Cleaner Cars Are a Win for America, Trump Isn’t Helping

Transportation is the largest source of greenhouse gas emissions in the United States, so to tackle climate change we need to be speeding away from the internal combustion engine. Electric vehicles (EVs) are leading the way. The EV transition will not only reduce transportation emissions, create jobs for U.S. workers, and provide more choices and fuel savings for consumers, it presents an incredibly lucrative opportunity for whichever carmakers can innovate fast enough to capture the market. It’s helpful to compare the world’s two largest car markets: the United States and China.

Right now, Chinese carmakers are electrifying their fleets faster than U.S. companies. State controls and public subsidies play a huge role in China’s EV market, and the domestic industry that serves it. Short of going that route, there’s much we can—and should—be doing in the United States to help advance this promising industry and the benefits it provides. Unfortunately, the Trump administration, with its policies discouraging clean car innovation, isn’t helping.

I recently attended the Beijing International Automotive Exhibition, China’s equivalent of the Detroit Auto Show. These annual car shows allow automakers to reveal new models to the public and to signal where they believe the market is headed. If the Beijing auto show was any indication, then the future of cars is electric SUVs in the world’s largest auto market. China’s drive toward electric vehicles is part of a larger strategy aimed at reducing pollution and containing traffic congestion, in part by learning from successful policies developed in the United States.

Auto shows provide a glimpse into each country’s EV market. I attended the Washington, D.C. Auto Show in January, which showcased a few EVs like the Chevy Bolt and Nissan LEAF, but they were mostly a side-note. In Beijing, EVs were the centerpiece of the auto show. The show was packed with startups, giving it an atmosphere of fierce competition, rapid innovation, and public and private cooperation that will eventually produce some winners who want to shake up the global auto industry. To be fair, many Chinese EVs are still lower-range micro vehicles, and there is currently a problem with too many (100+) subsidized companies vying for limited space. But this situation contrasts sharply with the U.S. market which has comparatively few auto startups, vanishing government support, and weaker clean vehicle and fuel economy standards on the horizon.

NIO ES8 electric SUVs at the Beijing auto show

The Chinese companies are all aiming at Tesla, the American EV company whose success over the past decade resulted from a combination of circumstance and public-private partnership that’s been hard to replicate.

NIO, a Chinese startup founded in 2014 with big Chinese tech investors like Baidu and Tencent, is developing a seven-seat, all-electric SUV, and they’ve opened an office in California. BYD, which stands for “Build Your Dreams”, started as a rechargeable battery manufacturer in 1995, now makes electric cars, trucks, and buses, and has American investors that include Warren Buffet. Byton just received half a billion in Series B funding from FAW Group, one of the largest state-owned carmakers in China, and CATL, the largest battery manufacturer in the world.

Geely, a plucky carmaker from Hongzhou founded in the 1980s, bought Sweden’s Volvo from Ford in 2010 and now produces a popular electric SUV modeled after Volvo’s XC40 under its subsidiary Lynk & Co. Last year Volvo itself announced that all of its new models after 2019 will be electric or hybrid. Its new factory opening in South Carolina in late 2018 will employ 2,000 workers and produce 60,000 Volvos a year.

Volvo’s electric XC90 SUV on display at a showroom in downtown Shanghai

China surpassed the United States as the world’s largest passenger car market in 2008 and hasn’t looked back. It has grown nearly 300 percent in the past decade (see chart below).

With car ownership surging, China needed a new national policy to reduce rampant traffic congestion and air pollution.

Where did it look? The United States. California and nine other states have adopted tightening fleetwide emissions standards and a zero emissions vehicle (ZEV) technology development program, and the federal government let them do that with a Clean Air Act waiver. These states provided a roadmap for China, and American companies are competing in the Chinese market, playing by China’s rules and remaining profitable.

GM announced in early April that Buick had its best March since 2004. For every Buick sold in the United States last year, six were sold in China. The all-electric Buick Enspire concept revealed at the Beijing auto show can travel 370 miles on a single charge with zero tailpipe emissions. Who doesn’t want that?

While China is doing that, the Trump administration is threatening to revoke California’s authority to set its own standards, cutting funding for advanced vehicle research and manufacturing and rolling back federal clean car and fuel economy standards. It argues that consumer preference has shifted away from cleaner, fuel-efficient cars towards trucks and SUVs since the original clean cars rules were enacted in 2012, so the rules need to be revised.

Vehicle sales have shifted towards trucks and SUVs since 2012 as automakers promoted new crossover and SUV models amid low gas prices, but U.S. fuel economy standards are designed to be flexible, and have already responded to these changes. And as Mr. Trump burdens Americans with higher fuel prices this summer, you can thank the standards for helping cars, trucks and SUVs achieve record high fuel economy.

Our national clean car standards, federal automotive R&D funding, and the spirit of cooperative federalism on which our national program is based, support hundreds of thousands of jobs across the country. They are key to keeping U.S. automakers competitive globally. The administration ignores these points, and automakers competing in the American market see it as an opportunity to increase their profits from gas-powered trucks and SUVs.

Consumer preference for trucks and SUVs doesn’t have to conflict with transitioning to cleaner vehicles. Almost all the EVs we saw at the Beijing auto show were electric SUVs—including American automakers’ offerings. Why can’t we find those models here?

Driven by necessity and national pride, as well as strong government control over the economy, China has demonstrated its ability to move markets fast and forcefully.

But U.S. companies can move too. To believe otherwise forgets the long tradition of American ingenuity, drive and innovation that helped perfect the automobile, mass-produce it, and then dominate the global market throughout the 20th Century.

Good policy helps. The Trump administration may say it advocates for “America first” policies. But if it wants America to be first in the EV revolution, it should see that preempting state authority, weakening our standards and cutting research funding will only result in the United States ceding leadership in the electric vehicle race to China.

About the Authors

Dan West

Senior Advocate, Government Affairs

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