There has been a lot of news in the world of electric vehicles since the start of 2021. Within the car manufacturing industry, the shake-up comes on the heels of an announcement from President Joe Biden that he plans to replace all the federal fleet with electric vehicles.
President Biden said the entire federal fleet, which includes cars, trucks, and SUVs, should be replaced not just with electric vehicles but vehicles that are made in the U.S. The goal is to create one million new jobs in the auto industry of America, as well as the supply chains that create parts for vehicles.
The hope, along with the job creation itself, is that U.S. carmakers could be boosted. The decision was part of the Made in America executive order, which put stricter rules on the procurement process undertaken by the federal government.
The government does have a buy American rule, which indicates a specific amount of product has to be made in the U.S. in order for the purchase to qualify for federal contracts.
The Biden executive order hopes to close loopholes and increase the purchases of made-in-America products.
The U.S. government had more than 645,000 vehicles in its federal fleet in 2019, the majority of which are trucks.
Of course, in addition to buying made-in-America products, the replacing of the fleet with electric vehicles is also part of the administration’s objectives to be more eco-friendly.
With the announcement certainly comes challenges. First, there isn’t necessarily the charging infrastructure needed to support an all-electric fleet, at least as it stands now.
Also, there isn’t the needed supply of electric vehicles to fulfill the executive order, but many U.S.-based car companies are already pledging to work toward all-electric in the next decade.
Along with the Biden administration announcement, the following are some things to know about electric vehicles in 2021 and beyond.
GM’s Electric Push
GM is making headlines with its dedication to producing more electric vehicles, not just in line with the federal executive order, but a general move toward more eco-friendly vehicles and American manufacturing.
GM recently announced a new business unit for commercial customers, focused on the delivery of an ecosystem of electric products. This is part of a $27 billion effort to become the leading electric automaker in the world.
The new business segment of GM is called BrightDrop.
The first product will be an electric van called the EV600, which will have a range of around 250 miles.
The second product will be an electric pallet called EP1.
By 2025, GM says they plan to bring 30 new electric vehicles to the world market. Around two-thirds of their anticipated launches will be available in North America, and each of GM’s brands will be represented. Brands include Cadillac, GMC, Chevy and Buick.
GM’s Chairman and Chief Executive Officer Mary Barra said at the end of January the plan is to entirely phase out internal combustion engine vehicles by 2035. The plan is also to be entirely carbon-neutral at all facilities by this time.
While this isn’t GM’s first foray into electric vehicles, this is the first time the Detroit-based car company has set a specific target to completely phase out gas and diesel engines.
GM is also building on efforts for clean technology for heavy-duty trucks.
The Chevrolet Bolt EV, introduced in 2016, was GM’s first attempt at a long-range battery-electric model.
Governor Gavin Newsom set a goal in California of phasing out the sale of new combustion engines in 15 years.
Newsom signed an executive order that by 2035, all new car and passenger trucks in California have to be zero-emission.
According to a state press release, the transportation sector is responsible for more than half of all carbon pollution in California.
The Air Resources Board in California will also have regulations in place that require all medium- and heavy-duty vehicles have to be 100% zero-emission by 2045 where possible.
Eleven states are requiring automakers to sell a certain percentage of vehicles that are rated as zero-emissions by 2025.
If carmakers aren’t able to do so, they’ll have to buy regulatory credits from another automaker that meets the requirements, which could include Tesla, since Tesla exclusively makes electric cars.
Tesla’s Net Profit
Within the realm of electric vehicles, it’s tough not to bring up Tesla. Interestingly, the public recently found out that Tesla’s net profit doesn’t come from selling cars. Instead, the way Tesla makes most of its profits goes back to the point above.
They brought in more than $3 billion over the last five years, with half of that in 2020 alone through the sale of regulatory credits.
Without having sold those regulatory credits, Tesla would have seen a net loss in 2020. The company is actually not making money selling cars. They’re losing it.
With that being said, while there could be headwinds if the trend continues, Tesla does have a forecasted annual sales growth of 50% in the next few years. It also expects to out-perform that metric in 2021, even though many other automakers are struggling in the wake of the pandemic.
Tesla is the top maker of electric cars, but there is growing competition, as is highlighted by the above steps being taken by GM. Many other automakers are similarly rolling out their own electric vehicles.
So what does all this mean?
It means that the American automaking industry is undergoing what’s probably going to be a rapid transformation. The ushering in of a new administration focused heavily on climate change is upending the traditional automaking industry.
We’ll see how well the federal government and private industry are able to come together and work toward the goal of reducing fossil fuel reliance and increasing electric vehicle usage. There’s a lot of interesting developments in these areas, particularly with the new administration taking office.