Things are about to get greener all across the board. And, from the looks of it, it seems like it’s not just going to help the environment, but all of us individual consumers as well. In case you haven’t heard, in the beginning of August, President Joe Biden announced what he called the “Build Back Better Agenda.” Jeez, that’s a mouthful; let’s just call it the BBB. It’s basically an Executive Order that sets out a plan for the future for investing in infrastructure and encouraging greener business. And a lot of that has to do with the car market.
So, if you’re a Tesla-head and you’re already getting excited, you should be. EVs across the board are probably going to get a whole lot more affordable in the next decade. If you live and die by the gas-powered car, well, you might have something to smile about too because even internal combustion cars are going to get a whole lot more fuel-efficient, which means you’ll be saving money at the gas pump.
Let’s take a look at how Biden’s BBB is going to affect the car market going forward and, more importantly, how it’s going to affect your wallet! Let’s go!
Biden’s Plan – Regulations and Tax Incentives
Before we get into what’s coming next for the car market, if you’re considering whether to go with a gas-powered car or an EV for your next ride, check out our video comparing the total cost of ownership of the two. I break down everything from fuel costs to insurance to depreciation, so you can really know which is cheaper to own. However, Biden’s latest plan might tip the needle in the direction of EVs. So, let’s take a look at what exactly he’s trying to do.
Alright, during the Obama administration, “Big Barack” made regulations that said that every car sold by 2025 would have to get 51 miles to the gallon or better by 2025. Then, President Trump came into office, and he loosened that standard to 44 miles to the gallon by 2026. As we all know, Joe Biden has been big on environmental stuff ever since he was running for office, and his new plan would require carmakers to get 52 miles to the gallon by 2026, pretty much going back to the same thing Obama was doing.
Now, gas-powered cars and trucks are the largest sources of greenhouse gases in the world. And, apparently, this new emissions standard could reduce emissions by 2 billion tons and prevent 200 billion gallons of gasoline from being burned. I know those sound like just numbers to most of us, but it’s a lot. For reference, Americans consumed 123 billion gallons of gasoline in the year 2020, which means that this plan would be like taking every car off the road for a year and a half.
And the other way that Biden is trying to cut back those emissions is by increasing the amount of EVs on the road. In fact, in the BBB, he said that he wants to reach the goal of having 50% of the new cars sold in the year 2030 be electric. This has a lot to do with investing in the EV supply chain, such as helping to make batteries cheaper. And it also has to do with those tax credits that the government gives to people that buy EVs.
Now, that all sounds pretty good, right? More fuel-efficient gas cars and EV prices dropping? And it is good in a lot of ways. So, let’s look at the benefits of Biden’s new plan, and then we’ll get to some potential problems later.
The Bright Side – Benefits of the BBB
So, first of all, saving money on gas is cool. And if our cars in 2026 are way more fuel-efficient than they are now, then we won’t have to spend as much at the pump. An environmental policy group called Climate Power estimated that the average American household will save about $900 a year on gas in 2026 if Biden’s plan goes through. And who doesn’t want $900 extra dollars in their pocket?
If you’re thinking that you’ll probably buy an EV in the next couple of years, then there’s good news for you too. Due to the fact that Biden’s plan will help reduce costs along the EV supply chain, the sticker price of EVs should go down in the next couple of years. Currently, the market share of EVs in the USA is only around 2%. However, that number is projected to grow to around 20% by 2030. And, hopefully, that will mean that prices will drop across the board.
Biden’s plan also involves quite a bit of investment into charging infrastructure around the country, which means, if you have an EV, it’s going to get a whole lot easier to find a charging station. Plus, as EV technology gets even better, the ranges of EVs will naturally improve as well, which means you won’t have to charge as much either.
In terms of the tax credit that you can get for buying an EV, that still exists. You can get a $7,500 tax credit if you purchase an EV that costs less than $40,000. And, yes, that now applies to GM and Tesla vehicles as well.
So, this all sounds pretty fine and dandy, right? Gas savings, cheaper cars, and tax credits. What’s not to like? Well, there are a couple of concerns about this plan that you should hear before you start celebrating.
Potential Problems – Drawbacks of the BBB
The major concerns with Biden’s proposal really fall into three categories: infrastructure, consumer adoption, and vehicle cost. With this plan pushing the move toward EVs so quickly, some people are concerned that the infrastructure won’t be able to keep up. Since 20% of the cars on the road are expected to be electric, the government will have to make huge investments into building up the nation’s charging infrastructure.
On top of that, there’s the question of consumer adoption. As of right now, despite the fact that electric vehicles are typically cheaper to own despite their high sticker prices, and even with the tax credits for EVs, most consumers are still choosing to go with gas-powered. And while most car manufacturers are supportive of the move over to electric, they still need to sell gas-powered cars to fund their electric car divisions.
So, there are fears that this move over to electric could be premature and that, if you force carmakers to produce EVs too early, before consumer adoption follows, it could put a ton of pressure on their bottom lines.
There’s also the worry that the prices of EVs will not drop enough to become affordable for the average person. At the current moment, EVs are pretty much luxury vehicles that get purchased by the upper classes. So, if EV prices remain high and the supply of affordable gas-powered cars starts to dry up because of the push toward EVs, then the middle and lower classes could be left without an affordable option.
So, what’s the bottom line here? Is Biden’s plan a good one? Is it going to screw over working-class Americans? Is it going to save the environment? Should we be celebrating in the streets or rioting?
The Bottom Line – What’s It All Mean?
Well, before you do something crazy, you should know that Biden’s plan is not set in stone. We’ve seen similar things with past presidents. Obama wanted to reach 1 million EV sales by 2015 and we fell short by about 600,000. Similarly, Biden’s goal to have 50% of car sales in 2030 is nothing more than that: a goal. If we don’t reach it, the government isn’t going to shut the doors to GM or anything like that. That 50%-mark is just something to shoot for.
The 52-mile-per-gallon-by-2026 mark, however, will be a mandate. So, carmakers will have to abide by that or face penalties. Overall, this plan is set to have a massive positive impact on the environment and the transition from gas cars to EVs should be pretty seamless for consumers. Pretty much every major car brand in the world today is making aggressive moves to develop more affordable electric cars, so it probably won’t be long before you can buy an EV for the same price as a gas-powered Honda Fit.
The government is planning to invest a ton in charging infrastructure, and Tesla has been putting Supercharger stations on every corner of the Earth, so there shouldn’t be much of a problem with charging your car up either. And while we’re making the transition over to electric, low-income households will still be able to purchase inexpensive gas-powered vehicles that will get even better gas mileage, saving them money at the pump.
Overall, I’d say this plan is going to do good things for the environment and good things for most of our wallets too. Of course, I’m going to miss the days of hearing gas-guzzling V8 engines roaring down the street, but we all knew the day was coming when that would be a thing of the past. And plus, there are some pretty insane electric cars coming on the market these days, just check out our Ideal video about the coolest electric supercars on the market.