Can American automakers really compete in a global EV market?

U.S. policy leaders face some pivotal decisions in the coming months that will determine if American automakers can continue to compete in a global market evolving at breathtaking speed. If the Biden administration is ambitious in setting new standards for clean cars and trucks — keeping up with the new rules just passed by the European Parliament — it will allow U.S. companies to thrive in the new electric era. 

U.S. automakers, like GM and Ford, have aggressively jumped into the EV race, joining Tesla and a range of start-ups. But the American economy overall, including transportation, got a dangerously late start in adapting to the 21st-century clean energy marketplace. As a global technology race evolved between Europe, China and South Korea, the U.S. action was uneven and sometimes mired in ideological arguments. While some political leaders worried about the implications of environmental science, Chinese leaders spotted an industrial opportunity.

Meanwhile, in Europe, automakers have been pushed and pulled toward electrification. They needed to make a rapid shift in order to comply with the EU climate standards and avoid substantial penalties; and they faced increasing competitive threats from Asian success stories such as China’s BYD and South Korea’s Hyundai, as well as California’s Tesla, which was claiming an ever-increasing share of the premium market.

At the start of this century, electrification was seen as something that would emerge slowly in the 2030s. But by around 2020, that smooth glidepath looked increasingly rapid. Not only was the European Union thinking about e-mobility as an important lever for reaching climate ambitions, it would also tackle toxic tailpipe emissions in cities such as Paris, London and Milan and reduced economic exposure to volatile oil prices. If any further reason was needed to end Europe’s oil addiction, that came when Russia’s invasion of Ukraine and ongoing war trashed all previous European assumptions of peace through trade.

The evolution of thinking in Europe has paid dividends and allowed even more progress. When the European Commission came through with a proposal last year to fully eliminate tailpipe pollution in new cars by 2035, it was notable how little the auto industry protested. While a few years earlier they had been vocal in warning how EVs would impact profits or employment, in today’s context, they are more worried about the damage that could be done by failing to embrace the transition.

In February, the EU action was approved by the European Parliament, the penultimate step before becoming law. The European automakers trade body ACEA forecasts that on the pathway toward achieving 100 percent EVs by 2035, fully 60 percent of new cars sold in 2030 will have a plug.

In the U.S., President Biden has taken a number of steps to push for increased American-made EVs. For example, in 2021, he set a goal of 50 percent EV sales in 2030. He has backed that up with significant investments for EVs under new laws, the Inflation Reduction Act and bipartisan Infrastructure Investment and Jobs Act. A president who ran on, and leaned into, building a clean-energy economy arrived just in time. And the auto industry has committed billions of dollars of investments in production of electric vehicles (EVs) and components in places like Michigan, Ohio, Indiana, Georgia, Texas, Kentucky and Tennessee.

But all of the activity in Europe and around the world means that the U.S. must do even more to stay competitive in this EV arena. For example, the U.S. Environmental Protection Agency (EPA) must carry out its responsibilities to establish nationwide limits on tailpipe pollution from new cars and freight trucks that mobilize the availability of zero-emitting solutions. At the same time, EPA must recognize and support the time-tested leadership of California and numerous other states across the U.S. that are adopting emission standards that recognize the inflection point for rapid environmental progress and enduring economic prosperity.

Given the rapid pace of change around the world, these additional pieces are required for the U.S. to remain a true contender in the race to define the future of global mobility.

Pete Harrison, based in Belgium, is executive vice president of the Environmental Defense Fund.