In Biden, Detroit Gets a ‘Car Guy’ With Electric Vehicles on His Mind

Source: By Ben Foldy, Wall Street Journal • Posted: Monday, November 9, 2020

Car companies are preparing for the Biden administration to deliver tougher fuel-economy rules and support electric vehicles

Then-Democratic presidential candidate Joe Biden speaking with an auto assembly-line worker at a campaign stop in Alliance, Ohio, in September. Photo: mike segar/Reuters

A Joe Biden administration could mean both big changes and more certainty for the U.S. auto industry after turbulent but mostly lucrative years under President Donald Trump.

A self-proclaimed “car guy” who showed off his 1967 Chevy Corvette in campaign ads, Mr. Biden has pledged to create 1 million auto-sector jobs as part of a broader plan to support clean energy and tackle climate change. He has also said he’ll toughen fuel-economy regulations, incentivize electric cars and take a collaborative tone on trade.

Car executives say the president-elect’s intentions to throw the government’s weight behind electric vehicles will aid the industry’s investment in this technology.

Executives, dealers and analysts say they expect Mr. Biden’s administration to push for stricter—and, for companies, more expensive—limits on tailpipe emissions. However, they say he could end a standoff between the federal government and California that has been dragging on the industry.

Vince Sheehy, president of Sheehy Auto Stores in Washington, D.C., said he’s hoping Mr. Biden brings a more stable regulatory environment for the automotive industry and can avoid competing federal and state standards.

“It is my strong preference that we would have a gradual approach guided by the federal government and not individual states,” Mr. Sheehy said. “That patchwork approach just wreaks havoc.”

Expanding U.S. manufacturing is also expected to remain a focus for Mr. Biden. But car-industry lobbyists say he is unlikely to employ Mr. Trump’s favored tactic of threatening tariffs on vehicles and auto parts.

“There may be stricter policies, but they’ll be predictably strict,” said Kristin Dziczek, an economist at the industry-backed Center for Automotive Research in Ann Arbor, Mich.

Mr. Trump has kept auto executives on edge with threats of tariffs and by taking aim at them on Twitter, saying they should build more vehicles in the U.S.

At the behest of auto makers, Mr. Trump moved to relax regulations on fuel economy, saying it would help lower vehicle prices for customers.

A campaign speech by then Democratic vice-presidential candidate Sen. Kamala Harris drew listeners to a UAW Local 653 rally in Pontiac, Mich., last month. Photo: Nic Antaya/Getty Images

The rollback was more drastic than many expected, however. It sparked legal challenges with California and other groups—ultimately complicating companies’ product plans instead of streamlining them.

California, which has the authority to set its own restrictions on tailpipe pollutants, has enacted tougher rules on auto emissions, creating a dilemma for auto makers that don’t want to build cars to two sets of standards.

Mr. Biden has said on day one he’ll start fashioning rigorous new federal regulations for tailpipe emissions, working with California and other states. The auto industry hopes that some of the outstanding legal battles can be settled, paving the way for a more certain future, executives, analysts and lobbyists say.

“We’re always hoping for one national standard,” said Chris Reynolds, Toyota Motor Corp.’s head of U.S. manufacturing. “We’re also open to reasonable compromise in order to get there.”

Mr. Biden has signaled he’ll be more willing than his predecessor to work with U.S. allies on trade issues, saying he wants to build consensus with other nations over how to approach China.

An assembly line at a Mercedes-Benz manufacturing plant in Sindelfingen, Germany. Photo: Lennart Preiss/Getty Images

He is also unlikely to use threats of tariffs on car imports in trade negotiations, an approach Mr. Trump used with Europe and Japan, said Jennifer Safavian, chief executive of Autos Drive America, a trade group representing foreign-based car companies.

“I don’t think he views autos and auto parts as a national-security threat,” Ms. Safavian said.

Mr. Biden’s support for renewable energy and electric vehicles would mark a departure from his predecessor. Mr. Biden said he plans to further boost incentives for battery-powered cars and plans to spend billions on upgrading the country’s charging infrastructure, though a divided Congress could rein in some spending plans.

An EV push could lift both legacy auto makers like General Motors Co. and Volkswagen AG that are investing billions in electric cars, and startups like Lordstown Motors Corp. that build battery-powered vehicles, executives say.

The construction site of a future Tesla Gigafactory near Berlin in September. Photo: filip singer/Shutterstock

Executives at parts suppliers Aptiv PLC, Dana Inc. and BorgWarner Inc. told investors on calls in late October that White House support for electric vehicles would benefit business.

“If there’s more emphasis on electrification here following the election that is great,” BorgWarner chief financial officer Kevin Nowlan told analysts. “We’ll look to capitalize on that.”

Any major bills may be difficult to pass if Congress were split between parties, analysts say, and converting consumers to more-expensive electric vehicles may be tougher and slower if federal incentives aren’t expanded.

“This is different from the story of switching from Blackberries to iPhones,” said Adam Jonas, an analyst at Morgan Stanley.