General Motors Co., Ford Motor Co. and the maker of Chrysler Stellantis NV said their engagement depended on federal funding for manufacturing and supply chain research and development, purchasing incentives and ” a national electric vehicle charging network.
Executives at these companies and the United Auto Workers are expected to attend an event at the White House on Thursday afternoon, where administration officials will also announce stricter energy efficiency standards.
The standard was set at an average of 54.5 miles per gallon under the Obama administration, but reduced to 40 mpg by former President Donald Trump.
The switch to electric vehicles will help automakers achieve these higher energy efficiency standards. But in a joint statement, the companies said the voluntary sales targets for electric vehicles “can only be achieved with the timely deployment of all electrification policies to which the administration is committed”. Biden in the roughly $ 1,000 billion infrastructure plan currently underway in the Senate. and related initiatives.
The Senate Infrastructure Spending Bill allocates $ 7.5 billion in grants to states and municipalities for the construction of electric vehicle charging stations. This is half the amount President Biden requested in March when he set a target of 500,000 public charging stations by 2030. The United States currently has approximately 110,000 charging stations. public recharging.
The bipartisan Senate proposal also includes more than $ 6 billion in subsidies for the production, development and recycling of batteries.
The proposal does not include a key element that the industry has called for: additional tax credits for people who buy electric vehicles. The administration is still working with Congress on consumer tax credits, White House Economic Advisor Susan Helper said earlier this week.
Electric vehicle sales accounted for about 3% of the total U.S. market in May and June, according to industry data. Automakers have said their commitment is to ensure that electric, fuel cell and plug-in hybrid vehicles account for 40-50% of sales by 2030, saying the action “represents a radical shift from the market. American Today “.
Biden administration officials, however, said the president plans to sign an executive order setting a voluntary 50% target.
Wall Street analysts have said the large-scale switch to electrification is likely to weigh on earnings for traditional automakers over the next several years.
“The chances that this industry can smoothly ‘hand over’ the ICE to the EV without major disruption to margins are low,” Morgan Stanley analyst Adam Jonas wrote in a note Thursday.
A notable absence from the White House ceremony will be Elon Musk, CEO of Tesla Inc., which has sold the vast majority of all-electric vehicles in the United States in recent years.
“It seems strange that Tesla was not invited,” Musk wrote in an overnight tweet.
Administration officials declined to comment on Tesla’s absence.
One possible explanation, analysts say, is that Tesla is a non-union store. The Detroit automakers attending the White House event have a production workforce represented by the UAW.
“The president said from day one that he was interested in promoting good union jobs in the automotive industry, and there are only three automakers that have union membership,” said Kristin Dziczek, vice president principal of the Center for Automotive Research.
In a statement released by the White House, UAW President Ray Curry said the president’s initiatives “will bring more certainty and better planning for the auto industry and the future jobs of UAW members. “.
Consumers have started to warm up to electric vehicles, and automakers are betting heavily on new technology.
“This industry will spend $ 330 billion over the next five years on electrification alone,” John Bozzella, president of the Alliance for Automotive Innovation, the pressure group for automotive manufacturers and suppliers, said on Wednesday at a conference. “Even in Washington, DC, it’s real money.”
Many of these investments go towards converting factories to electric vehicles or building battery factories. GM plans to open battery factories in Ohio and Tennessee as part of its joint venture with Korean battery company LG Chem.
The speed at which American automakers are turning to electric vehicle manufacturing could disrupt the automotive workforce. Motors built for electric vehicles do not require as much labor. Several major automakers have reduced their investments in the development of new gas engines.
Some environmentalists say the voluntary targets do not go far enough in the transition to electric vehicles, saying stronger measures are needed to reduce greenhouse gas emissions that contribute to climate change.
The plan “builds on unenforceable voluntary commitments from unreliable automakers,” said Dan Becker, a longtime advocate for clean transportation, currently director of the Safe Climate Transport Campaign at the Center for Biological Diversity , a nonprofit environmental advocacy group. are the companies that tore up the deal they made with President Obama to cut pollution, so why would anyone trust them now? “
Other automakers have joined in to support the administration’s efforts. In a joint statement released by the White House, BMW AG, Honda Motor Co., Volkswagen AG and Volvo AB said they “remain committed to leading the industry in the fight against climate change.”
“That is why we support the administration’s goal of achieving a future for electric vehicles and applaud President Biden’s leadership in reducing emissions and investing in critical infrastructure to achieve those reductions,” indicates the press release.
A senior administration official told reporters that the electric vehicle sales target was an ambitious step towards transforming the U.S. auto industry into a leader in electric vehicles.
“Ten years ago, we were talking about hitting about 50 miles per gallon of gasoline in 15 years,” the official said. “Today, for new cars, we’re talking about reaching about 50% of vehicles that don’t even require a gallon of gasoline to go a mile in less than a decade. It’s a paradigm shift. “
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