In the past two years, the automotive industry has been completely transformed on account of President Biden’s ambitious plan to have half of all new vehicles sold in 2030 be zero emissions, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles. But this spring, the electric vehicles (EV) market was rattled by a new directive from the EPA detailing more aggressive goals that may not bode well with auto industry players.
On April 12, The Environmental Protection Agency (EPA) announced that they would be proposing new auto pollution limits that require at least 54% of new vehicles sold in the U.S. to be electric by 2030. Additionally, they advise that as many as two of every three vehicles sold by 2032 will be an EV based on emissions limits.
The regulation would set greenhouse gas emissions guidelines for 2027 through 2032 model years that were even stricter than those proposed in President Biden’s 2021 directive. With the competitive landscape in the EV industry already rife with intellectual property disputes, M&A deals, and more, this proposal will push the already volatile market into a full-blown frenzy. Let’s take a quick look at the potential implications associated with this regulation’s approval.
The EPA’s Guidelines
If approved, the proposed regulation will be made up of some of the world’s most stringent emissions limits, supporting the Biden Administration’s efforts to establish the United States as a global leader in electric vehicle production. And even though the US finally reached the EV adoption tipping point last year, this new goal will not be reached without a complete industry overhaul; only 5.8% of all new vehicles sold in the last year were EVs, and even with a promising first quarter in 2023 (7.2% EV sales), automakers have a long road ahead when it comes to meeting the new targets.
Auto industry players understand that to accomplish these ambitious goals, it is going to take more than directive to get the wheels turning on increasing EV adoption. The Alliance for Automotive Innovation, a trade association supported by automakers like Ford and General Motors, reported that “Regulatory mandates alone will not address the conditions that will determine the ultimate success of the EV transition” and that the proposal “requires a massive, 100-year change to the U.S. industrial base and the way Americans drive.”
The government needs to supplement these guidelines with robust supportive policies that include EV tax credits, charging station infrastructure improvements, and domestic supply chain improvements. While 2022’s Inflation Reduction Act highlighted tax credits for electric vehicle manufacturing and purchases, some cars and purchasers are ineligible. And starting on April 18, the Treasury Department will shift manufacturing requirements to make even fewer EVs qualify for a full federal tax credit.
The Legal Implications
Overall, this directive will undoubtedly send automakers and parts manufacturers into overhaul; many auto industry players have already been firing on all cylinders to get ahead in the EV race, and they will have to ramp up their efforts tenfold if they want to remain relevant in the evolving market. While climate change activists and sustainability purveyors will likely celebrate the proposal, traditional automakers, and manufacturers are projected to refute it, taking their frustration to the courts.
Those who can adapt quickly to evolving industry requirements will survive the shift while those who are unable to readjust will quickly fall into obscurity. As a nation, universal adoption is largely inhibited by a lack of charging infrastructure, limited supply, dwindling materials, and a lack of consumer education. While attempting to mitigate these issues, industry incumbents and start-ups will likely begin running into legal challenges on a multitude of fronts regarding the supply chain, intellectual property, M&As, and more. Many major companies have made carbon-neutral pledges to help guide their operations over the next decade, and to achieve these goals, they will have to create aggressive strategies for success that will likely require new tech talent, improved sustainability programs, and educated counsel that can help guide legal strategy.
At WIT, we believe it is important to engage with experts early in the litigation process. With the legal need in the electric vehicles market expanding fast, we are working hard to continue identifying areas that will be ripe for potential disputes. Our team features industry insiders, battery technology experts, computer scientists, economists, mechanical engineers, power management specialists, and wireless technology engineers with the expertise to provide industry and academic perspectives essential to any litigation.
If your company needs help preparing for challenges surrounding the increase in electric vehicle deployment, reach out to WIT for the best experts who can advise you on your strategy. Our electric vehicles expert team was created to address what we expect to be the key areas of litigation in the move to electric fleets.