President Joe Biden will probably go down in history as an instrumental figure in the growth of America’s electric vehicle (“EV”) industry and the fight against runaway climate change. Biden, who took office this year, quickly unveiled a gargantuan infrastructure bill that would dedicate billions of dollars toward developing an extensive network of public electric vehicle charging stations.
With green, renewable energy and zero-emission vehicles being a major part of his agenda, Biden recently signed an executive order requiring that 50% of the vehicles sold in America must be electric by 2030. The Biden administration’s green-energy strategy would first restore and strengthen the mileage standards that were present during former President Barack Obama’s reign but were weakened by the Trump administration.
The administration would then draft stringent emission standards for passenger vehicles as well as heavy-duty trucks that would levy stiff penalties against auto makers that do not reduce their carbon emissions. Coupled with the installation of hundreds of thousands of charging stations, this would compel auto makers to ramp up the production of electric vehicles and encourage drivers to ditch their internal combustion engine vehicles for zero-emission electric cars.
America’s pursuit of electrification will have varied effects on both local and foreign auto makers. For Tesla, which received a life-saving $465 million loan to develop and manufacture the Model S back when Biden was vice president, it means good news. The California-based company has produced more than two-thirds of the battery electric vehicles (“BEVs”) on U.S. roads, and it is poised to sell at least 2.3 million EVs by 2025.
On the other end of the spectrum, foreign car maker Toyota Motors, which won’t start selling BEVs in America until next year, may have trouble penetrating the market. Speaking of international auto makers, Chinese carmakers also have an opportunity to expand into the American market as the push for battery-powered vehicles gains more steam.
Although Tesla still dominates the U.S. electric vehicle market, foreign companies may provide stiff competition to local carmakers and carve out a section of the expanding market for themselves during Biden’s time in office. Local carmakers will still have to catch up to Tesla, especially when it comes to production volume.
Unlike Tesla, which relies solely on revenue from electric vehicle sales, Ford Motors, General Motors, and Volkswagen still draw most of their revenue from internal combustion engine (“ICE”) vehicle sales despite having sold tens of thousands of EVs. Lucid Motors and Rivian, which are also based in America and are set to release their first EVs this year, could also take advantage of the recent electric vehicle mandate. Peter Wells, director of the Center for Automotive Industry Research at Cardiff Business School, says the mandates will put pressure on auto makers that have been slow to embrace electrification. This includes Chrysler, Jeep and Ram, which are owned by Stellantis and still do not have BEVs. Such companies will either have to adapt to the changing landscape or suffer the consequences of not adhering to emission standards and EV mandates.
With companies such as Ideanomics Inc. (NASDAQ: IDEX) making strategic investments into the electric vehicle industry, it may not be long before the favorable government policies, efforts of private firms and attitude changes in the public combine and result in an accelerated uptake of EVs.
NOTE TO INVESTORS: The latest news and updates relating to Ideanomics Inc. (NASDAQ: IDEX) are available in the company’s newsroom at https://ibn.fm/IDEX
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