Can the outcome of the 2024 general election change the further shift toward electric vehicles? Here are some thoughts on the coming year
By Allen Schaeffer, Executive Director, Engine Technology Forum
The coming of a new year and the general election are prime reasons to assess the challenges and opportunities that lie ahead for the automotive sector.
First and foremost, the automotive ecosystem—manufacturing, servicing, parts, exports—is a major part of the U.S. economy. It drives $1 trillion into the U.S. economy each year; that’s nearly 5% of the Gross Domestic Product, accounting for about 9.6 million jobs and many more indirect jobs.
Allen Schaeffer, Executive Director, Engine Technology Forum
It’s also undergoing a fundamental transformation to an autonomous, connected and electrified future. This transformation was greatly accelerated over the last four years. Significant incentives and funding exceeding $100 billion for purchasing electric vehicles and the essential infrastructure to support them have flowed from the Inflation Reduction Act.
Other policies of the Biden-Harris Administration established more stringent emissions standards that will require manufacturers to produce more zero emission vehicles in coming years. These will likely be at the expense of traditional gasoline, diesel and other internal combustion engine vehicles; not in addition to.
Can the outcome of the 2024 general election change the further shift toward electric vehicles? Here are some thoughts on the coming year:
ICEs vs. EVs: We’re a nation divided
This election year, there was a faceoff of federal and state policy both for and against policies to further incentivize electric vehicles or restrict or ban future sales of internal combustion engine (ICE) vehicles. At least a dozen states have made moves to restrict the future sale of ICE vehicles. Nine states are working toward a total ban. Joining Congress and its efforts to preserve vehicle choice, 15 states have responded by passing their own legislation and resolutions that protect the right of consumer choice of vehicle and fuel type.
Given the state of our union, we can reasonably expect to see more polarization of this issue in the coming year. It’s unfortunate given the fact that both technologies have a role to play in powering our future economy and mobility, as well as meeting climate and clean air objectives. There won’t be one “winner” anytime soon.
The march toward electrifying the transportation sector will continue, as will the ups and downs of EVs and their charging infrastructure
As of the end of the third quarter in 2024, battery electric vehicle (BEV) sales made up about 9.3% of all light-duty cars and trucks according to Baum Associates. Overall auto sales are running at an annual rate of 15.6 million vehicles. Sales of both light-duty and heavy-duty EVs are growing for sure; but at a pace that is well below expectations and investment.
Consumer incentives in the form of federal tax credits are a facilitator of consumer interest, so if they’re eliminated as some political campaigns have pledged, the economics of EV purchase would be more challenging. Any tariffs or other measures that target new entrants from China into the U.S. EV market could help domestic EV automakers. Nonetheless, manufacturers are deep into electrifying cars and trucks. There are already more than 40 choices. New battery plants are still opening, but at slower paces than originally envisioned.
Expect continued, but less aggressive growth, in BEVs sales and a lot more attention to charging infrastructure. This could be boosted with more favorable EV policy or tamped down with the elimination of incentives.
We’re not done with ICE yet
Given the slowdown in BEV/ZEV adoption, manufacturers will have to plan to keep and improve their traditional gasoline, diesel, natural gas and propane offerings to meet tighter environmental standards and sustained consumer demand. Expect to see more innovation to reduce emissions and fuel consumption from all traditional powertrains. I don’t think it will be on the scale of a decade ago, but it will be sustaining.
Hybrids bridge the gap
This year will be remembered as the year of the hybrid comeback. With lukewarm sales of BEVs, manufacturers are sensing that consumers may not be as enthusiastic about EVs as predicted. Plug-in hybrid electric vehicles (PHEV) offer bridge technology—one that incorporates an electrified component but also retains the flexibility and range-enabling gasoline engine. There are currently 37 PHEVs available. More options of current vehicles sporting PHEV systems can be expected in 2025.
Medium and heavy-duty trucks: A maze of new requirements and the countdown to 2027
A soft freight market in 2024 has led to a slowdown in new truck orders, but trucking fleets are expected to start showing their strategy for investing in future technology in the new year. With 2027 marking the first year of a new and more stringent emissions milestone, traditional talk of a “pre-buy” becomes more real in 2025. Expect fleet owners to plan vehicle upgrades before the new emissions milestone in an effort to avoid higher costs and any first-year issues with new technology.
What used to be a fairly basic consideration of acquisition of new fleet trucks to meet replacement cycle and capital investment goals has devolved to a complex consideration of compliance with a myriad of new federal, state and other policy considerations. Gone are the days when a manufacturer can sell whatever vehicle a customer wants, or a fleet can purchase a new diesel or natural gas truck and then operate it wherever they want.
A total of 17 states plus the District of Columbia have signed the Multi-State Medium- and Heavy-Duty Zero-Emission Vehicle Memorandum of Understanding (MOU), committing to make 30% of medium- and heavy-duty vehicle sales be zero-emission by 2030 and 100% by 2050.
Starting in 2025, there will be new considerations on the type of vehicle that can be sold. The regulation has been in effect this year in California and in 2025 will expand to Massachusetts, New Jersey, New York, Oregon and Washington, as all of these states have adopted the Advanced Clean Truck rules that require increasing sales of zero emissions vehicles. Also, Massachusetts and Oregon have adopted the Heavy-Duty Omnibus emissions standard that further limits the kinds of vehicles to be sold in those states.
The upshot of these new rules in California has emerged over the last few months: a shortage of new diesel trucks to purchase. Manufacturers’ ZEV sales requirements are tied to their diesel truck sales. So, if ZEV vehicles are less in demand, that means manufacturers cannot sell as many diesel vehicles or they have to pay a substantial penalty or purchase credits.
Sales of zero-emission heavy-duty vehicles are growing slowly in the United States. They’re limited by higher costs compared to diesel, some uncertainty about the performance of heavy-duty BEVs, and the lack of suitable charging infrastructure. In class 3-8 trucks, electric powered trucks made up less than one-tenth of 1% of all commercial vehicles in operation at the end of 2023. The Inflation Reduction Act Commercial Clean Vehicle Credit (Section 45W) provides up to a $40,000 tax credit for the purchase of a zero-emission truck.
The heavy-duty truck rules are highly controversial and there are now 24 states suing the U.S. Environmental Protection Agency to overturn the rules on various grounds. How a new Administration and Congress respond to these concerns remains to be seen. It is worth noting that the California Air Resources Board’s clean truck rules go beyond traditional regulation and also include individual agreements with manufacturers, as well as their associations, that stop them from challenging the rules in court.
Renewable low carbon fuels: More please
A bright spot in the so-called clean energy transition is low-carbon renewable fuels. Advanced renewable biofuels like renewable diesel (RD) hold great promise in helping decarbonize the transportation sector. They’re available, affordable and don’t require new vehicles for use. Compared to BEVs, renewable diesel fuel is a drop-in replacement for conventional diesel fuel, without requiring new infrastructure or changes to the vehicle to achieve the benefits.
Supply of renewable diesel and biodiesel fuels is growing in the United States, surpassing 3.3 billion gallons last year and on track for 6 billion by 2025. These fuels deliver 50 to 85% reduction in carbon emissions compared to conventional diesel and gasoline. State low carbon fuel requirements are expanding beyond California and now include Oregon, Washington, New Mexico and Colorado. Some new technologies enable the use of 100% biodiesel in existing diesel trucks and equipment.
Despite new state requirements and growth in supply, renewable fuel policies over the last three years have been generally viewed as lackluster and unfulfilling for the renewable fuels sector, particularly when compared to investments in electrification. The EPA has failed to set growth-oriented policies that drive further investment and increase the supply of these remarkably successful fuels. Major changes would be welcome here from the next Administration.
This year will be remembered for the landmark EPA regulation of the automotive and heavy-duty vehicle sectors, and the aggressive implementation of the clean energy provisions of the Inflation Reduction Act.
What will 2025 be known for? A rollback of clean energy programs and electric vehicle requirements or their acceleration perhaps? It all depends on the next administration and the makeup of the next Congress. One thing that we know for sure is that change is coming.
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