{"id":9265,"date":"2021-02-08T15:54:28","date_gmt":"2021-02-08T23:54:28","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=9265"},"modified":"2021-03-01T16:25:23","modified_gmt":"2021-03-02T00:25:23","slug":"the-global-impact-of-zev-mandates-on-the-u-s-auto-industry","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2021\/02\/the-global-impact-of-zev-mandates-on-the-u-s-auto-industry","title":{"rendered":"The Global Impact of ZEV Mandates on the U.S. Auto Industry"},"content":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;9272&#8243; img_size=&#8221;full&#8221;][vc_column_text]<span style=\"font-weight: 400;\">Recent legislation from around the globe (and from within the U.S.) has been one of the single largest forces pushing automakers to reduce their carbon output and shift toward the<\/span> <span style=\"font-weight: 400;\">production of zero-emission vehicles (ZEVs).<\/span><span style=\"font-weight: 400;\"> The EU, Japan, China, and other major economies worldwide have announced aggressive plans to tackle climate change by pushing automakers to lower and eventually eliminate their vehicles\u2019 emissions.<\/span><\/p>\n<h2><b>What are ZEV Mandates?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The Zero Emission Vehicle (ZEV) mandate programs are electrification goals set for the automotive industry to accelerate the adoption of electric vehicles (EVs) to help meet climate goals for reducing carbon emissions. The ZEV regulation currently considers three distinct vehicle models to fulfill the zero-emission requirement:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Plug-in Hybrid Vehicles<\/b><span style=\"font-weight: 400;\">: a combination of the conventional gasoline-powered engine with a battery recharged from the electrical grid.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Battery Electric Vehicles<\/b><span style=\"font-weight: 400;\">: entirely electric-dependent vehicles that can be recharged from the electric grid.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Hydrogen Fuel Cell Vehicles<\/b><span style=\"font-weight: 400;\">: powered by electricity that is produced from a fuel cell using hydrogen gas.<\/span><\/li>\n<\/ul>\n<h2><b>U.S. Adoption of ZEV Mandates<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">While the U.S. has some states that have adopted ZEV and low-emission vehicle regulations, no Federal legislation is currently in place. We can expect that to change with the <\/span><a href=\"https:\/\/www.qad.com\/blog\/2020\/11\/what-a-biden-presidency-could-mean-for-the-automotive-industry\"><span style=\"font-weight: 400;\">Biden administration<\/span><\/a><span style=\"font-weight: 400;\">\u2014 the policies that it will put in place will likely be shaped and influenced by what\u2019s already occurring on a global scale.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Therefore, we should not only examine the president&#8217;s agenda but also review the external pressures that are sure to impact and influence his policies moving forward.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To do this, we will analyze China and the G-7 (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States), the economies and government bodies most likely to influence Biden\u2019s team. Understanding the challenges and accomplishments of these countries will help us see which hurdles the Biden administration is likely to face and what we can expect as new regulations are formalized.<\/span><\/p>\n<h2><b>Electric Vehicle Transition and Charging Infrastructure<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">A full transition to electric vehicles necessitates more than a shift in the automaker business model. It requires the construction of a comprehensive charging infrastructure network to build range confidence and maximize electric vehicles\u2019 emission reductions and cost savings by enabling better electric vehicle utility.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This move requires municipal support, calling on provincial, state, and city governments to prioritize a strategic grid transformation that will give consumers viable options for recharging their vehicles. The individual designs and needs vary by city and depend largely on the underlying transportation, demographic, and housing patterns of the location.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In our review group (G-7 and China), each government has already begun developing innovative solutions that will accelerate the charging infrastructure at the local, regional and national levels. These solutions also include programs that tackle issues around home and workplace charging.<\/span><\/p>\n<h2><b>Electric Vehicle Sales Goals and Strategies<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Many governments are using sale percentages as a part of their long-term decarbonization strategies in an effort to ensure adequate representation and availability on the market and phase out the sale of gasoline- and diesel-powered vehicles.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Several governments have even announced a vision for ZEV to represent 100% of all new passenger vehicle sales in their jurisdiction. Norway takes the lead with a complete-ZEV market by 2025 and is followed by Denmark, the Netherlands, Sweden, and China\u2019s Hainan province with a 2030 target date.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The UK recently approved an all-ZEV market by 2035, and Canada, France, Portugal, Spain, and Singapore are aiming for 2040. Finally, Germany says it plans to complete its transition no later than 2050.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some less aggressive governments who haven\u2019t joined the complete ZEV transition consensus have still established targets. South Korea and Japan will require ZEVs to represent 30% of vehicle sales by 2030, and China is mandating a 50% ZEV market by 2035.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The United States, along with Italy, has not established ZEV targets (yet), though internal pressure in the U.S. from California\u2019s recently approved legislation will likely have an impact on the U.S. auto market. California, which is ranked as the world\u2019s fifth-largest economy, is now requiring all new vehicle sales to meet ZEV standards by 2035. Additional states have already adopted California\u2019s previous goal for 2050 and are predicted to shift toward California\u2019s new standard in the next legislative cycle.\u00a0<\/span><\/p>\n<h2><b>Internal Combustion Engine (ICE) Vehicle Phase-Out Goals<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Looking beyond the market of new passenger vehicles, some local governments have also set ambitious goals to tackle the percentage of electric vehicles on the road and have developed plans to phase out gasoline-powered cars\u2014some are even aiming for a complete phase out.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Amsterdam, Bergen, Oslo, Paris, and Stockholm are eliminating the internal combustion engine (ICE) by 2030. U.S. cities Los Angeles, New York, and San Francisco, along with Tokyo, have set all-electric targets for 2040 or 2050.<\/span><\/p>\n<h2><b>What will be Critical to the Biden Administration\u2019s Policies?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">There are many things that will need to be included in a comprehensive federal plan, but the primary policy tool that will be used by the Biden administration will be to establish a national electric vehicle sales goal.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Based on this analysis and global policy review, we believe Biden\u2019s administration will most likely implement a 100% zero-emission market by 2035. This signature legislation will move far beyond previous Obama-era legislation and will align our county with state-level mandates while putting us on par with global policies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Under this scenario and with consideration of current trends, we forecast the production of 3 million battery electric vehicles (BEVs) by 2025 and 5.2 million\u2014or 32% of the total U.S. vehicle production\u2014by 2030. The BEVs will be joined by 1.7 million plug-in hybrid electric vehicles (PHEVs) in 2025 and 4.4. million PHEVs by 2030. This would place the U.S. market at a 60%-ZEV by 2030, which is necessary to achieve 100%-ZEV status by 2035.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Based on Biden\u2019s campaign, we can also expect the installation of 500,000 EV charging stations, an additional $400 billion investment in advancing battery technology and automotive infrastructure, and the transition to a completely battery-electric federal vehicle fleet.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Please note: On January 28, General Motors pledged to stop making gasoline-powered passenger cars, vans and sport utility vehicles by 2035, further reinforcing the global shift and the likely position of the Biden administration.<\/span><\/p>\n<h2><b>How Automotive Companies can Prepare for ZEV Mandates<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Electrification is already here and happening, and with an administration in place that is focused on combating climate change, momentum is picking up, and the adoption rate is predicted to soar past previous forecasts.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As the industry charges, companies in the automotive industry must take the time to assess where they currently stand and prioritize creating a strategic plan that will guide them to where they want to be five, 10 and 15 years from now. Proper planning will require in-depth market research, analytical understanding of trends, designing forecasting models, placing a well-researched bet <\/span><a href=\"https:\/\/www.qad.com\/blog\/2020\/08\/software-not-hardware-will-drive-the-future-of-automotive\"><span style=\"font-weight: 400;\">on the future<\/span><\/a><span style=\"font-weight: 400;\">, and implementing those plans to navigate the organization through the high tides of automotive disruption. Companies that ignore this call will soon find themselves washed up and out of business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Get an overview of current global legalization targets by downloading this<\/span><a href=\"https:\/\/go.qad.com\/SBS-Auto-GL-FY22-AD-Paul-Eichenberg-Blog-Post-Feb_Content-Page-3.html?utm_source=Marketo&amp;utm_medium=web&amp;utm_campaign=sbs-auto-PEichenberg&amp;utm_content=news\"><span style=\"font-weight: 400;\"> ZEV Mandate Summary Table<\/span><\/a><span style=\"font-weight: 400;\">.<\/span>[\/vc_column_text][\/vc_column][vc_column][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;9272&#8243; img_size=&#8221;full&#8221;][vc_column_text]Recent legislation from around the globe (and from within the U.S.) has been one of the single largest forces pushing automakers to reduce their carbon output and shift toward the production of zero-emission vehicles (ZEVs). The EU, Japan, China, and other major economies worldwide have announced aggressive plans to tackle climate change by [&hellip;]<\/p>\n","protected":false},"author":60,"featured_media":9272,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182,199],"tags":[1518,7,1458,451,495,1454,1520,24,1450,1519,1521],"class_list":["post-9265","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-manufacturing-trends","tag-auto","tag-automotive","tag-biden","tag-electric-vehicle","tag-electrification","tag-evs","tag-hybrid-vehicle","tag-manufacturing","tag-presidency","tag-zero-emission-vehicles","tag-zev-mandates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Global Impact of ZEV Mandates on the U.S. Auto Industry | QAD Blog<\/title>\n<meta name=\"description\" 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