Joe Biden Sets About Correcting Trump Largesse For ICE Auto Firms

Highlights :

  • As the world’s largest market for transportation fuel, the US market’s direction matters.
  • Rules on emission standards also make a global impact as many US auto majors are global majors by default.
Joe Biden Sets About Correcting Trump Largesse For ICE Auto Firms

US President Joe Biden’s recent order aimed at making half of all new vehicles sold in the US in 2030 electric is expected to make a dent in the country’s consumption and emission levels, even though it’s a non-binding deal with the country’s biggest automakers. The administration has also proposed new vehicle emissions standards that would cut pollution through 2026, starting with a 10% stringency increase in the 2023 model year.

Through the proposed new fuel economy rules, Biden aims to fight climate change by persuading gas-powered car and truck owners to shift to electricity, thereby countering China’s efforts to dominate the EV market in the future. It’s a nudge to speed up a process that is already underway in effect. Let’s unpack the new rules and implications.

In the new rules, pollution and gas mileage requirements are reverting to those under the Obama administration, which required the fleet of new vehicles to average 5 per cent in carbon dioxide emissions cuts every model year through 2025. While the Trump administration had rolled that back to 1.5 pc per year and added another year to the rules, Biden’s new plan mandates 10pc emissions reductions in 2023 and 5pc every year after that through 2026. According to Consumer Reports, the time lost to the Trump administration’s laxity and loopholes means the new standards are likely to deliver only 75pc of the emissions cuts from the original Obama standards .

While these rules will help strengthen efforts to combat global warming, environmental groups are pushing for plans to phase out gasoline passenger vehicles entirely by 2030. The U.S. Environmental Protection Agency has said that over the years, its proposal will save about 200 billion gallons of gasoline and cut about 2 billion metric tonnes of carbon pollution.

While EVs today cost $8,000-$10,000 more than a combustion-engine vehicle, according to consulting firm Alix Partners, automakers believe the difference will decrease fast as they sell more EVs and develop lower-cost batteries. The impact of an India-style high tax on fuels could also reduce long term operating costs between the two even faster.

Biden has proposed expanding tax credits and rebates for EV buyers. There’s now a $7,500 federal tax credit, but it’s capped when automakers reach 200,000 in EV sales, building a case for change. One bill in the Senate promoted by Biden would expand it to all automakers and offer up to $12,500 in tax credits for five years, making EVs more affordable.

Some, however, have criticised the non-binding nature of the agreements. Dan Becker, director of the Safe Climate Transport Campaign, said “Voluntary pledges from auto companies make a New Year’s resolution to lose weight look like a legally binding contract.”

Although the agreements aren’t binding, automakers might anyway comply since they are currently moving towards developing more EVs as a result of Tesla’s success in the sector. The industry expects big investments from the government on charging stations and incentives to get people to buy EVs, so Biden must get funding approvals from Congress.

Hyundai said it supports the 2030 40-50% EV sales goal, while Nissan said it has a target that more than 40% of its U.S. vehicle sales by 2030 be EVs.

Ford, General Motors and Stellantis have promised fully electric pickup trucks and built prototypes too, and automakers are starting to roll out electric SUVs in the heart of the US market. The consulting firm IHS Markit says there are only about 50 fully electric models on sale now in the US, a fraction of the roughly 350 models sold by all automakers. But it expects 130 EV models by 2026.

Some vehicle analysts expect EVs to become available in all states because of the deal. At present, many are sold only on the coasts where there are state zero-emissions-vehicle requirements.

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Soumya Duggal

Soumya is a master's degree holder in English, with a passion for writing. It's an interest she has directed towards environmental writing recently, with a special emphasis on the progress being made in renewable energy.