US Electric Vehicle Production Lagging... Biden's Green Policy Put to the Test

US Production Share 18%
Behind China 44% and Europe 20%
Greenhouse Gas Regulations Eased Under Trump
Purchase Subsidies for Tesla and Others Reduced
Infrastructure Development Budget Severely Cut

[Image source=Reuters Yonhap News]

[Asia Economy Reporters Byunghee Park and Suhwan Kim] As electric vehicle (EV) sales surge in Europe, an analysis has emerged showing that U.S. EV production significantly lags behind that of Europe and China. This development puts U.S. President Joe Biden’s policy, which focuses on fostering the EV industry as part of eco-friendly infrastructure development, to the test.

On the 29th (local time), the non-profit organization International Council on Clean Transportation (ICCT) released research findings indicating that U.S. EV production is behind that of China and Europe, with the gap widening over the past three years.

According to ICCT’s tally of cumulative EV production from 2010 to 2020, the U.S. holds an 18% share, trailing China (44%) and Europe (20%). Compared to the 2017 data, China and Europe’s shares increased by 8 and 2 percentage points respectively, while the U.S. share dropped by 2 percentage points.

This outcome is largely attributed to the fact that, unlike European countries which have tightened greenhouse gas emission regulations leading to increased production and sales of eco-friendly vehicles, the U.S. relaxed vehicle exhaust emission standards during the Donald Trump administration.

Additionally, the gradual reduction of EV purchase subsidies for domestic manufacturers such as Tesla and GM also played a role. ICCT reported that last year, the EV sales share exceeded 10% in Europe but was only 2.3% in the U.S.

In fact, according to a report released the same day by the European Environment Agency (EEA), the number of new car registrations in the European Union (EU), Iceland, Norway, and the United Kingdom last year was 11.6 million, with 11% of those being electric vehicles.

The EEA stated that despite a decline in new car sales in Europe due to the COVID-19 pandemic, the share of EV sales tripled from 3.5% in 2019 to 11% last year.

While the overall automobile market contracted, the EV market continued its steep growth. This is attributed to the EU’s strengthened greenhouse gas emission regulations and countries like Germany and France including EV subsidy programs in their COVID-19 economic recovery plans last year, which significantly boosted EV sales.

Since taking office, President Biden has emphasized fostering the EV industry and pledged to expand related infrastructure development. However, disappointment has grown as the recently agreed infrastructure budget in the U.S. Congress significantly cut EV-related funding.

According to the infrastructure development plan signed by President Biden on the 24th, the budget allocated for the EV industry is $15 billion (approximately 17 trillion KRW).

This amount is only one-tenth of Biden’s original plan of $174 billion (approximately 196 trillion KRW). During negotiations with the Republican Party, a large portion of the eco-friendly budget was slashed, which impacted the EV budget. Notably, most of the $100 billion budget for EV purchase subsidies was reduced.

Consulting firm Ernst & Young predicted that the U.S. EV era will arrive later than in Europe and China.

In a recent report, Ernst & Young forecasted that the U.S. will not enter the EV era?where EV sales surpass internal combustion engine vehicle sales?until 2036. This is significantly behind China (2033) and Europe (2028), where the EV era is expected to begin earlier.

Ernst & Young also predicted that by 2045, 99% of vehicles sold in Europe will be electric, with internal combustion engine vehicles nearly disappearing.

Meanwhile, there is speculation that the Biden administration and the Democratic Party may prepare additional budgets to foster the EV industry. The Hill reported that the Democrats are likely to propose an additional budget including EV purchase subsidies within this year. The White House also stated in a press release that "this budget will not hinder achieving President Biden’s goal of deploying 500,000 EV charging stations by 2030."

This content was produced with the assistance of AI translation services.