U.S. automakers preparing for potential Biden win

Automakers are gearing up for tough new vehicle emissions rules and policies favoring electric vehicles if Democratic presidential candidate Joe Biden wins the White House. Both, U.S. President Donald Trump and Biden need the votes of auto workers in Midwestern swing states such as Ohio and Michigan with both candidates saying they want automakers to create more auto jobs in the country rather than outsource them from China or Mexico.

Biden’s and Trump’s policies for the transportation and auto sector present automakers with very different sets of risks and rewards.

In the event of Biden winning the presidency, he is expected to reinstate the legal basis for California’s zero-emission vehicle rules and start reversing the Trump administration’s decision to ease fuel efficiency and carbon emission requirements through 2025.

Automakers are likely to face higher penalties for failing to meet fuel-efficiency standards. The Trump administration rolled back penalties for not meeting those standards, which the auto industry says saved them at least $1 billion in annual compliance costs, In August however, a federal appeals court reversed the administration action.

Biden has promised new tax incentives including rebates to buy EVs and a significant expansion in charging stations for electric vehicles – policy measures that automakers have long advocated.

In 2016, following Trump winning the presidency, a trade group representing major automakers in Washington had called on him to reconsider fuel-efficiency standards proposed by the outgoing Obama administration, which was backed by California and other coastal states. Now however, the industry is divided, While Honda Motor Co, Ford Motor Co, Volkswagen AG  and others have struck a compromise deal with California with regard to emissions standards, others including General Motors Co, Fiat Chrysler Automobiles NV, and Toyota Motor Corp have sided with the Trump Administrattion, in an effort to freeze out California and roll back emissions requirements.

The question that remains to be answered is that, will these automakers who had earlier backed Trump’s rollback, continue their legal fight in the courts should he lose his re-election bid?

According to John Bozzella, who heads an auto industry trade group, automakers are “committed to a cleaner, safer, smarter future and we understand the importance of working with all parties to achieve these goals.” However, the constituents of “all parties” could change if Biden wins the election.

Environmental groups and unions want more prominent roles in determining auto policy.

UAW members are concerned with the shift to electric vehicles since in combination with tougher emissions standards it will amount to a reduction in the job pool.

In a statement, a spokesperson for the UAW said, what is needed is “a transition to EV production that takes full advantage of economic opportunities and ensures that there are quality manufacturing jobs for tens of thousands of American workers that currently work on gas and diesel powered engines.”

While California wants to ban all fossil fuel-powered passenger vehicles by 2035, last Friday a New Jersey state environmental agency recommended that the state should ensure all passenger vehicles sold by 2035 are electric to meet emissions goals.

A few lawmakers are considering tax credits to help convert some engine and other auto facilities into building electric vehicle components.

“Climate-friendly policies and a good economy are not at loggerheads,” said U.S. Representative Andy Levin.

Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Regulations & Legal, Strategy, Sustainability

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