The 2020 US presidential election attracted a record number of voters and promises a potentially record long wait for confirmation of a victor. COVID-19 has meant extraordinary levels of mail-in ballots, the counting of which could take several days to complete. Even after all the votes are tallied there could be further delays: President Donald Trump has warned that he intends to contest a Democratic victory in the courts.
Meanwhile, the White House has erected a non-scalable fence around the property in anticipation of violence, and police in major cities are bracing for civil unrest. Amidst this uncertainty, the automotive industry keenly awaits the results. A victory for blue or red could spell dramatically different futures, investment demands and priority areas.
Essentially, the US will either discard any pretence of an environmental agenda, or scrap Trump’s plans and try to sign back up to various commitments. Trump’s Administration made it clear from the start that it would be dialling back on environmental targets. Scott Pruitt, the Trump appointee who took over from Gina McCarthy as EPA Administrator, pushed back the corporate average fuel economy (CAFE) and CO2 emissions standards for model years (MY) 2021-2026, previously agreed under the Obama Administration. What’s been put forward in its place, the finalised Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule, consists of watered down targets and, most worrying of all, a potential negative US$22bn societal net benefit. That’s compared to a positive US$98bn net societal benefit under the original 2012 standards.
Economic and environmental specifics aside, Biden promises a more rational, rule-governed, well-mannered and science-driven approach to policy
“During my 18 years as Director of the Office of Transport and Air Quality, the EPA never put forward a regulatory requirement that would hurt the public more than it would help it,” Margo Oge, who led the EPA team that authored the previous 2017-2025 standards under Obama, told Automotive World. “It’s unheard of.”
The past four years, though, have been full of steps previously unheard of in US government and policymaking. In 2017 Trump announced plans to withdraw the country from the Paris climate agreement. Today, after a three-year delay, the US has officially become the first country ever to leave this global coalition designed to tackle climate change.
On the other hand, Joe Biden, the Democratic presidential nominee, promises greater government support for clean energy technology and vehicle electrification, including purchase incentives, charging infrastructure and R&D. Specifically, the ‘Clean Cars for America’ proposal envisions the creation of 500,000 charging stations and an electrification of the government fleet. Biden is also expected to put forward tighter automotive greenhouse gas emissions standards.
Writing on the potential of a Biden victory, Cox Automotive Chief Economist Jonathan Smoke comments: “Expect a quick return to the fuel economy and emissions standards set by the Obama administration and an immediate end of the clash with California. This is a positive for common rules and objectives across the US and globe, but it will not be good for affordability as regulation will lead to costlier automobiles, which are already historically expensive.”
A victory for blue or red could spell dramatically different futures, investment demands and priority areas
But it’s not just about the green agenda. Trade policy and hence manufacturing footprint could also go in different directions. Another Trump presidency would very likely see trade policies that continue to favour re-shoring and local content. Political pressure, primarily in the form of tweets from Trump, has been linked to a number of production commitments over the years from such players as Ford and FCA. As a result, it would make sense that US manufacturing remains a key marketing strategy for brands. Under Biden, there’s general agreement that trade friction would be eased but overall change would be minor. “Perhaps the biggest benefit for auto will simply be no new surprises and namely removal of the threat to the EU and Japan,” suggests Smoke. “We will likely see far less Section 232 drama with trading partners like Canada.”
And therein lies the essence of this crossroads: drama and surprises. The US has had too much of both in the last four years and now risks losing its credibility on the global stage. Economic and environmental specifics aside, Biden promises a more rational, rule-governed, well-mannered and science-driven approach to policy. That alone should create the stability and clarity that all businesses need to thrive.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Megan Lampinen is Editor at Large at Automotive World
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