Biden’s victory put some wind at the auto industry’s back and makes the commitment to electric powertrains more palatable for their risk-averse corporate cultures.
Political Convenience
Even so, there also is a hefty dose of political convenience involved in the decision to go all-in on EVs. GM, Toyota Motor Corp. and Fiat Chrysler Automobiles NV -- now a part of Stellantis NV -- went along with Trump in his legal fight with California, throwing a bone to a temperamental president and thereby extending their ability to churn out cash-cow gas-guzzlers.
Officially, GM said it always wanted one national standard instead of different rules from Washington and Sacramento. It just so happens that the company picked Trump’s watered-down option.
Critics of government subsidies were quick to see GM’s move as a sign the market for EVs is maturing fast enough that no additional incentives are needed.
“GM is a publicly traded business and is making a strategic, calculated market decision,” Tom Pyle, a former Trump adviser and current president of American Energy Alliance, a free-market advocacy group, said in a statement. “In no way should any taxpayer be responsible for GM’s ability to achieve -- or fail to achieve -- their corporate goal of an all-electric light duty fleet by 2035.”
Big companies have long sought to position themselves in the most favorable light in Washington, regardless of which party’s candidate is in the Oval Office. Carmakers are no exception. Former Ford CEO Mark Fields warned then-President Trump that overly tough mileage rules would put a million jobs at risk, a prelude to Trump’s rollback. And GM broadly touted its Chevrolet Volt plug-in after its 2009 rescue by the Obama administration, which later set a goal of putting a million electric vehicles on the road by 2015.
Carrot and Stick
Trump and his Twitter account are now silenced. With Democrats running the White House and having a majority in both chambers of Congress, the prevailing wind is definitely blowing against Detroit’s status quo dependency on big sport-utility vehicles and trucks.
Biden’s plan also comes with a stick. Earlier this week, he vowed to reinstate vehicle emissions standards gutted by the Trump administration and set “new, ambitious ones that our workers are ready to meet.”
Doing so would aid GM’s electrification push and could encourage competitors to follow suit, said Joshua Linn, a senior fellow at Resources for the Future, a Washington think tank that focuses on environmental policy and economics.
“Companies don’t want to get out too far ahead of the market,” he said. “Having more ambitious policies, greenhouse-gas standards and maybe a national zero-emission vehicle program will help support the entire market moving in that direction.”
GM’s worst nightmare is a scenario in which its commitment to EVs isn’t met with higher consumer demand, allowing rivals with less ambitious electrification plans to steal away business. Biden may be giving GM some of the cover it needs to proceed.
--With assistance from William Mathis and Jennifer A. Dlouhy.
This article was provided by Bloomberg News.