A recent New York Times report has revealed that the Biden administration may loosen some of its electrification plans. Citing three people familiar with the plan, the NYT report noted that the administration intends to relax its electrification plans as a concession to labor unions and automakers.
According to the report, the Biden administration will give automakers more time to ramp up electric vehicle sales rather than require them to accelerate the EV sales rapidly within the next couple of years. The new plan would give automakers until after the end of the decade to increase their EV sales sharply.
The proposed changes to the Environmental Protection Agency’s (EPA) rule would essentially loosen short-term vehicle pollution requirements, easing the pressure on local automakers to transition to zero-emission electric vehicles as soon as possible. Although the proposed change would push America’s electrification timetable further, it is a significant win for labor unions and vehicle manufacturers in the country. Many antielectrification proponents argued that transitioning from internal combustion engine (ICE) to battery electric vehicles (BEVs) would eliminate thousands of car manufacturing and assembly jobs.
Electric vehicles generally require 30% less labor than internal combustion vehicles but cost around 40% more to manufacture. This will force North American carmakers to cut costs, and many experts argued auto workers will be on the chopping block.
With America’s UAW and Canada’s Unifor set to begin contract talks with GM, Ford and Stellantis this year, the main agenda of the discussions will be protecting union jobs, especially the higher-paying ones. Despite these discussions, many unionized auto workers face the risk of unemployment over the next decade as automakers relocate their EV and battery-assembly plants to nonunionized states in the South.
Unifor national president Lana Payne says the private sector union sees Canada’s EV transition as a net positive for the automotive sector. She said new electric vehicle product mandates would help keep thousands of trade and production jobs in assembly plants countrywide. In some cases, Payne added, the mandates could even create new jobs in car manufacturing locations.
However, she says the union foresees auto supply base employees encountering challenges “without a clear government-led transition strategy.” Legacy automakers in the United States and Europe have a poor history of adapting to major changes, especially changes as massive as electrification.
Although China’s auto industry has lagged behind America’s and Europe’s for most of its history, it was quick to adapt to electric vehicle technology and is now far ahead of other markets.
If the reports of slowing down the EV transition are true, legacy automakers may be the ones likely to see the pressure on them easing a little while EV startups such as Workhorse Group Inc. (NASDAQ: WKHS) may opt to press ahead with their expansion plans in order to strengthen their footprint in the market.
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