Biden wants American car companies Quick that electric cars account for 40% by 2030. Who will be the winner?

Biden administration is negotiating with American Car Companies, hoping that they can support an agreement: by 2030, at least 40% of new car sales in the United States will be electric vehicles.

The Biden administration has yet to reach a final agreement with U.S. automakers (American Car Companies), and many details are still being finalized, including whether the sales target of electric vehicles may be raised to 50%, and whether electric vehicle sales include hybrid vehicles, people familiar with the matter said.

Wang Yong, a professor at the School of International Relations of Peking University and director of the American Research Center of Peking University, said in an interview with the First Financial Reporter that at the policy level, whether the successful implementation of the Biden administration’s new energy policy depends on whether the U.S. government can solve the problem of high debt and whether the Democratic Party can elect in mid-2022. Juhe defeated the Republican Party in the 2024 U.S. presidential election.

Zheng Wei, senior partner of Roland Berger Global, said in an interview with First Financial Reporter that based on the current penetration rate of the U.S. electric vehicle market by American Car Companies, the 40% target is slightly radical. Whether the Biden administration’s goals can be achieved by American Car Companies depends on the government’s incentive system for the purchase of electric vehicles, the perfection of infrastructure such as charging piles, and whether it can promote the development of new energy batteries.

Since Biden took office as President of the United States, America’s new energy policy has been advancing. In the field of electric vehicles, under the Infrastructure Construction Plan, the Biden administration will promote the development of the electric vehicle market on both the supply and demand sides.

On the supply side, $174 billion will be allocated to help American Car Companies build a complete supply chain in the United States, and promise to build 500,000 electric vehicle charging piles by 2030. On the demand side, the electrification of public vehicles such as transport vehicles, buses and school buses will be promoted, and purchase subsidies will be provided to consumers.

In the upcoming agreement between the Biden administration and American Car Companies, the Biden administration could follow the example of the California government’s 2019 approach, people familiar with the matter said. This means that by 2026, the average fuel economy standard of American Car Companies will likely exceed the 5% annual increase stipulated by the Obama administration.

Wang Yong believes that the Biden administration has always put climate issues at the height of national security strategies, which has brought many aspects of its government work to the energy transformation. In the automotive industry, the Biden administration, on the one hand, urges the transformation of traditional automobile enterprises, and on the other hand, it also encourages the development of electric vehicle enterprises.

“But it is still unknown whether the new energy policy can be smoothly promoted.” Wang Yong said, “at the policy level, this is mainly limited by the two major problems of excessive government debt and bipartisan game.”

First of all, the current fiscal deficit of the U.S. government is relatively high, and the source of funding for policy subsidies is variable, he explained. According to the data of the U.S. Congressional Budget Office, the federal government’s fiscal deficit is expected to reach $3 trillion in fiscal year 2021, the second highest level since 1945. Second, the United States will hold midterm and presidential elections in 2022 and 2024. At present, the competition between Democrats and Republicans is so fierce that it may be difficult to reach consensus on large-scale new energy subsidies in the short term.

At the corporate level, the Biden administration’s plan has also attracted opposition from the traditional automobile industry. The National Federation of Auto Workers said it had not reached an agreement with the Biden administration.

Among the three major American Car Companies in the United States, General Motors (55.05, 0.61, 1.12%) said it hoped to stop selling new gasoline-powered light vehicles in the United States by 2035. Chrysler parent company Stellaantis said it hopes to achieve low emissions for 40% of its cars sold across the United States by 2030. Ford Motor (13.8, 00.09, 0.66%)did not comment on this.

How will it affect the electric vehicle market?

CICC expects that if a series of new energy policies of the Biden administration are implemented, the U.S. electric vehicle market is expected to reproduce the European market development path from 2019 to 2020 from 2022 to 2023, driving a new round of global growth.

CITIC Securities (22.9, 0.00, 0.00%)predicts that the sales of electric vehicles in the United States are expected to exceed 2.3 million by 2025, and the compound growth rate will exceed 35% from 2020 to 2025.

In Zheng Wei’s view, for the global electric vehicle market, from the demand side, this will accelerate the pace of the transition to electrification in various countries around the world. From the supply side, it can promote the competition of automobile mainframe factories in the U.S. market. However, because China and Europe are currently the two major electric vehicle markets in the world. Even if the penetration and sales volume of the U.S. electric vehicle market increase, it may not have much impact in the past three years.

In 2020, China and Europe accounted for 40.70 percent and 43.80 percent of the global EV market share, while the U.S. accounted for only 11.20 percent, according to market research firm EV Sales.

“But from the perspective of the electric vehicle industry chain, upstream battery manufacturers may be greatly affected.” Zheng Wei said that while promoting new energy policies, the Biden administration also emphasizes Made in the United States and pays attention to supply chain security. Against this background, U.S. battery manufacturers may benefit from the boost of Biden’s new energy policy.

Since the Biden administration launched the new energy policy, it has also continuously emphasized the importance of localizing American Car Companies the electric vehicle industry chain. The Biden administration has proposed to use U.S.-made parts more strictly in government-purchased vehicles, and the current standard is to require at least half of the auto parts to come from the United States.

Meanwhile, in the EV Support Program, the Biden administration plans to subsidize new battery plants in the United States.” Don’t bring the benefits of our public investment overseas, expand the production of electric vehicles and batteries overseas.” Biden said during a visit to the Ford Motor Vehicle Electric Vehicle Factory.

In addition, Zheng Yi said that the current electric vehicle market in the United States is still driven by policies, not fundamentals, because the market has not grown up and has not reached the stage of full competition.

For consumers, when buying electric vehicles, they are compared with traditional fuel vehicles, and their focus is on the cost of buying a car, the cost of using the car and the residual value. The Biden administration can only make new energy policies really work if it promotes a combination punch policy in the above aspects, gradually expands the cake, and let consumers experience the “full life cycle of car use”.