US Electric Vehicle Transition Policy 'Backtracking'... Tesla 'Frowns' GM 'Smiles'

New Car Fuel Efficiency Regulations Eased Compared to Previous Proposal

Calls to Slow Electric Vehicle Transition Rise in Biden Administration's Final Phase
Criticism Emerges Over Appealing to Voter Sentiment

Stock Prices of Electric Vehicle and Internal Combustion Engine Companies Show Mixed Reactions

The Biden administration in the U.S. has finalized regulations that ease fuel efficiency requirements for new cars compared to the original proposal. This has led to criticism among environmentalists who argue that the momentum for electric vehicle (EV) transition is weakening as the administration enters its final term. The EV transition holds symbolic significance for the Biden administration, which champions eco-friendly policies.

However, as the election season approaches, it is analyzed that President Biden, seeking re-election, cannot help but be mindful of workers' ‘votes’. Consequently, this year, the stock prices of leading EV companies and internal combustion engine (ICE) vehicle companies have sharply diverged.

Finalization of Weakened Fuel Efficiency Regulations Compared to Original Proposal

According to Bloomberg News on the 9th (local time), the U.S. National Highway Traffic Safety Administration (NHTSA) announced the final rule on the 7th to raise the average fuel efficiency of passenger cars up to the 2031 model year to 50.4 miles per gallon. This is a weaker regulation than the 58 miles per gallon proposed in July last year. NHTSA projected that under this standard, U.S. gasoline consumption would be reduced by about 7 billion gallons by 2050, saving consumers over $23 billion in fuel costs. However, this is significantly less than the previous savings estimate of approximately 8.8 billion gallons and $50 billion in fuel costs.

The final rule was designed to accelerate the EV transition with the goal of reducing carbon emissions under the Biden administration. However, since it is weaker than the original proposal, environmental groups have criticized it as a ‘half-measure’. Dan Becker, an environmental activist at the Center for Biological Diversity, expressed concern that “NHTSA’s weak final rule will result in the emission of many pollutants and give foreign companies an advantage in the EV market.”

Slowing Pace of EV Transition... Conscious of ‘Votes’?

[Image source=Yonhap News]

There have been ongoing criticisms this year that the Biden administration’s regulations on internal combustion engine vehicles are retreating. In March, the U.S. Environmental Protection Agency (EPA) finalized a passenger car carbon emissions regulation aiming for 56% of new car sales to be electric vehicles by 2032. This too is weaker than the previous target of 67% EV sales. Also in the same month, the U.S. Department of Energy released fuel efficiency calculation rules that evaluate EV fuel efficiency lower than previously proposed.

Critics argue that the delay in the Biden administration’s EV transition plan is due to concerns about the upcoming November presidential election. U.S. media have repeatedly raised concerns that many workers will lose jobs because EV factories have higher automation rates compared to ICE vehicle factories. The states of Michigan and Ohio, known as hubs for U.S. oil refining and auto parts manufacturing, are also seen as critical of the Biden administration’s Inflation Reduction Act (IRA) and related policies for this reason.

Meanwhile, last month, The Wall Street Journal (WSJ) released a survey showing that 40% of Americans hold negative views toward EVs, with 38% of those opinions rooted in political beliefs. WSJ explained, “Conservatives tend to criticize EV subsidies and dislike regulations that steer consumers toward specific products.”

Tesla ‘Cries’, GM ‘Smiles’

As the debate over slowing the pace of EV transition rises in the U.S., the fortunes of leading EV and ICE vehicle companies have diverged. After the relaxed ICE regulations were finalized on the 7th, EV maker Tesla’s stock closed slightly down, while ICE leaders General Motors and Ford closed slightly up. Looking at their stock trends over the past six months, Tesla and Rivian’s shares have fallen by 26% and 39%, respectively, while General Motors and Ford’s shares have risen by 36% and 10%, respectively.

Energy market research firm SNE Research forecasts that global EV growth this year will be 16.6%, below last year’s growth rate of 33.5%.

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