US Electric Car Revolution Hindered Do to Government and Legal Challenges

by Wall Street Rebel - Michael London | 04/18/2023 9:07 AM
US Electric Car Revolution Hindered Do to Government and Legal Challenges

The timing of a nationwide switch to electric cars is crucial, especially in light of the Supreme Court's extreme conservatism, which sees the laws as an example of government overreach.


The administration of President Joe Biden has recommended the implementation of stringent regulations to significantly accelerate the nation's transition to electric vehicles and considerably reduce the amount of auto pollution contributing to the planet's catastrophic warming. However, implementing these regulations faces several obstacles on the economic, logistical, and legal fronts, making it difficult to accomplish.

If the laws were to be approved as they are now suggested, it would imply a quantum leap for the automotive sector in the United States. The proposals, which the Environmental Protection Agency presented on Wednesday, are intended to guarantee that by the year 2032, two-thirds of new passenger cars and one-fourth of new heavy trucks sold in the United States will be all-electric vehicles. There were just 5.8 percent of new vehicles and fewer than 2 percent of trucks sold in the United States that were all-electric last year.

.The transportation sector represents the primary contributor to the production of greenhouse gases within the United States, which is the second most significant emitter of such gases globally, following China. President Biden has pledged to reduce the country's emissions by 50% by the year 2030 to prevent a potential climate crisis. Reducing tailpipe emissions is a crucial aspect of the aforementioned strategy.

In order to achieve its ambitious goals for the American automobile industry, the Biden administration must overcome opposition from both manufacturers and consumers, in addition to potential legal obstacles from those who view the regulations as an encroachment of government authority.

The temporal dimension constitutes a crucial factor in the wholesale adoption of electric vehicles.

The proposed regulations present a quandary for automakers who have already allocated significant funds towards electrification. Specifically, they must grapple with the challenge of maintaining the production of gasoline-powered vehicles, which generate profits, while simultaneously increasing investment in new electric infrastructure. The government's ambitious timeline may pose a challenge for car manufacturers in terms of procuring the necessary materials for vehicle batteries, which are already scarce.


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Another obstacle to overcome is the market's demand. Even with federal tax incentives for buyers that may reach up to $7,500, electric vehicles still have a higher initial cost than traditional automobiles and pickup trucks. According to the Kelley Blue Book, the price of an average new automobile by the end of 2022 was $49,507, while the price of an electric vehicle was $61,448. The dread of being stranded because an electric car cannot reach its destination on a single charge and there are not enough fast-charging stations available is known as "range anxiety." However, even for customers who are driven to purchase electric vehicles and who have the financial means to do so, range anxiety remains a significant barrier.

"This was always going to be a transformation that was going to happen over decades," said Stephanie Brinley, an automotive analyst at S&P Global. Because we have such a tight schedule, there are a lot of activities that have to take place one after the other as well as simultaneously.

The new regulations are vulnerable to being overturned, either by the courts or by a future president, and this is a danger that hangs over the whole situation like a dark cloud.

The sector is already making significant strides toward a fully electric future in many respects. General Motors has committed to ending the production of all cars powered by an internal combustion engine by the year 2035. Ford Motor Company has expressed the goal that electric vehicles would account for half of its sales by the year 2030. The goals of Volkswagen and Stellantis, the business that resulted from the merger of Fiat Chrysler and Peugeot, are quite similar. Additionally, Hyundai and Nissan are working to increase their output of electric vehicles.

However, the new laws would place even more stringent requirements on automotive manufacturers.

Ford is on schedule to invest $50 billion between 2022 and 2026 in the manufacturing of electric vehicles. The company already has two battery factories under development in Kentucky, and a third is slated to be built in Tennessee, along with a factory to produce electric trucks. In February, it made the announcement that it would collaborate with a Chinese company to construct a battery facility in Michigan at the cost of $3.5 billion.


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Automakers such as Ford have yet to acquire adequate supplies of essential materials, including lithium, nickel, cobalt, manganese, and others, necessary for the production of automotive batteries. The origin of these materials remains uncertain.

The Biden administration is relying on the prospect of reduced electric vehicle expenses through mass production, whereas Carlos Tavares, the CEO of Stellantis, has expressed that the challenge of material procurement presents a hindrance to this goal. During a conference held in Detroit, Mr. Tavares expressed that the lack of affordability can be attributed to the scarcity and high cost of raw materials, which are also subject to volatility.

The manufacturing of electric cars is now being financed by the significant profits that automakers make from the sale of gas-powered pickup trucks and sport utility vehicles. However, analysts predict that it will be difficult for automakers to keep their profit margins stable as they build an increasing number of electric cars and a decreasing number of models powered by gasoline.

General Motors has said that it is not yet generating money on its electric cars, while Ford has just stated that its electric business is on track to lose $3 billion this year. Both of these statements are accurate. Both businesses are ramping up the production of electric vehicles in the hopes of turning a profit. Still, in the meanwhile, they are working to reduce expenses, particularly in light of the uncertain economic climate.

As part of an attempt to cut expenses by $2 billion, General Motors is now in the process of cutting 5,000 positions. Ford started eliminating around 3,000 positions from its workforce late last year.

And even though the number of electric vehicles being purchased is on the rise, many people shopping for cars are wary of the new technology.

The price is the most fundamental barrier.

Over the next decade, depending on how much of the car was built in the United States, the federal government will award consumers tax credits of up to $7,500 for purchasing an electric vehicle. Mr. Bozzella estimates that only around 40% of the 91 different electric car models now available in the nation are eligible for tax incentives.

Electric car drivers also have concerns about how to charge their vehicles. According to the White House, 130,000 public charging stations exist for electric vehicles in the United States. The government will invest $7.5 billion to install 500,000 EV charging stations along federal roads as part of the 2021 infrastructure plan. S&P Global released research in January estimating the demand for public charging stations nationwide at over 2 million.

Rentals are one method manufacturers of electric vehicles use in their campaign to win over customers. Hertz, a rental car firm, made electric vehicles twenty percent of its fleet in 2021 after purchasing one hundred thousand Teslas. Most other big automobile rental firms are also expanding their fleets to include electric cars.

"Rental cars are an excellent way to move E.V.s from niche to mainstream," said Drew Kodjak, executive director of the International Council on Clean Transportation, a research group. "Rental cars are an excellent way to move electric vehicles from niche to mainstream." "It gives customers the opportunity to put electric vehicles through their paces for a few days to determine whether or not they like them and how they feel about range anxiety," he said.

Rental firms, such as Teslas, are eligible for tax credits of up to $7,500 per vehicle if they purchase electric cars manufactured in the United States. And the government under President Joe Biden has made it simpler for auto rental firms to resell the vehicles after a few years by allowing purchasers to obtain tax credits of up to $4,000 for purchasing secondhand electric vehicles.

Despite the potential for companies to efficiently produce cost-effective electric vehicles and for consumers to overcome concerns regarding driving range, the suggested regulations are likely to encounter legal opposition or be influenced by fluctuating political circumstances.

According to Mike Sommers, the President of the American Petroleum Institute, an organization that advocates for the interests of the oil and gas industry, the regulations represent a significant move towards prohibiting the usage of vehicles essential to Americans.

According to Mr. Sommers, the suggested regulation can negatively impact consumers by increasing costs and creating a greater dependence on unpredictable foreign supply chains.

Donald J. Trump, the previous President of the United States, took pleasure in reversing the automobile pollution regulations put in place by his predecessor, Barack Obama. A future president can take similar actions concerning the regulations implemented during the Biden administration.

A cohort of Republican attorneys general, a significant proportion of whom hail from states with a thriving oil industry, have already contested a number of the climate policies put forth by the Biden administration. It is worth noting that none of these policies are as ambitious as the proposed regulations on automobile pollution.


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On Wednesday, Attorney General Patrick Morrisey of West Virginia indicated that the aforementioned group would oppose the latest proposals.

According to Steven G. Bradbury, the former chief legal counsel for the Transportation Department under the Trump administration, the proposed regulations would constitute excessive government intervention.

According to Mr. Bradbury, who previously served as a clerk for Justice Clarence Thomas, the utilization of a well-established and long-standing statute is being repurposed to achieve a novel objective, namely the conversion of the industry to electric vehicles. The attainment of these outcomes is evidently motivated by the instruction of the head of state. It is doubtful that this can be accomplished. Congress did not previously consider the utilization of statutes in this manner.

According to Jody Freeman, an environmental law professor at Harvard University and former climate adviser to President Obama, the Clean Air Act has effectively compelled polluting industries to invest in emission-reducing technologies for a considerable time.

However, she acknowledged that the present Supreme Court, comprising six justices nominated by Republican presidents, including three appointed by Mr. Trump, may not interpret it similarly.

According to Ms. Freeman, the court exhibits a strong aversion towards any form of regulation and displays a particularly antagonistic attitude towards the Environmental Protection Agency.


                       Biden admin accelerating electric vehicle movement with new standards

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