By Coral Davenport and Neal E. Boudette
Aggressive rules proposed by the Biden administration to drastically speed up the country’s transition to electric vehicles, and significantly cut the auto pollution that is dangerously heating the planet, face several economic, logistical and legal challenges.
The plans, outlined last week by the Environmental Protection Agency, are designed to ensure that two-thirds of new passenger cars and one-quarter of new heavy trucks sold in the United States are all-electric by 2032. If enacted as proposed, the regulations would mean a quantum leap for the auto industry in the United States, where just 5.8% of new cars and less than 2% of trucks sold last year were all-electric.
Transportation is the single largest source of greenhouse gases generated by the United States, the second-biggest polluting country after China. To head off climate catastrophe, President Joe Biden has promised to cut the nation’s emissions in half by 2030. Shrinking tailpipe emissions is key to that plan.
But to transform the American automobile industry on the scale it envisions, the Biden administration has to surmount resistance from manufacturers and consumers as well as likely legal challenges from those who consider the regulations government overreach.
One of the most important aspects of a wholesale transition to electric vehicles has to do with timing.
Although nearly every automaker has already invested billions in electrification, the proposed regulations create a dilemma: how to continue to manufacture gasoline-powered vehicles, which provide profits, while investing even more in new electric facilities. The aggressive timeline envisioned by the government means that carmakers could also struggle to source the materials required for vehicle batteries, already difficult to obtain.
Market demand is another challenge. Even with federal tax incentives of up to $7,500 for consumers, electric vehicles cost more upfront than conventional cars and trucks. At the end of 2022, the price of an average new car was $49,507 compared with $61,448 for an electric vehicle, according to the Kelley Blue Book. But even for motivated consumers who can afford electric vehicles, a major stumbling block is what’s known as range anxiety, the fear of being stranded because an electric vehicle cannot reach its destination on a single charge and not enough fast-charging stations exist.
“This was always a transformation that was going to happen over decades,” said Stephanie Brinley, an automotive analyst at S&P Global. “Putting this aggressive a timeline on it means that there are a lot of things that have to happen consecutively and concurrently.”
Looming over all of this is an all-but-certain legal and political threat: The new rules could be erased by the courts or a future president.
In many ways, the industry is already moving into an all-electric future. General Motors has set a goal of phasing out the sale of all internal combustion vehicles by 2035. Ford Motor has said it hopes EVs make up half of its sales by 2030. Volkswagen and Stellantis, the company formed through the merger of Fiat Chrysler and Peugeot, have similar targets. Hyundai and Nissan are also ramping up EV production.
The risks of accelerating the transition away from gasoline-powered vehicles are “high, if not very high,” for the industry, said Matthias Heck, a vice president at Moody’s Investors Service, “because electrification will require further substantial investments into new battery electric vehicles, battery technology, supply chain and manufacturing capacity, and charging infrastructure.”
Ford and other automakers also have not yet secured sufficient sources of lithium, nickel, cobalt, manganese and other materials needed for automotive batteries, and it is unclear where they will get them.
And while the pace of electric vehicle purchases is ticking up, many car buyers are uncertain about the new technology.
“We’re making sales to early adopters and easy adopters, but we need to get beyond them,” said John Bozzella, president of the Alliance for Automotive Innovation, which represents large U.S. and foreign automakers. “We have a long way to go.”
The most basic hurdle is price.
The federal government will offer buyers up to $7,500 in tax credits for the purchase of an electric vehicle for the next decade, depending on how much of the vehicle was made in the United States. But of the 91 unique electric vehicle models now on the market in the country, fewer than 40 qualify for the tax credits, Bozzella said.
Drivers are also worried about charging electric vehicles. There are currently 130,000 public electric vehicle charging stations in the United States, according to the White House. Under the 2021 infrastructure law, the government will spend $7.5 billion to build 500,000 electric vehicle charging stations along federal highways. But a January report from S&P Global concluded that the nation would need more than 2 million public charging stations by 2030, in addition to private home and garage chargers.
Even if companies can churn out affordable electric vehicles at a fast pace, and consumers get over range anxiety, the proposed regulations are certain to be hit with legal challenges or be subject to shifting politics.
Mike Sommers, president of the American Petroleum Institute, which represents the oil and gas industry, called the regulations “a major step toward a ban on the vehicles Americans rely on.”
“As proposed, this rule will hurt consumers with higher costs and greater reliance on unstable foreign supply chains,” Sommers said.
President Donald Trump relished rolling back the auto pollution regulations enacted by his predecessor, Barack Obama. A future president could do the same to the Biden regulations.
A group of Republican attorneys general, many of them from oil-producing states, has already challenged several of the Biden administration’s climate polices, none of which are as ambitious as the proposed auto pollution regulations.
Attorney General Patrick Morrisey of West Virginia suggested Wednesday that the group would fight the newest proposals.
Steven G. Bradbury, who served as the chief legal counsel for the Transportation Department during the Trump administration, said the regulations would amount to government overreach.
“They are using this established, long-standing statute for an entirely new purpose, to force an entirely new goal: the transformation of the industry to electric vehicles,” said Bradbury, a former clerk for Justice Clarence Thomas. “This is clearly driven by the president’s directive to achieve these results. I don’t think you can do this. Congress never contemplated the uses of statutes in this way.”
Jody Freeman, a professor of environmental law at Harvard University, who also served as a climate adviser to Obama, argued that the Clean Air Act has been used successfully for years to compel polluting industries to invest in new technologies to reduce emissions.
“All of that is part of the normal course of how EPA has set standards,” she said.
But she conceded that it may not be seen that way by the current Supreme Court, consisting of six judges appointed by Republican presidents, including three named to the court by Trump.
“It is a court that is very unsympathetic to regulation of any kind, and particularly hostile to the EPA,” Freeman said.