Carmakers get more time to phase out gas cars

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The Biden administration confronts the reality of slow EV sales

The Biden administration, accepting the reality that consumers are not flocking to buy electric vehicles (EV), has backed away from its aggressive timeline to phase out gasoline-powered vehicles from America’s roads.

The administration has announced a new set of standards that allows carmakers more time to meet emission standards. Now, carmakers will be asked to produce a fleet of cars and trucks that will cut greenhouse emissions in half by 2032.

A year ago, the U.S. Environmental Protection Agency (EPA) issued a proposal that would have required automakers to make EVs account for 67% of their sales of light-duty vehicles and 46% of medium-duty sales by 2032.

What’s changed? Mostly pushback from the auto industry and its labor unions, a core Democratic Party constituency. They point out that EVs make up about 6% of U.S. vehicle sales and have recently plateaued.

Automakers were the first to respond, cutting back or delaying EV production. Ford is a prime example. 

After reporting that it was losing $1 billion a quarter on EV production, Ford announced it was postponing $12 billion in EV production. GM, meanwhile, scaled back its goal to build 400,000 EVs through the middle of this year. Volkswagen has ditched plans to build a $2 billion EV factory in Germany.

Used EV prices are falling

While EVs cost more than their gasoline-powered counterparts, even with government subsidies, they don’t cost as much as they once did – especially used EVs. A recent study by shows the average used car price is down 3.6% in the last 12 months but used EV prices have plunged 31.8%. Yet those falling prices have failed to create a surge in demand.

In a recent report, NPR attributed the slowdown in EV sales to a gap between early adopters, those enthusiastic about EVs, and the rest of consumers. The question is, how long will it take for that gap to disappear, if ever?

It didn’t happen soon enough for Hertz. In 2022, the rental car company announced it would spend $4.2 billion before the end of that year to purchase a fleet of Teslas. But it didn’t ask its customers first.

In January, Hertz said it would sell 20,000 EVs and replace them with gasoline-powered cars. Not long afterward, it fired its CEO.

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