Biden's EPA rolls out regulation to accelerate EV adoption, as carmakers say it's a stretch

By Claudia AssisVictor Reklaitis

Regulation got adjusted in this election year after lobbying from UAW, automakers and car dealers

President Joe Biden's administration on Wednesday released a much-anticipated final rule on tailpipe emissions for new passenger vehicles, putting forward a regulation that looks set to help increase usage of electric vehicles while also making concessions sought by the United Auto Workers and other car-industry groups.

About a year ago, Biden's Environmental Protection Agency had floated an emissions rule that was projected to lead to fully electric vehicles making up 67% of U.S. sales of new autos by 2032.

The final regulation gives a variety of paths to achieve emissions targets for 2032, according to senior administration officials. There can be reliance on fully electric vehicles, plug-in hybrid EVs, "strong hybrids" and improved internal combustion engine vehicles, the officials said, and that came after carmakers, car dealers and labor leaders said the regulation would be more durable if it identified a variety of paths.

The UAW is a key ally for Biden as he looks set to face former President Donald Trump in this year's White House race. The union endorsed Biden's re-election bid in January. Trump and his fellow Republicans have blasted the Biden administration, describing the new EPA rule as an "EV mandate."

Biden's national climate adviser, Ali Zaidi, said in a statement that U.S. autoworkers are "making cars and trucks that give American drivers a choice - a way to get from point A to point B without having to fuel up at a gas (RB00) station."

The share of U.S. car sales that are EVs is likely to be 8% in 2024, according to a recent Edmunds estimate.

The Alliance for Automotive Innovation, which lobbies for automakers, emphasized on Wednesday that it had pushed for plug-in hybrids (PHEVs) - vehicles with both an electric motor and a combustion engine - to be included in electrification targets, in addition to fully electric vehicles, also called battery EVs.

John Bozzella, the alliance's president and CEO, said in a blog post that the new regulation is "significantly different from the unworkable plan the Biden administration originally announced about a year ago." He wrote that the EPA's proposal a year ago projected EVs would make up 60% of U.S. sales of new vehicles by 2030, but the final rule is "closer to a 50% EV sales target by 2030."

In addition, Bozzella said in a statement that "the future is electric" and automakers have invested "enormous amounts of capital" in the EV transition, but "pace matters."

"These adjusted EV targets - still a stretch goal - should give the market and supply chains a chance to catch up," the alliance head said.

"The rules are mindful of the importance of choice to drivers and preserves their ability to choose the vehicle that's right for them."

EV pioneer Tesla Inc.'s stock (TSLA) was up by about 0.6% on Wednesday, while shares in General Motors Co. (GM) rose 1.6%, Ford Motor Co.'s (F) stock gained about 2.4%, and Chrysler parent Stellantis NV (STLA) shares added 0.4%. The main stock indexes SPX DJIA were little changed ahead of a Federal Reserve's announcement on interest rates.

The UAW said in a statement that the EPA made "significant progress" by listening to feedback in the past year.

"By taking seriously the concerns of workers and communities, the EPA has created a more feasible emissions rule that protects workers building ICE vehicles, while providing a path forward for automakers to implement the full range of automotive technologies to reduce emissions," the labor union said, referring to cars with internal combustion engines. "We reject the fearmongering that says tackling the climate crisis must come at the cost of union jobs. Ambitious and achievable regulations can support both."

Consumer Reports, which provides reviews and does advocacy work, estimated that the EPA's new standards will save consumers more than $1 trillion over the next 20 years.

"This rule will lead to cleaner cars that cost less to fuel, and people can be confident they'll continue to have a large number of choices that meet their individual needs," said Chris Harto, a Consumer Reports transportation and energy analyst. "While the rule isn't as stringent as EPA's original proposal, there's real progress here to reduce emissions and help people save money."

Now read: The $7,500 federal EV tax credit is on the ballot in November

And see: Trump might deliver lower oil prices but 'mixed' performances for oil and gas stocks

-Claudia Assis -Victor Reklaitis

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03-20-24 1436ET

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