The Biden Administration is reportedly planning to delay the requirement for automakers to increase their sales of electric vehicles (EVs) due to weak demand, according to a report by the New York Times. This decision comes as the administration faces pressure from environmentalists who want action on climate change, as well as concerns from unionized auto workers about potential job cuts. The relaxed rule is part of a pending regulation that limits tailpipe emissions and is set to be finalized by the Environmental Protection Agency (EPA).
Under the proposed EPA regulation, about 67% of new car sales, including sedans, crossovers, SUVs, and light trucks, would need to be electric by 2032. This represents a significant increase from the current 7% in 2023. The regulation would also require a certain percentage of buses, garbage trucks, short-haul freight tractors, and long-haul freight tractor purchases to be electric by 2032.
The decision to delay the requirement is driven by the fact that EVs have not been selling well, impacting the profit margins of leading U.S. automakers like Ford and General Motors (GM). Consumers have been hesitant to purchase EVs due to their relatively high prices. The average cost of an EV, after factoring in federal and state subsidies, is $52,500, compared to $24,000 for an average subcompact car.
Ford has projected a loss of $5 billion to $5.5 billion on its EV division this year. In response, the company has established a separate team focused on designing a small, low-cost EV that can compete with China-based BYD’s Seagull model. Ford CEO Jim Farley has emphasized the importance of competing with Chinese automakers in order to protect revenue.
GM CEO Mary Barra has expressed openness to collaborating with other automakers on EV technologies to make them more affordable. She believes that GM is well-positioned to break even on its North American EVs in the second half of this year if it can reach an annualized production rate of 200,000 to 300,000 vehicles and continue to benefit from federal EV subsidies.
Both Farley and Barra have indicated a willingness to form partnerships with other automakers to enhance the competitiveness of their EV offerings. They recognize the threat posed by low-cost options from Chinese automakers like BYD, which are entering the European market and may soon enter the U.S. market.
In conclusion, the Biden Administration is planning to delay the requirement for automakers to increase their sales of EVs due to weak demand. This decision reflects the challenges faced by U.S. automakers in selling EVs at higher prices compared to traditional vehicles. However, industry leaders like Ford and GM are exploring strategies to make EVs more affordable and competitive, including potential partnerships with other automakers. The future of the EV market will depend on consumer demand, technological advancements, and government policies that support the transition to electric transportation.