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Biden seeks to make half of new U.S. auto fleet electric by 2030

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(C) Reuters. The GM logo is seen at the General Motors Assembly Plant in Ramos Arizpe, in Coahuila state, Mexico November 25, 2017. REUTERS/Daniel Becerril

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By David Shepardson and Jeff Mason

WASHINGTON (Reuters) -President Joe Biden took a step toward his goal of slashing U.S. greenhouse gas emissions on Thursday with an executive order aimed at making half of all vehicles sold in 2030 electric, a move he made with backing from the biggest automakers.

The administration also proposed new vehicle emissions standards on Thursday that would cut pollution through 2026, starting with a 10% stringency increase in 2023 model year.

“The future of the American auto industry is electric,” Biden said.

The two moves are part of Biden’s broader plan to fight climate change, in this case by targeting emissions from cars and trucks, while working to make the United States an industry leader while other countries move aggressively to dominate the electric vehicle market.

The 50 percent target, which is not legally binding, won the support of U.S. and foreign automakers, who said that achieving it would require billions of dollars in government funding.

After signing the executive order on the South Lawn of the White House, he jumped into a waiting EV Jeep, which he proceeded to drive rapidly around the grounds, even honking at one point to let people know he was coming.

General Motors Co (NYSE:GM), Ford Motor (NYSE:F) Co and Chrysler-parent Stellantis NV said in a joint statement they aspired “to achieve sales of 40-50% of annual U.S. volumes of electric vehicles… by 2030.” Reuters reported the planned automaker announcement on Tuesday.

Biden’s 50% goal and the automakers’ 40-50% aspiration includes battery electric, fuel cell and plug-in hybrid vehicles that also have a gasoline-engine.

Biden has repeatedly resisted calls from many Democrats to set a binding requirement for EV adoption or to follow California and some countries in setting 2035 as a date to phase out the sale of new gasoline-powered light duty vehicles in the face of opposition by the United Auto Workers (UAW) union.

UAW President Ray Curry, who attended the event, noted the EV goal but said it was focused “on preserving the wages and benefits that have been the heart and soul of the American middle class.”

Senator Gary Peters of Michigan agreed with Biden’s decision not to set a hard deadline for phasing out gasoline-powered vehicles. “Flexibility is important … but at the same token you need to set ambitious goals,” Peters said.

The executive order sets a schedule for developing new emissions standards through at least 2030 for light duty vehicles and as early as 2027 for larger vehicles.

Dan Becker, director of the Safe Climate Transport Campaign, said the plan “relies on unenforceable voluntary commitments from unreliable car makers… Voluntary pledges by auto companies make a New Year’s weight-loss resolution look like a legally binding contract.”

General Motors Chief Executive Mary Barra and Ford CEO Jim Farley were among those in attendance.

Tesla (NASDAQ:TSLA) Inc CEO Elon Musk, whose company makes EVs, tweeted early on Thursday: “Seems odd that Tesla wasn’t invited.”

Asked whether the White House did not invite Musk because Tesla is not a union shop, White House press secretary Jen Psaki said: “I’ll let you draw your own conclusion.”

The Detroit 3 automakers said the aggressive EV sales goals can only be met with billions of dollars in government incentives including consumer subsidies, EV charging networks as well as “investments in R&D, and incentives to expand the electric vehicle manufacturing and supply chains in the United States.”

Hyundai said it supports the 2030 40-50% EV sales goal, while Nissan (OTC:NSANY) said it has a target that more than 40% of its U.S. vehicle sales by 2030 as EVs.

Toyota said in a statement the goal was “great for the environment” and that it would “do our part.”

Meanwhile, U.S. regulators plan to propose revising former President Donald Trump’s March 2020 rollback of fuel economy standards. Trump required 1.5% annual increases in efficiency through 2026, well below the 5% yearly boosts set in 2012 by President Barack Obama’s administration.

Biden’s proposed rules, which cover 2023-2026, are expected to be similar in overall vehicle emissions reductions to California’s 2019 deal with some automakers that aims to improve fuel economy 3.7% annually through 2026, sources told Reuters.

BMW, Honda, Volkswagen (DE:VOWG_p), Ford and Volvo Cars – which previously struck the California deal – said in a joint statement they support the administration’s EV goal but that the federal government must take “bold action … to build consumer demand.”

Consulting firm AlixPartners in June said investments in EVs by 2025 could total $330 billion. EVs now represent about 2% of total global vehicle sales, and will be about 24% of total sales by 2030, it forecast.

Biden has called for $174 billion in government spending to boost EVs, including $100 billion in consumer incentives. A bipartisan Senate infrastructure bill includes $7.5 billion for EV charging stations but no money for new consumer incentives.