With the infrastructure and electrification focus of the new American Jobs Plan, President Joe Biden has set the stage for the “Big 3” U.S. automakers to enjoy a thriving market for their new electric vehicles in the years to come. For those concerned about the car-buying habits of millennials, an affordable zero-emissions car could be just the ticket to attract a new generation of climate-aware drivers who benefit from other elements of the new plan, including well-paying union jobs, subsidized child care and other policies that lift working households.
Why millennials often don’t buy cars
Several years ago, auto industry observers began to notice a concerning trend in which younger drivers were not buying cars. Affordability and urbanization were cited as leading factors.
“…less than half of potential drivers age 19 or younger had a license in 2008, down from nearly two-thirds in 1998,” noted reporter Jordan Weissmann in a 2012 article. “The fraction of 20-to-24-year-olds with a license has also dropped. And according to CNW research, adults between the ages of 21 and 34 buy just 27 percent of all new vehicles sold in America, a far cry from the peak of 38 percent in 1985.”
Silicon Valley entrepreneur Anthony Seba dialed those concerns up to an 11 in 2018, when he co-authored a report suggesting that electrification and autonomous technology would lead future generations of U.S. drivers to rely on fleet vehicles and ride sharing. He predicted that personal car ownership in the U.S. would practically evaporate by 2030.
The more recent picture is actually more complicated than that, and far less gloomy for the automakers. In April 2019, for example, MIT’s Sloan Management School published a lifespan study indicating that the dip in the rate of car ownership is a temporary phenomenon. The study did find that car ownership is lower for millennials early in life, but over time the rate of car ownership evens out.
COVID-19’s effect on the automakers
The automakers still have to be wary of new trends that make personal cars less necessary, such as the rising popularity of e-bikes and the creation of walkable communities. In addition, The American Jobs Plan also eases pressure on car ownership by improving access to mass transportation.
On the other hand, the COVID-19 crisis has brought a new appreciation for the personal car as a mobile living, working, and entertainment space, not just a means of getting from one place to another.
The COVID-19 crisis has also sparked a renewed interest in moving outside of urban areas or purchasing a second home. That trend could also motivate additional car buying.
The American Jobs Plan provides ample support for a rise in personal car ownership through its pitch for road and bridge improvements.
Connectivity and the personal car
The American Jobs Plan also includes a substantial emphasis on rural broadband and affordable broadband. That could further incentivize car ownership, by bringing full Internet connectivity to an estimated 30 million Americans who live in areas without adequate services.
“With the 1936 Rural Electrification Act, the federal government made a historic investment in bringing electricity to nearly every home and farm in America, and millions of families and our economy reaped the benefits,” the American Job Plan notes. “Broadband internet is the new electricity. It is necessary for Americans to do their jobs, to participate equally in school learning, health care, and to stay connected.”
Range anxiety no more
That reference to the Rural Electrification Act is no accident. It brings up the elements of the American Jobs Plan that support electric vehicle ownership.
Between new electric vehicle charging stations, new transmission lines, more renewable energy capacity, grid resiliency initiatives and more funding for energy storage and clean tech R&D, the American Jobs Plan covers a sprawling web of initiatives that support electric vehicle makers and EV owners.
The charging station network is especially important, because it assures EV owners of access to electricity everywhere they go.
In addition, the American Jobs Plan doubles down on Biden’s commitment to support the electric vehicle market through the purchasing power of the federal government. Much attention has focused on the Postal Service fleet of 230,000 vehicles, but the Department of Defense also has the power to move markets. The Department of the Army alone has a fleet of 225,000 vehicles.
More support for union workers
The Big 3 automakers are Ford, GM, and the recently renamed Stellantis Group, which includes the Chrysler, Ram Trucks, Jeep and Dodge brands. Together, the automakers’ history with unions has had its ups and downs, but that reservoir of experience should put them in a relatively good position to grow their business within the strong pro-union policies envisioned by the American Jobs Plan.
In particular, GM has a head start through its ambitious electrification commitment. The company has also proven its interest in a holistic approach to selling electric vehicles, including support for thousands of new EV charging stations, a role in building out the nation’s renewable energy infrastructure, and the promotion of more affordable EV models.
GM also burnished its social responsibility image during the COVID-19 outbreak by working with unions and health professionals to ensure worker safety at its auto manufacturing plants, while making a sharp pivot into PPE and ventilator production.
The outcome under strong pro-union federal policies is less certain for startups, including the high-profile Elon Musk-led venture Tesla Motors. Tesla has become notorious for anti-union policies in its U.S. operations, and the company’s handling of the COVID-19 crisis did not earn it high marks.
On the other hand, Tesla itself was the beneficiary of a federal initiative that echoes some key themes of the American Jobs Plan. In 2010 Tesla was among the first companies to receive funding through a newly created loan guarantee program administered by the U.S. Department of Energy.
The loan program was created through a 2005 Act of Congress, which aimed to kickstart energy-related innovation in the U.S. Telsa used its $465 million loan to establish an electric vehicle factory in Fremont, California. The new factory launched Tesla far ahead of the Big 3 in the race to get zero emission autos on the road.
If the company needs a similar level of support to keep up with the emerging competition from the Big 3 automakers, the pro-union elements of the American Jobs Plan could force a culture shift for Tesla and others that have resisted unionization.
Image credit: Ford Media Relations
Tina writes frequently for TriplePundit and other websites, with a focus on military, government and corporate sustainability, clean tech research and emerging energy technologies. She is a former Deputy Director of Public Affairs of the New York City Department of Environmental Protection, and author of books and articles on recycling and other conservation themes.