Automakers Must Double Investment to Meet Biden’s Proposed Electric Vehicle Targets, Says New Study

Cambridge, MA - The Biden Administration and automotive industry have announced ambitious targets for the number of electric vehicles they hope to deploy by 2030, but automakers are not yet on track to meet those targets, according to new analysis by researchers at Harvard Kennedy School’s Belfer Center for Science and International Affairs.

In April 2023, the Biden Administration proposed emissions regulations designed to incentivize the automotive industry to increase production of zero emission vehicles (ZEVs) to 60% of new passenger vehicle sales in 2030. The Environmental Protection Agency is expected to finalize its proposed target early next year.

The 13 global automakers operating in North America have committed to individual targets that total 43% ZEV penetration in passenger vehicle production volume by 2030, or 2.7 million units below the Administration’s proposed 60% target. But analysis by authors Daniel Wohl and Daniel Schrag shows that automakers’ announced capital expenditures are sufficient to achieve just 31-39% ZEV penetration of vehicle production by 2030, a number well below the capital investment needed to hit both internal and federal targets.

“Announced investments may not represent the totality of the auto industry’s privately planned or potential investments,” said lead author Daniel Wohl, a joint MBA and MPP candidate at Harvard Business School and Harvard Kennedy School. “However, this analysis quantifies industry’s progress so far relative to its pledges and the government’s goal. It demonstrates automakers must virtually double the capabilities enabled by their current investments in order to achieve the federal target.”

In order to bridge the gap between the industry’s targets and its current trajectory, policymakers should consider supply-side incentives aimed at retrofitting older, internal combustion engine vehicle factories for ZEV production, Wohl and Schrag argue. Retrofits offer near-term expedience through lower capital expenditures, access to a trained labor force, existing supply chain infrastructure, and grandfathered zoning and siting. To date, state and federal efforts to expand ZEV adoption have focused on providing demand-side incentives, like the consumer tax credits in the 2022 Inflation Reduction Act.

“The transportation sector is the largest contributor to U.S. greenhouse gas emissions, and passenger vehicles represent the lion's share, so we must provide the right incentives to the automotive industry to electrify,” said Daniel Schrag, Sturgis Hooper Professor of Geology and Professor of Public Policy at Harvard University. Added Wohl, “The majority of legacy, conventional factories in North America were built over 30 years ago, so they will soon require business-as-usual upgrades. Incentives encouraging automakers to implement ZEV retrofits when these upgrades are necessary could accelerate the electrification of passenger transportation.”

Further Information

Read the full paper, "Increasing Manufacturing Capacity to Electrify Passenger Vehicles," here.

For Media Inquiries:

Elizabeth Hanlon
(617) 495-5965
ehanlon@hks.harvard.edu

About the Belfer Center of Science and International Affairs

For 50 years, the Belfer Center for Science and International Affairs has consistently ranked as the world’s top academic think-tank, bringing together leading thinkers and practitioners from across disciplines to advance understanding of the most critical challenges in international security.