Outlook dims for electric vehicles
Trump plan to freeze fuel standards halts imperative to switch
WASHINGTON — With car manufacturers racing to introduce new electric vehicle models, the age of the gasoline-powered engine would seem to be quickly approaching its end.
But the much-hyped industry is now facing a major test, as President Donald Trump plans to freeze automobile efficiency standards next year, delaying what had been a major incentive for automakers to go electric. Instead, automakers will be free to sell electric vehicles at whatever pace American consumers are willing to buy them, pegging the cars’ efficiency and environmental benefit against their relatively high price compared to gasoline-powered engines and lengthy waits for recharging.
“For the car companies, less
ening the regulations lessens the incentive to deliver electric vehicles in the United States,” said Brett Smith, a researcher at the Michigan-based Center for Automotive Research. “What Trump is saying is if the consumer wants to have one they can have one. And if the consumer doesn’t, then pull it, it won’t happen.”
The transition away from internal combustion engines represents an existential threat to Houston’s oil and gas industry, which for years has enjoyed near monopoly-status on the energy that drives cars and trucks along the nation’s roadways. But forecasts on the speed at which motorists will make the switch to electric vary widely, and the transition is not materializing as quickly as some predicted.
As prices on electric vehicles decline, U.S. sales totaled around 360,000 last year, an increase of more than 80 percent from 2017, according to the trade group Advanced Energy Economy. Still, that represented only 2 percent of total vehicle sales.
Under a deal the Obama administration cut with automakers in 2011, the imperative for manufacturers to get more electric vehicles on the road was about to get a lot more pressing. By 2025 new model cars and light-duty trucks were required to get 54.5 miles per gallon on average — up from approximately 43 miles per gallon this year — as part of wider push to reduce U.S. greenhouse gas emissions.
Then came Trump
While more efficient internal combustion engines would get automakers part of the way there, a wide scale expansion of electric fleets was essential to meeting the regulation, Smith said. Then last year, Trump announced his intent to freeze efficiency standards in 2020, largely letting automakers off the hook.
“There is growing evidence automakers cannot comply with the trajectory of (efficiency) standards,” EPA Administrator Andrew Wheeler said at the Washington Auto Show last week. “Standards need to be achievable.”
With California and other states fighting Trump’s rollback of fuel-efficiency standards, the matter is likely headed to court, with most expecting a resolution not until after the 2020 presidential election. In the meantime, that leaves automakers with an unclear mandate, one that could very well hinge on who wins the White House next year, as Democrat candidates push for greater reductions in carbon emissions.
So far U.S. car manufacturers are holding back in shifting their fleets to electric, even as they invest in new electric-powered models, said Devin Lindsay, an automotive analyst at IHS Markit.
“Right now they’re really hedging their bets depending on which way the market goes,” he said.
Anyone walking around an auto show these days might find such an observation confusing, as sales representatives show off an increasing variety of electricpowered vehicles. Standing next to a new electric-powered Audi SUV at the Washington Auto Show last week, Brad Stertz, director of government affairs for the German carmaker, said the company is planning for electric vehicles to make up 30 percent of their sales within six years.
“We’re making government aware of our significant investment in electric vehicles,” he said. “If people want an Audi, they want an Audi. And if it’s electric even better.”
For European and Asian manufacturers, the future of U.S. car efficiency standards is a secondary concern to what’s happening in China and Europe, where crackdowns on carbon dioxide and other emissions are creating ripe markets for electric vehicles. Last year, the research firm Bloomberg New Energy Finance forecast electric vehicle sales would reach 11 million a year by 2025 — up from 1.1 million in 2017 — with China and Europe combining for more than 60 percent of the market.
“This market is not being driven by the United States,” said Matt Stanberry, vice president of market development at Advanced Energy Economy. “China is the largest auto market in the world, and they’re heading toward banning internal combustion engines.”
Electric vehicle fees
But any move to increase electric vehicles in the United States remains deeply divisive. Earlier this year, Republicans led by Sen. John Barrasso, of Wyoming, the nation’s eighth largest oil-producing state, introduced legislation to repeal existing federal tax credits for buying electric vehicles — worth between $2,500 and $7,500 a vehicle.
At the same time, close to 20 states, such as Oregon, Oklahoma and West Virginia, have imposed fees on electric vehicles, something proponents say is necessary to fund highway repair, which is primarily financed by taxes on gasoline and diesel fuel. But many electric vehicle advocates see it as a move to slow adoption. Among those pushing for the fees is the American Petroleum Institute, the oil and gas industry’s lobbying arm.
“The electric vehicle tax credit has allowed the government to pick winners and losers at the expense of taxpayers, and it is time for that to end,” Frank Macchiarola, downstream vice president at API, said in a statement earlier this year.
For the time being, the future of electric vehicles in the United States is firmly in the hands of American consumers. And for now, they remain a tough sell.
“We always skew to a worstcase scenario, where (people believe they) need a vehicle that can travel 600 miles when the average commute is less than 30 miles,” said Amelia Fine-Morrison, an Audi communications manager. “There’s a consumer education component that has to be done.”