New EPA proposal could be a boost for EVs in the US
Slightly relaxed ruling could be a boost for EV sales
In response to strong industry and labor opposition to the US Environmental Protection Agency’s (“EPA”) April 2023 policy proposal, the agency has issued a “final”, slightly relaxed ruling that could be a boost for EV sales in the nation.
For model years 2027 through 2029, the proposal enforces stricter pollution standards on light-duty and medium-duty vehicles, before ramping up to nearly reach the previously targeted level in 2032.
The regulations are technology-agnostic, although under the final ruling, the EPA states that the US industry could see 56% of new vehicle sales be battery electric vehicles by 2032 and at least 13% plug-in hybrids.
Following the ruling, President Joe Biden reiterated his pledge that half of new cars and trucks sold in the US will be zero-emission by 2030.
Adamas take:
The Biden-led agency has kept true to its cause while making some practical ramp-up accommodations for industry to re-tool accordingly.
The strategy is particularly elegant as it maintains consumer freedom, important to U.S. consumers, while affording multiple pathways for industry to comply.
In our view, the modelled uptake for 50% BEV market penetration by 2030 is inline with credible forecasts led and driven by existing market forces.
Reconciling the EPA ruling with these forecasts, it can be said the policy may serve to catalyze the desired outcomes without being overly restrictive.
Possibly one unintended consequence of the EPA’s ruling is it turns up the heat for US supply chain independence.
At present, with China dominating battery raw materials supply chains, any EV-centric policy will act counter to the IRA in the near-term while further nurturing China’s industry stronghold.
With long lead times to develop upstream mining and refining projects, the incentive to develop IRA-compliant supply chains in the near-term, particularly in the lithium sector, is arguably stronger than ever.
[The insight above is an extract from the April update of the EV Battery Lithium Monthly service.]
