US sets electric vehicle sales target of 50% by 2030

General Motors, Ford and Stellantis agree to voluntary electric-vehicle sales target but say push needs federal funding.

Joe Biden at the wheel of a plug-in hybrid Jeep Wrangler on the South Lawn of the White House on Friday. Picture: AFP

US President Joe Biden made dual moves to reduce greenhouse gas emissions, imposing tougher fuel-efficiency standards on carmakers and ­challenging them to drastically ramp up sales of electric vehicles by 2030.

Mr Biden on Thursday (friday AEST) signed an executive order setting a target for electric vehicles, hydrogen-fuel cell and plug-in hybrid vehicles to make up 50 per cent of US sales by 2030 — a voluntary goal that carmakers said necessitated federal support for vehicle charging stations and consumer tax incentives.

Separately, the Environmental Protection Agency proposed new rules that would require carmakers to achieve a fleetwide average fuel-efficiency equivalent of 52 miles per gallon by the 2026 model year, using an industry measure that takes into account both fuel efficiency and emissions reductions.

The current requirement for that model year is 43.3mpg under rules set in 2020 by the Trump administration. Carmakers would be allowed some increased flexibility to use credits they banked in past years by surpassing their goals to comply with the rules, the agency said.

Mr Biden signed the executive order at a White House event Thursday afternoon that included General Motors chief executive Mary Barra, Ford Motor chief Jim Farley and Stellantis NV’s North American chief operating officer, Mark Stewart. Mr Biden called on all three to continue leading the transition away from cars and trucks with traditional combustion engines, which release greenhouse gas emissions into the air.

“This is a big deal, but to unlock the full potential we have to keep investing in our workers and in our manufacturing capacity,” he said.

Parked around the White House were vehicles the three carmakers hope will help them meet the new goals, including GM’s electrified Hummer, an electric Ford F-150 pick-up truck and a plug-in hybrid Jeep Wrangler from Stellantis.

“They’re a vision of the future that is now beginning to happen, a future of the car industry that is electric,” Mr Biden said of the vehicles during his remarks. “There’s no turning back.”

In a joint statement before Thursday’s event, the carmakers said the voluntary targets for electric-vehicle sales “can be achieved only with the timely deployment of the full suite of electrification policies committed to” by the Biden administration in the roughly $US1 trillion infrastructure plan now moving through the Senate and related initiatives.

The Senate infrastructure spending bill allots $US7.5 billion in grants for states and municipalities to build out electric-vehicle charging stations. That amount is half of the sum that Mr Biden pushed for in March when he set a goal of 500,000 public chargers by 2030. The US has roughly 110,000 public charging outlets.

The bipartisan Senate proposal also includes more than $US6 billion in grants for battery production, development and recycling.

The proposal doesn’t include a key item that the industry has pushed for: additional tax credits for people who purchase electric vehicles. The administration is still working with congress on the consumer-side tax credits, White House economic adviser Susan Helper said earlier this week.

Electric-vehicles sales made up about 3 per cent of the total US market in May and June, according to industry data.

Wall Street analysts said that the large-scale shift to electrification is likely to weigh on profits for legacy carmakers over the next few years.

“The chances this industry can smoothly ‘pass the baton’ from ICE to EV without a major disruption in margins is remote,” Morgan Stanley analyst Adam Jonas wrote in a Thursday note, referring to internal combustion engines.

A notable absence from the White House ceremony was Elon Musk, chief executive of Tesla, which sold the vast majority of all-electric vehicles in the U.S. over the past few years.

“Seems odd Tesla wasn’t invited,” Mr Musk wrote in an overnight tweet, before posting a meme implying the snub was sabotage.

Asked why Tesla wasn’t invited along with the Detroit carmakers, White House press secretary Jen Psaki said, “These are the three largest employers of the United Auto Workers, so I’ll let you draw your own conclusion.”

There were also no representatives attending from foreign carmakers like Toyota or Hyundai, whose U.S. workforces like Tesla’s aren’t union-represented.

The American International car Dealers Association, which represents dealers selling those and other foreign brands, warned that Mr Biden’s support for unionised workforces could hinder his sales goals.

“Any policies that divide us, or prioritise some American auto workers above others — for example, offering additional tax credits for union-built electric vehicles — politicise what should be a shared mission and make meeting the target announced today that much more difficult,” the group said in a statement.

Consumers have begun warming to electric vehicles, and auto manufacturers are laying heavy bets on the new technology.

“This industry’s going to spend $330 billion over the next five years on electrification alone,” John Bozzella, president of the Alliance for Automotive Innovation, the lobbying group for carmakers and suppliers, said at a conference on Wednesday. “Even in Washington, DC, that is real money.”

Many of these investments are going toward converting plants to make electric vehicles or building new battery factories. GM plans to open battery plants in Ohio and Tennessee as part of its joint venture with Korean battery company LG Chem.

The speed with which US carmakers pivot to electric-vehicle manufacturing could shake up the automotive labour force. Engines built for electric vehicles don’t require as much labour. Several major carmakers have pulled back investment in developing new gasoline engines.

Some environmentalists say the voluntary targets don’t go far enough in transitioning to electric vehicles, saying stronger measures are needed to curb greenhouse gas emissions that contribute to climate change.

The plan “relies on unenforceable voluntary commitments from unreliable car makers,” said Dan Becker, a longtime environmental advocate for clean transportation now serving as director of the Safe Climate Transport Campaign of the Center for Biological Diversity, a non-profit environmental advocacy group. “These are the companies that tore up the agreement they made with President Obama to cut pollution, so why would anyone trust them now?”

Other carmakers joined in supporting the administration’s efforts. In a joint statement released by the White House, BMW, Honda Motor, Volkswagen and Volvo said they “remain committed to leading the industry in fighting against climate change”.

“That’s why we support the administration’s goal of reaching an electric vehicle future and applaud President Biden’s leadership on reducing emissions and investing in critical infrastructure to achieve these reductions,” the statement said.

The Wall Street Journal