Consumers, automakers, and the government will have to work together to pull off President Joe Biden’s ambitious plan to shift the country away from gas-powered vehicles and cut carbon emissions, says Wharton management professor John Paul MacDuffie.
Biden signed an executive order earlier this month that calls for 50% of all new vehicles sold by 2030 to be battery electric, fuel-cell electric, or plug-in hybrid. The Environment Protection Agency and U.S. Department of Transportation also announced the reversal of a Trump-era rollback on emissions standards. The agencies will impose a goal of 52 miles per gallon for passenger vehicles by 2026, a standard that’s even more stringent than President Barack Obama’s 50.8 miles per gallon.
Both measures are part of Biden’s agenda to expand manufacturing, compete with China, and combat climate change. Gasoline-powered vehicles are the single largest source of greenhouse gases in the U.S., according to the EPA. The administration’s plan would cut about 2 billion metric tons of carbon pollution and save about 200 billion gallons of gasoline.
“It’s very ambitious, it’s aspirational, and it’s nonbinding. It’s a goal that’s being set to indicate policy direction or policy enthusiasm or intensity,” MacDuffie says.
Ford, General Motors, and Stellantis, which owns Jeep and Chrysler, pledged that 40% to 50% of their cars sold by 2030 would be electric, a number that signals their willingness to work with the administration to accomplish shared goals, MacDuffie said. However, car buyers may need more persuasion.
“The demand side, of course, is what we know is the toughest,” said MacDuffie, who is director of Wharton’s Program on Vehicle and Mobility Innovation. “Consumer reluctance, charging infrastructure—that’s where the automakers are saying we need a lot of government support for this, maybe subsidies for purchases, and certainly help getting charging infrastructure into difficult places. We’ll see how much support for EVs comes out of what Congress is doing right now.”
Read more at Knowledge@Wharton.