Biden says 50% of new cars in the United States will have zero emissions by 2030: Can the Detroit Big Three catch up with Tesla?

21st Century Business Herald reporter Zuo Maoxuan reported on the future of the US automotive industry, which is about to usher in new changes.

On August 5, U.S. President Joe Biden signed an executive order at the White House that by 2030, 50 percent of new U.S. sales of new cars should be zero emissions. When the executive order was signed, executives from Detroit's three major automakers, General Motors, Ford and Chrysler, stood behind Biden.

Although the goals set by Biden are not legally binding, the release of the new policy is bound to bring a series of incentives, and automakers hope to reap development dividends. General Motors, Ford Motor and The Tellantis Group expressed support for the executive order in a joint statement and hope to achieve 40 to 50 percent of annual electric vehicle sales in the United States by 2030.

Previously, the U.S. electric vehicle industry was dominated by the "California upstart" Tesla, and Tesla's sales were in the lead in North America and the world. In the capital market, Tesla is the leader, with a market value of nearly $700 billion, which is about equal to 9 General Motors and 12 Fords.

From a global perspective, the trend of electrification transformation is unstoppable. In Europe and China, the government has vigorously supported the development of the new energy automobile industry, and many car companies have also responded positively. The Detroit Big Three has been slower to make progress in the electric vehicle space, both in the U.S. and elsewhere in the world.

Judging from the joint statement issued by the Detroit Big Three, on the one hand, they support the new policy, but on the other hand, they are also calling on the Biden administration to provide more incentives to catch up with other competitors.

<h4>Align yourself with Central Europe</h4>

Cui Dongshu, deputy secretary-general of the All-China Passenger Transport Association, said that the 50% target set by the United States is basically in line with the progress of China and Europe.

In July this year, the European Commission proposed that from 2035, new cars should be required to achieve zero emissions, that is, to ban the sale of fuel vehicles in the EU in 2035, which is significantly earlier than the previous planning time of 2050. In addition, by 2030, co2 emissions from vehicles will be reduced by 55% compared to 2021.

In China, in 2020, under the guidance of the Ministry of Industry and Information Technology and led by the Society of Automotive Engineers of China, the "Energy-saving and New Energy Vehicle Technology Roadmap 2.0" proposed that by 2035, new energy vehicles will become the mainstream, accounting for more than 50% of sales. At the same time, the implementation of the "double carbon" strategy will also greatly promote the development of new energy vehicles in China.

Data show that in 2020, China's new energy vehicles accounted for about 5% of new car sales, and in the first six months of this year, this proportion rose to 10%. In Germany, due to the high purchase subsidies for new energy vehicles in the past two years, the sales share of new energy vehicles has increased from 3% in 2019 to 14% in 2020, and this proportion is still continuing to increase. In the United States, new energy vehicles accounted for only 2% of new car sales in 2020.

Obviously, it is extremely difficult to achieve the 50% target set by the Biden administration. This requires more aggressive incentives to spend real money.

In fact, after Becoming President of the United States, Biden has repeatedly expressed his support for the development of the U.S. electric vehicle industry in public.

As early as March 31 this year, the Biden administration announced a $174 billion electric vehicle industry development support program, including $100 billion in consumer car purchase discounts, $15 billion in charging pile construction, $45 billion in school bus and bus electrification programs, subsidies for new battery factories in the United States, and subsidies for the transformation of closed car factories into electric vehicles and parts factories.

The specific goal of electrification development has pushed the electrification transformation of the US automotive industry to a new strategic height.

The White House said in a press release: "President Biden believes that the time has come for the United States to lead the way in electric vehicle manufacturing, infrastructure and innovation. ”

Reinvigorating U.S. manufacturing and providing more jobs are, in fact, an important underpinning of Biden's Build Back Better program.

So, in addition to the Detroit Big Three, the Confederation of Auto Workers (UAW) also issued a statement expressing support for this policy.

"We're not only going to keep union jobs, but we're also going to add jobs like this and expand the manufacturing of electric vehicles in the U.S. from parts to assembly." These future jobs will be high-paying and welfare jobs for U.S. unions, not only underpinning our wages, but also safeguarding critical health and safety standards. UAW said.

<h4>The Big Three have a tough transition</h4>

Although the United States currently has Tesla, the world's highest-selling electric vehicle company, to rebuild the glory of the American auto manufacturing industry, the Detroit giants also need to catch up.

According to US media data, in 2020, GM, Ford, and Tesla have a share of 27%, 14% and 2% of the US car market, respectively. However, Tesla has a 79% share of the U.S. electric vehicle market. Among the five highest-selling models, Tesla made the list of 4 models on sale.

Although the three giants of Detroit have previously released electrification transformation strategies, at this stage, several traditional car companies have not yet launched products that are competitive in the market. At present, the main electric products of GM and Ford are only Chevrolet Bolt and Ford Mustang Mach-E.

However, they are well aware of the need for electrification.

Ford motor company plans to invest $30 billion globally in its electrification strategy by 2025. According to the plan, Ford will develop two exclusive manufacturing platforms for electric vehicles, one for the development and manufacture of full-size trucks and SUVs, and the other for cars and small SUVs. Based on this, Ford has also proposed a rather aggressive sales target: by 2030, Ford's pure electric vehicle sales will account for 40% of its global sales; In the European market, its product lineup will consist entirely of pure electric models.

In June, GM announced it was stepping up investment in electric vehicles and autonomous driving, increasing its investment from $27 billion to $35 billion between 2020 and 2025. By the end of 2025, GM will launch 30 pure electric models around the world, achieving the goal of annual global electric vehicle sales exceeding 1 million. GM also plans to produce only electric vehicles after 2035 to achieve zero emissions for all new vehicles.

Stellantis Group has also previously said it plans to invest at least 30 billion euros in the electric vehicle segment by 2025. In line with the company's vision, electrification options will be available in 98% of models in the European and North American markets by 2025.

After the release of the New Deal, the Big Three expressed support for the first time in a joint statement, claiming that this was a huge shift in the US auto market. However, they also stressed in the statement that this transformation can only be achieved if a series of incentives pledged by the government are implemented in a timely manner.

"We look forward to working with the Biden administration to develop policies in Congress, state and local governments to achieve this ambitious goal." Mentioned in the joint statement.

In the United States, Detroit's established car companies are struggling to catch up with Tesla. Tesla has launched several competitive models, and they are still on the way to building a pure electric vehicle production line; Tesla's direct sales model in the United States has been very perfect, and they are still studying how to let consumers choose electric vehicles; the gap in the network of charging facilities is even larger. The total number of electric vehicle charging stations in the United States is less than 100,000, while Tesla's official website shows that its superchargering stations in the United States have reached 25,000.

For Ford, GM and other companies, if the POLICY promotion of the United States can drive the growth of scale, thereby promoting the advancement of their electric vehicle technology, it is also very important for the global development of car companies.

In China, the Ford Mustang Mach-E model has entered the market, but the response has been flat. In addition, Ford has not announced other electric vehicle plans in China. THE CADILLAC LYRIQ, a smart pure electric SUV produced on SAIC-GM's first Ultium platform, is scheduled to be launched in the Chinese market in the first half of next year. By 2025, more than 10 domestic new energy models based on the Ultium platform will be launched successively.

At present, the electric vehicle market is still in its infancy, although latecomers still have the opportunity to catch up, which of course cannot be separated from the government's promotion. But more importantly, the transformation of traditional car companies must be more resolute, and the market will give the answer.

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