USA EV

Kevin Riddell, Senior Manager, Americas Powertrain

18 November 2020

The US presidential election is over, but the path to electrification remains strewn with obstacles

Citizens of the US have spoken and elected Joe Biden and Kamala Harris to lead the country in 2021. The president elect’s platform includes a strong climate impact reduction plan, which calls for the US to rejoin the Paris Agreement as a matter of priority. A task force has been assembled already, whose agenda encompasses improvements within the transport sector, ranging from Passenger Cars, to Heavy Duty Trucks, Buses, aircraft and more. The aim is not only to reduce the direct impact of any given vehicle, but also that of the assembly plant.

The biggest remaining hurdle is the fact that the Senate is still controlled by the Republicans. This may change, however, as the two seats held by the state of Georgia are heading towards a run-off election. The Democrats need to win both seats in order to gain the Senate majority, but the two Republican contenders are currently tipped to win.

“Biden would struggle to pass environmental legislation without bi-partisan support, or confirming a number of cabinet posts, not least the Administrator of the Environmental Protection Agency”

Were the Senate to remain in the hands of the Republicans, Biden would struggle to pass environmental legislation without bi-partisan support, or confirming a number of cabinet posts, not least the Administrator of the Environmental Protection Agency. Indeed, this could turn out to be the first real test of the new president’s ability to foster unity between the two parties.

Despite the challenge of replacing the Safer Affordable Fuel Efficient (SAFE) Vehicles regulations and committing US$2 trillion in the budget over the next four years to reduce climate change, certain elements of the plan could be split out to make them more palatable, including

  • Extending national tax credits for all-electric and plug-in vehicles
  • Increasing incentives for producing all-electric and plug-in vehicles
  • Boosting usage of all-electric and plug-in vehicles in government Light Vehicle fleets
  • Expanding investment in public charging infrastructure

“without regulations to support a greater uptake of electrified vehicles, the US may miss out on potential capital investments”

A previously proposed extension of the tax credits was supported by both parties, only to be blocked when it reached the White House. Nevertheless, the initial response seems to indicate that some Republicans are willing to cooperate on reducing environmental impact. More importantly, without regulations to support a greater uptake of electrified vehicles, the US may miss out on potential capital investments from the current wave of production opportunities created by technological transition.

With stronger regulations abroad, the US would be left playing catch-up in the years ahead, from a tech-capacity standpoint, while exports of vehicles that do not meet – or that negatively impact – foreign fleet requirements could potentially be hampered.