A week before airing a now-viral Super Bowl advert starring Will Ferrell to promote its Ultium electric vehicle (EV) battery, and the 30 new EV models it plans to sell by 2025, General Motors (GM) made a less flashy announcement. The automaker said it “aspires to eliminate tailpipe emissions from new light-duty vehicles by 2035.”
“GM is making it crystal clear that taking action to eliminate pollution from all new light-duty vehicles by 2035 is an essential element of any carmaker’s business plan,” said Fred Krupp, the long-time president of the non-profit advocacy group the Environmental Defense Fund, which worked with GM to develop its electrification plans.
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The announcement is praiseworthy. GM is the US’s largest automaker. Declaring an “aspiration” to build only zero-emission passenger cars and light trucks marks an abrupt turnaround for the company. In autumn 2019, it had joined other carmakers in siding with the Trump administration against California in a battle over whether the state could continue to set more stringent fuel economy standards than required under federal law. Since the election, major automakers, including GM, Toyota and Fiat Chrysler have dropped their support for the Trump gambit. Elections have consequences.
Joe Biden should welcome GM’s reversal and commend the company for targeting an all-electric future, but it is too late for aspirations. Transportation accounts for the largest share – 28% – of US greenhouse gas emissions. The possibility of automakers petitioning a future US president to relax vehicle fuel economy standards, as occurred with Donald Trump, should stiffen Biden’s resolve for bold action.
Biden signed an executive order on his first day in office giving regulators a July 2021 deadline to develop new fuel economy standards for passenger cars and light trucks for models to be developed through 2026. The White House has already held discussions with automakers and workers about the standards. It is rumoured to be leaning towards using as a template, a deal struck between Ford, Honda, Volkswagen and BMW and California in July 2019. That deal was a compromise, more stringent than Trump’s fuel-economy freeze, but weaker than rules the auto industry had agreed to under President Obama.
GM is making it crystal clear that taking action to eliminate pollution from all new light-duty vehicles by 2035 is an essential element of any automaker business plan. Fred Krupp, Environmental Defense Fund
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Beyond 2026, Biden needs to push automakers much harder. At a minimum, he should aim for convergence around 2035. That is the deadline California Governor Gavin Newsom gave state regulators to develop rules to require that all new cars and passenger trucks sold in the state be zero-emission vehicles. It is the same year Biden wants to achieve a carbon-free power grid, and it is also, of course, the year GM “aspires” to sell only zero-emission cars.
Biden should call GM’s bluff and make 2035 the year the US adopts California’s internal combustion engine car phase-out as the national standard. The good news for the White House is that the Democratically-controlled Congress is ready to help transition the market.
Tax credits
On 5 February, Democratic leaders from the House Ways and Means Committee, the US House of Representatives’ primary tax-writing committee, released the Growing Renewable Energy and Efficiency Now Act. The bill would raise the cap on the total number of a manufacturer’s vehicles eligible for the federal customer EV tax credit from 200,000 to 600,000, while reducing the credit by $500 to $7,000. (Tesla and GM have exceeded the existing cap.)
The bill would also create a new tax credit worth up to $2,500 for used plug-in EVs, and a 10% manufacturer credit for the sale of zero-emission heavy-duty vehicles, until 2026. Ways and Means Committee Chairman Richard Neal has committed to ensuring the bill is included in the green recovery and infrastructure package likely to emerge in Congress this spring.
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In October 2019, then-Senate Minority Leader Chuck Schumer released a $454bn plan that would provide consumers with vouchers convertible into point-of-sale discounts starting at $3,000 to trade in fossil fuel-powered cars for US-made zero-emission vehicles. Senate Majority Leader Schumer now has the power to muscle the “cash-for-clunkers” proposal into the Democrats’ green recovery package.
Meanwhile, another Democrat senator, Martin Heinrich, wants the White House to use the full powers of the federal government to promote EVs. In a 12 February letter, Heinrich and a dozen fellow senators ask Biden to intervene to pursue electrification of the US Postal Service’s fleet of more than 200,000 vehicles. They also call for the General Services Administration to purchase hundreds of thousands of EVs, for EV charging stations on federal property and a baseline total cost of ownership metric that reflects EVs’ lifetime savings over fossil fuel-powered vehicles.
The US trails global leaders Europe and China in terms of EV sales growth. Last year, Europe’s plug-in vehicle sales increased by 137% compared with 2019, to nearly 1.4 million units. In China, sales increased by 12% in 2020 to 1.34 million units. In the US, growth was a mere 4%, reaching 328,000 units.
Force investment
The US’s legacy automakers say they are all for electrification. Ford recently boosted its planned investment in electric and automated vehicles to $29bn and committed to selling only all-electric passenger vehicles in Europe by 2030. GM says it will spend $27bn on electric and automated vehicles by 2025 and will invest profits from trucks and SUVs, which hit $6.4bn in 2020, in electrification.
During his campaign, Biden pledged to “use all the levers of the federal government” to make the US a global leader in EVs. If the US is to match Europe and China, automakers must deliver on their plans and aspirations. Biden should adopt a zero-emission vehicle mandate that forces automakers to make the investments necessary to transition the market and forecloses a future industry retreat from electrification.
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