Under Trump GM backed a Republican legal battle that could have neutered California’s longstanding right to set its own tougher carbon-emission rules. About two weeks after Trump lost, GM withdrew from that fight and two weeks after he left office, it pledged to match the state’s mandate to sell only electric vehicles starting in 2035 – and do that all across the U.S.
Why the turnaround? Barra is getting a jump on President Joe Biden’s policies, which are expected to help GM and its rivals build and sell more EVs in the U.S. He wants to restore the $7,500 tax incentives that companies including GM and Tesla Inc. exhausted under Trump’s watch, and Biden plans to build 500,000 charging stations across the country. That could make EVs more affordable and ease concerns of would-be buyers about battery-powered cars’ driving range.
“They would not make an announcement this substantial just for political purposes,” said Joe Britton, executive director of the Zero Emission Transportation Association, a Washington-based lobby group pushing for full adoption of EVs by 2030. “This is a clear sign that electric vehicles are going to be the future and that we’re in a bull market for innovation right now.”
Believe it or not, Biden’s position has been met with a collective sigh of relief in some quarters of Detroit. The rest of the world is moving toward electric vehicles, and the Trump administration had no interest in easing that transition in the U.S.
China and the EU have jumped way ahead of the U.S. in EV adoption rates. Last year, of the 3.2 million EVs sold globally, 1.3 million were in China and 1.2 million were in the European Union and UK The U.S. accounted for just 328,000 sales, according to Swedish researcher EV Volumes.com.
That put Detroit’s carmakers in a spot. They get most of their revenue and profits at home in the U.S., where EV sales have been minimal. And they need help with economies of scale sufficient to drive down battery costs and create profit margins.
Ford Motor Co. has been stepping up its efforts as well, budgeting $11 billion for EVs and more fuel-efficient vehicles.
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.
GM, Toyota Motor Corp. and Fiat Chrysler Automobiles — now a part of Stellantis — 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 gasoline-powered vehicles.
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.
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.
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