THE AUSTRALIANAugust 5, 2021Auto makers including General Motors Co., Ford Motor Co. and Jeep maker Stellantis NV will aim to make electric vehicles account for 40% to 50% of their U.S. sales by 2030, according to people familiar with the matter, who said the targets would be announced at the White House on Thursday.
Other auto makers are expected to separately make similar announcements regarding sales targets for electric vehicles as consumers begin warming to EVs and as auto manufacturers lay heavy bets on the new technology, the people said.
“This industry’s going to spend $330 billion over the next five years on electrification alone,” said John Bozzella, president of the Alliance for Automotive Innovation, the lobbying group for auto makers and suppliers, at a conference Wednesday. “Even in Washington, D.C., that is real money.” Even so, the sales targets are predicated on increased support from federal and local governments such as increasing the availability of charging and providing purchase subsidies, the people said. Federal lawmakers are proposing up to $7.5 billion for states and municipalities to build electric-vehicle charging stations as part of the infrastructure bill moving through the Senate.
Along with the electric-vehicle targets, auto industry officials expect the White House to announce rules mandating a 3.7% annual increase in fuel efficiency for the next two years. The White House and other federal officials declined to comment on the fuel targets.
The 3.7% figure matches an agreement struck in 2019 involving Ford, three other auto makers and the state of California that was a compromise between more stringent rules set under President Barack Obama and standards that were eased by President Donald Trump.
The target is likely to increase in later years, the people said, but the expected conversion to EVs will make those goals easier to reach. Auto makers have pledged to make major investments in developing electric vehicles.
The speed with which U.S. auto makers pivot to electric-vehicle manufacturing could shake up the auto labour force. Engines built for electric vehicles don’t require as much labour. Several major auto makers have pulled back investment in developing new gas engines.
President Biden, however, is a “car guy [who] recognises that auto workers and good union manufacturing jobs are the backbone of communities across this country,” White House economic adviser Susan Helper said at Wednesday’s conference sponsored by the Center for Automotive Research.
“There’s a lot of ways in which the U.S. is really well positioned to lead the transition to electric and zero emissions vehicles,” she said.
Many of these investments are going toward converting plants to making 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.
Ford and Korean battery maker SK Innovation Co. have formed their own joint venture, which they said will likely mean building two new factories in North America.
Americans are buying electric vehicles in record numbers, but the voluntary sales targets are far higher than what is currently sold. Electric-vehicles sales made up about 3% of the total U.S. market in May and June, according to industry data.
In the past several months, many auto makers have rolled out their first attempts at high-volume electric vehicles for the U.S. market.
Ford began selling an electric SUV called the Mustang Mach-E, with branding borrowed from its popular line of sports cars. It has showed off an electric version of its popular F-150 pickup truck to be called the Lightning and set to hit dealer lots in 2022. Volkswagen AG has begun selling an electric SUV called the ID.4, which it plans to begin building in Tennessee.
Despite delays caused by the pandemic, several electric startups plan to begin sales this year as well. Rivian Automotive LLC has said it would begin sales of its R1T pickup truck in September and Lucid Group Inc. plans to start selling an electric luxury sedan called the Air by the end of the year.
Consumers are kicking the tires of electric models, especially as lineups expand into popular segments such as pickup trucks. A survey this year by UBS found that 37% of U.S. respondents were likely to consider buying an electric vehicle for their next purchase, up 15 percentage points from last year.
Bill Charmley, director in the Environmental Protection Agency’s Office of Transportation and Air Quality division, said at Wednesday’s conference that with enough consumer acceptance and federal support, “to some extent, EPA’s mission of having tight policies and standards that require ultraclean, low emission vehicles, it will get easier and easier over time.” Higher sales of electric vehicles will mean that auto makers will have an easier time meeting new standards for fuel-efficiency standards and tailpipe emissions set by the EPA and the Transportation Department. Auto makers that fall short of requirements risk fines.
In 2012, auto makers were required to achieve average fuel efficiency of 54.5 miles a gallon by 2025 -- or an estimated 36 mpg in so-called real-world driving that accounts for stop-and-go traffic. The Trump administration eased that to 40 mpg, or about 29 mpg on a real-world basis.
The revised standards are expected to apply to vehicles through the 2026 model year. Officials at both agencies declined to discuss their pending proposals.
The Alliance for Automotive Innovation said earlier this year that it supports a standard that is “roughly midway between current standards and those of the former Obama administration.” Environmental groups are pushing the Biden administration to adopt even tougher standards than those adopted by the Obama administration.
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