• Electric Vehicles
  • Automakers
  • CAFE Standards
  • Policy and Regulation

What's Next for Clean Transportation?

Sam Abuelsamid
Nov 17, 2020

Guidehouse Insights

There was a surprise winner in the US presidential election 4 years ago that promised a radical shift in federal policies on the environment. Coming into office, President Trump promised to roll back regulations across the board in to stimulate the business community. The results of the 2020 election were less of a surprise, except for being much closer than polls had projected. While the Biden administration’s policies are expected to be as much of a reversal of course as the last 4 years have been, they may not actually have a great impact on transportation.

From his earliest days in office, President Trump began issuing executive orders instructing federal departments not to impose new regulations and to repeal existing rules. Among the prime targets were the Corporate Average Fuel Economy (CAFE) Standards and carbon dioxide emissions rules enacted under the Obama administration.

While numerous automakers had been lobbying for some relaxation of the standards, the industry was not interested in broad rollback. Guidehouse Insights projected that any regulatory changes in Washington would likely have a minimal effect on the industry’s long-term product plans. More than many other industries, automakers have to take a long view of the market due to extended lead times in developing new vehicles, long product cycles, and the global market they participate in.

The industry has faced many challenges over the past few years, particularly in 2020. The consumer market has shifted significantly away from traditional car form factors to SUVs and crossovers. However, in markets outside of the US, emissions regulations have become more stringent while the Trump administration has attempted to pull back.

Automakers Persist with High Standards

Since automakers are now developing vehicles with common component sets and architectures that can be sold in all markets, they have had to continue developing technologies that can be applied to the highest rather than lowest common denominator rules. Even while the Trump administration threatened to withdraw California’s Clean Air Act waiver that enabled the state to establish a zero emissions vehicle mandate, automakers were investing heavily in new EV platforms.

Even if the new congress fails to pass a Green New Deal, the Biden administration will likely revert most environmental policies to at least where they were in 2016 or strengthen them. The attempt to rescind the California waiver will likely be dropped and the federal government may move toward adopting the recently announced California ban on new internal combustion engine vehicles.

However, even if the status quo is maintained, the automotive industry is likely to keep its current course, which will see most vehicles electrified to some degree and many go completely zero emissions by the end of the decade. In the past 12 months, major automakers have begun to publicly reveal the electrification strategies that they have been developing.

General Motors announced its Ultium electric propulsion system and several battery EVs (BEVs) in North America and China. By 2022, it will have at least three assembly plants in North America exclusively building BEVs. Ford is about to start deliveries of the Mustang Mach-E, and it should soon reveal electric versions of the Transit and F-150 and have at least two BEV plants. Volkswagen Group has BEVs from its VW, Audi, and Porsche brands, and Bentley just announced plans to be all electric by 2030.

No single country’s policies are enough to change this industry’s direction anymore. However, much that the Biden administration is able to accomplish will likely be a rubber stamp on the inevitable.