Biden suddenly "magnified his moves".
On March 20, local time, the Biden administration announced the introduction of strict vehicle exhaust emission regulations, according to the latest regulations released by the U.S. Environmental Protection Agency, by 2026, compared with the existing standards, the new regulations will reduce the average emissions of vehicles by nearly half. Between now and 2055, the new regulations are expected to reduce CO2 emissions by 7.2 billion tons, bringing nearly $100 billion in annual benefits.
According to the analysis, this new regulation is the strictest vehicle pollution standard in the history of the United States, which will be beneficial to the development of the new energy vehicle industry. According to the U.S. Environmental Protection Agency, by 2032, automakers may need to increase their sales of electric vehicles to 56% of total U.S. sales, with plug-in hybrids accounting for 13% and conventional combustion vehicles accounting for only 29%.
It is worth noting that the Biden administration introduced the above new regulations against the backdrop of continued weak sales of electric vehicles in the European and American markets, and the new regulations may be intended to stimulate the sales of new energy vehicles. As we all know, promoting the United States to switch to new energy and popularizing electric vehicles is one of Biden's main campaign ideas.
Sudden big news
On March 20, local time, the Biden administration "amplified the move" and introduced strict automobile exhaust emission restrictions to control the pollution caused by cars and light trucks in the United States. According to the analysis, this move will promote the sales of electric vehicles and plug-in hybrids by automakers, which will be good for the development of the new energy vehicle industry and will increase the penetration rate of electric vehicles in the United States.
According to the latest regulations released by the U.S. Environmental Protection Agency (EPA), by 2026, the new regulations will reduce the average vehicle emissions by nearly half compared to the current standard. By 2032, tailpipe CO2 emissions will be capped at 85 grams per mile, down from 170 grams per mile shown by the model. Stringent requirements will be achieved mainly after 2030.
The new rules also limit pollution from soot and smoke, and the U.S. government says it will provide cleaner air to overburdened communities near major roads.
The U.S. Environmental Protection Agency's implementation of exhaust pipe emission limits for cars and light trucks will force automakers to rapidly ramp up sales of electric and hybrid vehicles.
According to U.S. Environmental Protection Agency modeling data, automakers may need to increase their EV sales to 56% of total U.S. sales by 2032, with plug-in hybrids accounting for 13% and conventional combustion vehicles accounting for only 29%.
Currently, electric vehicles account for less than 8% of U.S. car sales, while plug-in hybrids account for less than 2%. This means that there will be huge room for improvement in the penetration rate of electric vehicles in the United States in the future.
Stimulated by this news, U.S. auto stocks collectively rose, with Tesla rising more than 2.5%, Ford Motor up more than 4%, General Motors up nearly 3%, and Stellantis up nearly 2%.
The Biden administration's latest demands are broadly in line with previous projections, but they involve some concessions, including looser standards from 2027 to 2030 and a higher proportion of plug-in hybrid vehicles as a way to reduce pollution.
Still, the U.S. Environmental Protection Agency is asking automakers to quickly transition to zero-emission vehicles.
Michael Regan, director of the U.S. Environmental Protection Agency, said the new rule is the strictest vehicle pollution standard in U.S. history and sets the stage for continued U.S. innovation. The new standard will ensure cleaner vehicles that emit pollution, while allowing companies to decide how to meet the standards sustainably and most effectively.
The U.S. Environmental Protection Agency estimates that between now and 2055, the new rules are expected to reduce carbon dioxide emissions by 7.2 billion tonnes and bring nearly $100 billion in annual benefits, including $13 billion and reduced health benefits from pollution reduction, reducing up to 2,500 deaths per year.
The U.S. Environmental Protection Agency also estimates that U.S. drivers will save an average of $6,000 over the life of a vehicle due to reduced fuel and maintenance costs once the requirements are fully implemented. The restrictions are also expected to cut oil demand, with U.S. oil imports falling by about 14 billion barrels between now and 2055.
WTI crude oil futures for April delivery closed down 2.1% at $81.68 per barrel and Brent May futures closed down 1.6% at $85.95 per barrel during the overnight U.S. stock trading session.
How big is the impact?
U.S. President Joe Biden has made tackling global warming a top priority, and the latest regulations are among his most impactful and visible climate regulations.
Vehicle emissions standards will significantly influence the decisions of automakers and, ultimately, the purchases of American households.
As a result, the Biden administration sees this as a boon for American consumers, as the regulation helps push more electric vehicles into the market, which in turn allows Americans to increasingly get rid of stoneOil linemonopoly of the industry.
However, opposition to the new regulations is also fierce. Among other things, opponents, including former US President Donald Trump, have denounced that the rules are effectively mandatory for electric vehicles, forcing automakers to focus on selling zero-emission vehicles at the expense of traditional gasoline vehicles.
In addition, some analysts pointed out that the background of the Biden administration's new regulations is that the sales of electric vehicles in the European and American markets continue to be weak, and the new regulations may be intended to stimulate the sales of new energy vehicles.
As we all know, promoting the United States to switch to new energy and popularizing electric vehicles is one of Biden's main campaign ideas.
Mr. Trump has publicly mocked Mr. Biden's electric vehicle development plan, announcing that he would repeal the EPA's emissions rules if elected. He has publicly stated that he is not interested in electric vehicles, emphasizing that the charging range of electric vehicles is not suitable for popularization.
In 2023, U.S. electric vehicle sales reached a record high of 1.2 million units, but the EV penetration rate was only 7.6%. According to statistics from KBB, a research institute in the U.S. automotive industry, in the fourth quarter of 2023, U.S. electric vehicle sales increased by 40% year-on-year, slowing sales for three consecutive quarters, significantly lower than the 52% and 49% growth in the previous two quarters.
KBB's analysis report believes that although the U.S. electric vehicle market is still growing, the growth rate is slowing down.
Morgan Stanley said in the research report that the U.S. electric vehicle industry is facing a reshuffle, Rivian, Lucid, Fisker, Canoo and other electric vehicle companies are facing huge losses, and some companies are facing the cruel reality of the cooling of the electric vehicle market after large-scale investment in the production of electric vehicles and batteries.
It is worth noting that while the growth of electric vehicles is slowing, the growth of hybrid vehicles in the United States is accelerating. In 2023, U.S. hybrid vehicle sales will exceed 1 million units for the first time, a year-on-year increase of 76%. In the fourth quarter of 2023, the sales of pure electric vehicles increased by only 40%, while the sales of hybrid vehicles increased by 75%, which is in stark contrast.
With the fading of the electric vehicle boom, the performance of traditional fuel car companies in the United States is unexpectedly eye-catching.
Some analysts believe that the "Big Three" of the United States, GM, Ford and Stellantis, may emerge as the industry winners due to weakening demand for electric vehicles.
The reason given by analysts is that although the old fuel car companies also have a layout in the field of electric vehicles, their current revenue and profits mainly come from traditional fuel vehicles and hybrid vehicles, and have formed a stable sales network, brand loyalty and profit model. Moreover, these models still account for a large proportion of the global market and will continue to generate strong cash flow for the company in the future.