Two weeks ago, President Joe Biden signed an executive order (EO) establishing a non-binding target for electric vehicles (EV) to comprise half of all U.S. passenger auto sales by 2030. The order covers battery-electric, plug-in hybrid electric, and hydrogen fuel cell-powered electric vehicles. The Biden Administration is also rolling out several incentives to increase EVs’ market share and is calling on Congress to introduce legislation driving EV adoption. President Biden’s tagline: “There’s no turning back.”
The text of the EO can be found here. According to a White House fact sheet, the EO includes the following key provisions:
- Establishes a target, in conjunction with major auto manufacturers such as General Motors (GM) and Ford, for EV market share to reach 40-50% by 2030
- Invests in a national network of electric vehicle charging stations
- Provides point-of-sale consumer incentives to increase domestic manufacturing and union jobs
- Provides funding towards retooling and expanding the domestic EV manufacturing supply chain
- Collaborates among the Department of Commerce (DOC), Department of Labor (DOL), and Department of Energy (DOE) to increase EV manufacturing, strengthen existing EV domestic supply chains, and increase the availability of high-paying jobs
- Collaborates with states, such as California, to coordinate in reducing vehicle emissions
- Works with labor unions, industry leaders, environmental justice organization, and public health experts to develop future EV-centered legislation
On the same day, the Environmental Protection Agency (EPA) released new fuel efficiency standards requiring automakers to achieve a fleetwide average fuel-efficiency equivalent to 52 miles per gallon by 2026, accounting for both fuel efficiency and emissions reductions. This reverses an earlier policy from the Trump Administration of 43.3 miles per gallon. However, auto manufacturers could bank credits for future flexibility if they surpass their goals. Many auto executives remarked that this rule change came as no surprise.
However, environmental advocates, such as the American Council for an Energy Efficient Economy, oppose the EPA rules as too conservative. The group noted that these standards would only achieve 67% of the emission cuts projected under targets set during the Obama Administration; the Biden campaign promised to exceed Obama-era targets.
Similarly, the Department of Transportation (DOT) also announced their intention to release new regulations which sought to roll back Trump-era fuel efficiency and tailpipe emissions standards. The proposed rules would address existing Safe Affordable Fuel Efficient (SAFE) vehicles rule implemented during the Trump Administration. In particular, the new rule would increase the national fleet average by nine miles per gallon higher than the finalized 2020 rule by 2026. The DOT also unveiled their plans to develop new fuel economy standards for passenger cars and light-duty trucks as well as new medium and heavy-duty fuel efficiency standards. These standards would be formally instituted as soon as model year 2027.
President Biden was joined by Mary Barra, the CEO of General Motors, Jim Farley, the CEO of Ford, and Ray Curry, the President of the United Auto Workers, on the South Lawn as he announced the executive order. Notably, the White House did not invite Tesla CEO Elon Musk, who the National Labor Relations Board (NLRB) sanctioned earlier this year for anti-union activities.
It is still unclear how many major auto manufacturers will be on board with the Biden Administration’s new benchmark. The attendees present at the unveiling had pledged the support under the condition that Congress passed a spending bill later this year that would provide funding for a national network of charging stations as well as provide tax credits to manufacturers that would make it easier for them to develop these vehicles. Previously, Ford, Honda Motor, and Volkswagen supported California’s strict vehicle emission regulations despite public opposition from then-President Trump. Volvo is already committed to being fully electric by 2030, and GM had announced an “aspiration” for a fully electric and fuel-cell powered vehicle fleet by 2035.
As mentioned earlier, the target set by the Biden Administration is non-binding; not setting requirements for the industry but instead encouraging collaboration amongst relevant government agencies and incentivizing EV technology deployment. However, vehicle manufacturers that need to slash their fuel emissions to comply with the DOT and EPA’s standards in the next five years could be heavily impacted.
Moving forward, Congress may soon act on President Biden’s calls for federal legislation promoting EV technology. In the coming weeks, Congress will attempt both a bipartisan infrastructure bill and a climate-focused reconciliation package that could further push electric and other lower-emissions vehicles into production. If you have questions about this executive order, please contact Lucia Alonzo at lmalonzo@michaelbeststrategies.com or Mike Dankler at mldankler@michaelbeststrategies.com.
