Biden to set symbolic 2030 target for electric vehicle sales

President Biden is set to announce a new target for electric vehicles to form at least half of all new vehicles sales in the US by 2030. It’s a non-binding executive order but is expected to be supported by vehicle manufacturers, both in the US and abroad. Ford, GM and Stellantis (formerly Fiat Chrysler) have issued a joint statement in which they said it was their “shared aspiration to achieve sales of 40-50% of annual US volumes of electric vehicles (battery electric, fuel cell and plug-in hybrid vehicles) by 2030 in order to move the nation closer to a zero-emissions future consistent with Paris climate goals”. Car manufacturers, perhaps goaded by the hullabaloo surrounding Tesla Inc, seem to have twigged that electric vehicles (EVs) are the way forward but in the US, as in many other countries, infrastructure constraints remain an obstacle to wide-scale adoption. The US is the world’s third-largest market for EVs, with new EV sales totalling 295,000 units according to market research firm IHS Markit. While this was down 11% on the year before – most likely because of the coronavirus pandemic – it was a smaller fall than the total market, where sales of new cars fell 23% to 14.6mln units. Earlier this year, IHS Markit predicted EV (excluding hybrids) sales would account for 25-30% of all new vehicle sales in 2030, so Biden’s target is a stretch but by no means unachievable. By 2035, IHS Markit thinks sales of EVs will form 45-50% of all automobile sales. The Biden administration is also tipped to announce proposed federal fuel economy and emission standards through the 2026 model-year, using California’s tougher environmental regulations as a basis. This might cause some consternation among the car manufacturers as they are hoping to use sales of “gas guzzlers” to finance the switch to producing electric vehicles; traditionally, the margins on electric vehicles have been lower than petrol or diesel-fuelled cars. Ford, Honda Motor and Volkswagen have agreed to the Californian regulations but other manufacturers are sitting on the fence. There seems to be more of an industry consensus on the move towards EVs. “What we're hearing across the board is a consensus about the direction where this industry is going and a coming together around the recognition that this is the moment of truth — not just for climate action, for economic action, as well,” said a senior Biden administration official in a briefing of reporters. US unions, however, might be less keen. The motors used in EVs take fewer hours to build and are often built overseas. “We are falling behind China and Europe as manufacturers pour billions into growing their markets and expanding their manufacturing,” said Ray Curry, the president of the United Auto Workers. Broker Wedbush said the US still has some catching up to do on international rivals when it comes to electric vehicles. “Recently auto stalwarts such as GM, Ford, VW and many others have doubled down on their EV initiatives over the coming years signalling a clear shift in the EV tide among traditional auto players looking ahead. In the US, there are many pure-play innovative EV players (consumer/commercial) on the horizon poised to capitalise on a Biden-driven green tidal wave domestically with our expectations that the tax credits and incentives around EVs will ramp significantly in the coming years,” Wedbush said. The broker reckons the EV market represents a US$5,000bn total accessible market over the next decade. “We view today's announcement as another driving factor speaking to our bullish EV thesis around the OEMs, trucking plays, supply chain, and foundational components of this next step in the green tidal wave led by Tesla, GM, and others focused on this EV vision,” the broker said.