[Bojo, Battery] Consecutive Electric Vehicle Factory Delays... US Market Downtrend, Due to Biden?

Changes in Fuel Efficiency Regulations and Other Factors
Lead to Changes in Electric Vehicle Production Plans

U.S. President Joe Biden visited the Ford Motor Company plant in Dearborn, Michigan, in May 2021 (local time) to receive an explanation about electric vehicle assembly. During his speech that day, President Biden said, "The future of the automotive industry is electric vehicles. There is no turning back." [Image source=Yonhap News]

As Stellantis delays plans for its Illinois auto plant, all three major U.S. automakers have postponed at least one electric vehicle (EV) factory construction plan this year. The consecutive delays in North American EV production facilities are also attributed to the ambiguous policy revisions by the Joe Biden administration.

On the 20th (local time), Stellantis announced in a statement that it had notified the United Auto Workers (UAW) union of the delay in plans for the Belvidere plant in Illinois. Stellantis explained the background by stating, "To ensure the company's future competitiveness and sustainability and to maintain manufacturing jobs in the U.S., all investments must align with market conditions and the ability to meet diverse consumer demands."

Three Major U.S. Automakers Change EV Production Plans One After Another This Year

The Belvidere plant in northwest Chicago, Illinois, was a facility that manufactured popular sport utility vehicles (SUVs) such as the Jeep Grand Cherokee. It was shut down in February last year. The plant was set to be converted into an EV production facility and had secured subsidies amounting to $334.76 million (approximately 450 billion KRW).

As the growth momentum of the EV market slows, automakers are adjusting the pace of their investments in EV-related facilities. Earlier, Ford announced last month that it would withdraw its original plan to convert its Ontario, Canada plant into an EV production base and instead convert it into a production site for internal combustion engine pickup trucks. GM has also effectively withdrawn its plan to produce one million EVs by 2025.

EV Policies Retreat Amid Union Pressure and Demand Slowdown Ahead of U.S. Presidential Election

Additionally, there are concerns that the revised fuel efficiency regulations ahead of the U.S. presidential election are causing confusion among companies and consumers. In April, the U.S. Environmental Protection Agency (EPA) announced the final version of vehicle emission regulations to be applied from 2027. The final rule includes relaxed measures compared to the draft released in April last year, such as expanding hybrid vehicle sales while lowering the proportion of EVs. It is evaluated that President Biden took into account labor opposition fearing job losses due to the EV transition ahead of the presidential election.

According to the EPA's announcement, the proportion of EVs in new car sales has been significantly lowered. Under the scenarios presented in the regulation, automakers must compose new car sales by 2032 with 56% EVs, 13% plug-in hybrid electric vehicles (PHEVs), and 3% hybrids (HEVs) to meet carbon emission reduction targets. Gasoline vehicles would account for about 29%. However, the EPA also proposed a scenario with 36% PHEVs, 35% EVs, 13% hybrids, and 17% gasoline vehicles. This is a considerably relaxed condition compared to the draft that required 67% of new car sales to be EVs by 2032.

According to the "2024 First Half U.S. Electric Powertrain Vehicle Sales Trends" report published last month by the Korea Automobile Mobility Industry Association, the EV market in the first half of this year recorded a growth rate of 6.4%, which is lower than the 54.8% growth in the first half of 2023. Professor Kim Pil-su of Daelim University’s Department of Automotive Studies said, "With the U.S. presidential election approaching and fuel efficiency regulations changing, uncertainty is increasing, leading to changes in plans by EV and battery companies. Europe is also easing eco-friendly regulations such as fuel efficiency. I expect this pace adjustment to continue for a considerable period."