Biden Calls Pushes Auto Industry Toward Electrification

American roads are about to get a whole lot quieter.

Half of new cars sold in the US by 2030 should be all-electric, plug-in hybrid, or hydrogen-powered, President Biden announced yesterday via a non-binding executive order. At the same time, the EPA proposed tougher fuel-efficiency standards for automakers, which would reverse a Trump-era order that relaxed them.

Why it matters: This is like the government telling McDonald’s and Chick-fil-A they need to convert half their sales to veggie burgers in nine years. Producing electric vehicles requires seismic investments and buy-in from automakers, which must replace the guts of their cars with entirely new technology.

In total, the industry will spend $330 billion on electrification by 2025, per estimates from the consulting firm AlixPartners.

But they’re not doing it reluctantly

Case in point: The CEOs of the country’s three largest automakers were in attendance as Biden gave his speech.

In a show of solidarity with the White House, the automakers pledged to make electric vehicle sales 40%–50% of their total by 2030...provided the government helps them out with consumer incentives, and by establishing a nationwide charging network.

Still, the US is behind the global EV curve:

• Electric cars currently make up just 2% of new auto sales in the US, compared to 6% in China and 10% in Europe.
• And Biden’s order isn’t as tough as those laid out by other governments. The EU has effectively banned sales of new gas-powered vehicles by 2035.

What’s the point of all this? Just that existential threat scientists like to call climate change. Biden’s goal is to cut emissions by 50% below 2005 levels by the end of the decade, and to do that he’s targeting transportation, the industry accounting for 29% of all US emissions.