the conditions for us to achieve this goal,” Treasury Secretary Pete Buttigieg told CNBC’s “Squawk Box” on Thursday. “We have to act, the transportation sector is the largest part of our economy that emits greenhouse gases, and cars and trucks are one of the largest parts of that.”
The Biden government is also expected to announce proposed state fuel economy and emissions standards by model year 2026, based on California’s stricter regulations, officials said. The proposed standards are subject to a public comment period and final approval.
While automakers increasingly support electric cars, they are mixed on short-term fuel economy standards as they seek to make profits from traditional vehicles to fund electric models. Electric vehicles have historically been unprofitable or produce lower profit margins.
It is unclear how many automakers will support Biden’s fuel economy standards. Automakers like Ford, Honda Motor, and Volkswagen previously agreed to California’s stricter standards, which the Trump administration vigorously opposed.
Some smaller brands like Volvo plan to go fully electric by 2030, while Stellantis and Ford have announced targets for at least 40% electric vehicles by then. At the beginning of the year, GM announced an “aim” to exclusively offer fully electric and fuel cell vehicles by 2035.
Such a rapid introduction of electric vehicles faces significant hurdles such as charging infrastructure, consumer acceptance and vehicle costs.
“Today Ford, GM and Stellantis announce their joint goal of 40-50% of annual US sales of electric vehicles (battery-electric, fuel cell and plug-in hybrids) by 2030 in order to the nation closer to a zero-emissions future in line with the Paris climate goals, “the automakers said in a joint statement. “We look forward to working with the Biden administration, Congress, and state and local governments to enact guidelines that enable these ambitious goals.”
Jessica Caldwell, executive director of insights at Auto Insights firm Edmunds, said the electric vehicle sales target is not “particularly overambitious” but will ultimately depend on regulations and consumer acceptance, which remain low.
“Automakers all play aggressive games in this category,” said Caldwell. “But what we’ve seen over the past five years or so is that these goals tend to be moving goals, not fixed goals. All of that is more fluid than the actual plan.”
A previous Obama administration target of selling one million electric vehicles between 2012 and 2015 fell far short of expectations. In January 2016, Reuters reported that only about 400,000 electric cars had been sold.
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The US is the third largest market for electric vehicles in the world. While total sales of new vehicles fell by 23% to around 14.6 million units in 2020, sales of fully electric vehicles fell by 11% to 295,000 units, according to IHS Markit.
High-ranking officials in the Biden administration touted the introduction of electric vehicles and the ordering of the executive branch as a job stimulator for American manufacturing. They said the new measures would support Biden’s “Build Back Better Agenda” and the bipartisan infrastructure deal.
United Auto Workers officials, who represent union workers on an hourly basis at automakers in Detroit, weren’t as keen on electric vehicles as boosting American jobs.
“While the UAW notes that companies have made voluntary electric vehicle commitments, the UAW is not focusing on hard deadlines or percentages, but rather on maintaining the wages and benefits that have been the heart and soul of America’s middle class,” said UAW – President Ray Curry said in a statement on Wednesday.
A 2018 study by the union found that the mass adoption of electric vehicles could cost the UAW 35,000 jobs, but officials said that number could be lower now. Electric vehicles require far fewer parts than those with internal combustion engines, which potentially means less assembly work in the factory. Many of the parts for electric vehicles are made outside of the United States or in domestic plants, where workers are paid far lower wages than traditional assembly jobs.
In May, IHS Markit forecast all-electric sales of 25 to 30% of new vehicles in the US by 2030 and 45 to 50% by 2035.
US President Joe Biden tests the new Ford F-150 Lightning Truck during a visit to the VDAB at the Ford Dearborn Development Center in Dearborn, Michigan, May 18, 2021.
Leah Millis | Reuters