Auto Industry Urges Biden to Back 'Comprehensive' EV Plan

by David Shephardson (Reuters) ... “Neither the current trajectory of consumer adoption of EVs, nor existing levels of federal support for supply- and demand-side policies, is sufficient to meet our goal of a net-zero carbon transportation future.”

John Bozzella, who heads the Alliance for Automobile Innovation that represents General Motors, Toyota, Volkswagen and others, noted EVs account for just 2% of U.S. sales today.

“To fully transition is going to require an enormous effort across the economy in every sector,” said Bozzella who signed the letter along with Motor & Equipment Manufacturers Association CEO Bill Long.

United Auto Workers Union President Rory Gamble, who also signed the letter, said in a separate statement to Reuters “workers will disproportionately suffer if we do not get it right. The reality is that we have a long way to go in terms of battery technology, refueling infrastructure and, importantly market demand in order to successfully make this transition.”

The letter urged Biden to back significant government tax incentives and subsidies for manufacturing and buying EVs and boosting federal government fleet EV purchases.

It called for government grants to automakers and suppliers “to reequip, expand, and establish facilities” for EVs and components and to “accelerate the domestic manufacture of batteries, power electronics (and) electric motors.”

Biden is currently reviewing the Trump administration’s 2020 decision to roll back Obama-administration vehicle emissions standards. READ MORE

Excerpt from Washington Post: Phasing out the internal-combustion engine is critical to President Biden’s vow to retool the American economy for a low-carbon future. In a massive infrastructure plan set to be unveiled Wednesday, Biden is expected to signal just how far he is willing to go to achieve his climate goals.

Serious negotiations are just beginning. Over the weekend, Rep. Debbie Dingell (D-Mich.), a former auto industry executive who represents a union stronghold southwest of Detroit, convened a discussion among the rival factions, urging them to pull together behind Biden’s vision of a robust market for electric vehicles, in part by establishing a nationwide network of charging stations.

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A year ago, the Environmental Protection Agency and the National Highway Traffic Safety Administration finalized a rule to improve average fuel efficiency by 1.5 percent per year, compared with a nearly 5 percent annual increase set to take effect under the Obama rules. But five automakers — Ford, Honda, Volkswagen, BMW North America and Volvo — have struck a deal with California that raises it about 3.7 percent annually.

California, the world’s fifth-largest economy, has significant leverage with industry because it was given authority under the Clean Air Act to establish its own limits on tailpipe emissions, which more than a dozen other states follow. Next month the Biden administration plans to restore that authority, which was revoked under President Donald Trump.

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While the administration has set a July deadline to resolve that issue, the more fundamental question is how it will manage the transition to a carbon-free fleet that will not materialize for years, probably after Biden leaves the White House.

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“Workers will disproportionately suffer if we do not get it right,” United Auto Workers President Rory L. Gamble said in a statement. “Currently, EV batteries are mostly made by suppliers in other countries, with China in the lead. And where automakers are entering battery production, they are often doing so through joint ventures with battery companies that have an unknown track record on providing quality jobs.”

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Meanwhile, automakers are concerned about the scarcity of materials and parts needed for manufacturing electric vehicles.

“It takes seven years to build a lithium mine and 2½ years to build a battery plant,” said Simon Moores, managing director of Benchmark Mineral Intelligence, a London-based analytical firm that specializes in lithium-ion batteries. After that, he warned, the companies “will hit a wall of demand” in the United States while trying to get up to speed.

A Moody’s Investors Service report last week forecast “a long road” ahead for battery electric vehicles, or BEVs. “Achieving adequate returns on this growing BEV portfolio will be a major challenge for car companies,” it said, citing “roadblocks” such as high battery costs and insufficient demand.

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“Even if there were sentiment from consumers, it’s incredibly difficult to replace the vehicles on the road,” said David Keith, a professor at MIT. “Those cars will be on the road for the next 15 to 20 years.”

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The carmakers resisted the system California has in place. It requires companies to buy “zero emission credits” if they fail to deliver increasing numbers of electric vehicles, which make up 8 percent of car sales in California. Under Virginia’s new law, automakers will have to comply after two years, even though EVs account for only 2 percent of Virginia sales. However, through negotiations, the automakers’ trade group was able to double count the credits banked in California and use them to cover up to 18 percent of their obligations in Virginia. READ MORE