Biden's EV Strategy is More Stick Than Carrot

There are competing philosophies when it comes to shifting the market to electric vehicles.

There’s the free-market philosophy, which says the market will get there on its own. There’s the incentive philosophy, which suggests incentivizing consumers will accelerate the transition away from the internal combustion engine. Consider that one to be the carrot approach.

Finally, we have the philosophy that if regulations don’t force automakers to make more EVs, they won’t, at least not quickly enough to address climate change. The free market and/or incentives won’t be enough. Consider this to be the stick.

Guess which philosophy President Joe Biden seems to be embracing?

According to the New York Times, Biden’s plan to cut tailpipe emissions is two-fold. The first part is to restore standards to what they were under Barack Obama, who Biden served as vice president. The second part? Make the standards stricter.

The Times reports that sometime this month, Biden will announce a plan to return to the Obama-era standards. The Times also reports that the administration is working on stricter standards. Those standards could reduce emissions and perhaps increase EV sales but they’d almost certainly be the target of political pushback. It’s also possible, though by no means certain, that stricter standards could have negative impacts on the industry.

Biden has already pledged to cut carbon emissions to half of 2005 levels by 2030.

“Look, the future of the auto industry is electric. There’s no turning back,” Biden said back in May, at a Ford event unveiling the Lightning electric truck. “We’re going to set a new pace for electric vehicles. That means reversing the previous administration’s shortsighted rollback of vehicle emissions and efficiency standards. Setting strong, clear targets where we need to go.”

Both the Environmental Protection Agency and the Department of Transportation are expected to propose a rule that would require passenger vehicles to have an average of around 51 mpg by 2026. Current standards, set by former President Donald Trump, hover around 44 mpg by 2026. Obama’s rules aimed for the same mpg but by 2025.

But wait, there’s more. The admin is also said to be working on rules that would be more “ambitious” (the Times word) and run through 2030 or maybe even 2032. A top climate advisor is apparently trying to write the rule so that it appeases both automakers and the labor unions.

According to the Times report, transportation as a sector is the biggest single source of the kind of emissions that warm the climate, at 28 percent of carbon emissions. The paper doesn’t break things out by segment, though — it doesn’t say how much of that is attributed to cars and how much is attributed to cargo ships or commercial airplanes.

The Times astutely notes that consumers might be slow to adopt EVs, due to the lack of charging infrastructure and other reasons. It also suggests that the passage of a general infrastructure bill might make tougher emissions rules an easier sell, especially if such a bill improves charging infrastructure and creates more tax incentives.

If an infrastructure bill doesn’t spend much to help support EVs, it could upset automakers, who’d be forced to build EVs that would be tough to sell. Unions also have skin in the game, since a shift to EVs could reduce the number of workers needed on the line.

There’s also politics to consider, as Biden is a car guy who has also presented himself as pro-union. There will also be pushback from the fossil-fuel industry.

Some governors want the Biden admin to go further and work to make sure all new cars and trucks are EVs by 2035.

We’re not going to tell you in this piece which philosophy is the best way to get the market to shift to EVs (I have thoughts on that subject but they are best saved for a separate op-ed), but from here it sure appears Biden chose the stick.

[Image: Ford]