New Biden emission standards for 2027 expected Wednesday I'm having difficulty pinning down anything concrete in writing about proposed GHG emission legislation. However, there is lots of stuff to read about individual components and timing of the proposed legislation. So, my headline might end up being click bate if I had an agenda, which I don't other than to warn everyone here what is coming.
Like any good politician, Biden won't be taking away anyone's choice as that would be "wrong". Instead of banning new ICE vehicle sales as of 2027, Biden is taking a page out of China's playbook. The new legislation expected to be introduced next Wednesday in the USA will basically make it impossible for auto makers to conform to new emissions standards using ICEvehicles.
Will each of the auto makers choose to spend the tens of billions of dollars needed to try to modify their ICE car emissions so that they are 75% "GHG" cleaner than today by 2027 (if they can even do it)? Or, will they invest their money in EV's so that their customers can get the $7,500 IRA grant (plus State incentives) and so that the auto makers themselves can caputure the $3,000 to $4,000 battery grant?
What would you do?
Ford has already divided off their business into 3 distinct companies. Smart move as the EV business will flouish while the ICE division will go bankrupt leaving the Feds to clean up the mess. The only unknown at this time is how Ford will handle its highly profitable commercial business. My guess is that we will see Ford making an annnouncement about how they will have their commercial division 100% EV by 2027 with the support of the Feds.
GM has said they would catch up and pass Tesla in EV sales. GM has said a lot of things that they HAVE NOT delivered on. GM has promised to increase EV sales by 250,000 vehicles per quarter through 2025. However, they sold 39,000 in all of 2022 including 16,000 in Q4. You do the math. Their new Ultium platform which was supposed to carry them to a bright shining future is already obsolete, so they are inevitably going to have to scrap Ultium and completely retool like Volkswagon has chosen to do. That means GM and Volkswagon are looking at a lot of pain before they get things turned around.
Toyota, Honda, and Nissan have all been pretty much ignoring the EV fad. If Biden announces the new measures on Wednesday, it may signal the end of Japanese auto sales in America. There will be lots of whining, but Biden has the environment story on his side and he will continue to run with it into the next election.
The good news for SU shareholders might come in the form of pressure being placed on politicians to postpone emission complience deadlines. I wouldn't count on it, but it could happen. Instead, I think we will see a "movement" to save the American auto industry by doing everything possible to make EV production a priority for the nation. Who knows, but I don't see the Dems taking their foot off the gas (hehe).
China, with its 38% share of the world wide auto market is essentially banning new ICE vehicle sales in less than 3 months. I wonder how the EU will respond to the USA leap frogging Europe when it comes to the new 2027 emissions standards? I'm guessing NOT WELL as those bloody Americans won't be allowed to have the bragging rights on protecting the health of its citizens. All nonsense imo, but that never stopped a politician.
I'm all about loyalty and it is nice to see SU investors defending their position. Unfortunately, the only loyalty that counts going forward is the loyalty of DEM supporters to getting back in office. I expect the Dems will keep driving their popular EV agenda to another 4 years in office. The only obstacle I see for the Dems is the UAW and my bet is that the Dems throw them a lifeline.