Legislative Landscape

President Trump met auto industry CEOs to discuss a revival of the domestic car industry’s fortunes. His administration’s roll-back of emissions standards and ongoing spat with Californian legislators suggest that EVs would not be part of that turnaround. Photo © rtrlnine967658

The world’s fleet of electric vehicles ballooned in 2018 and 2019, thanks to new government policies and continuing incentives. From Asia to South America, states are assisting what was once a niche mode of transport to become one of the fastest-growing automotive sectors in the world.

Elsewhere, incentives have ebbed over the past 12 months. EV buyers in the United States are reaching the end of sales-based tax credits, and both the Chinese and Dutch government are rolling back on what were once generous enticements for owners and producers. Even so, modest economies such as Portugal are going great guns for clean cars.

Even with favorable incentives in place, common issues still hinder growth, from a lack of charging infrastructure to consumer attitudes toward range and cost. It remains to be seen if governmental help can break down those barriers, which may come as a relief to marketers of passenger car motor oils.

While many see the advantages of EVs – cleaner air, reduced dependency on fossil fuels and invigorated industries – how use and ownership are encouraged varies from country to country. 

Some South American authorities are investing in electric public transport and making EVs more accessible. In Africa, only a few governments are passing legislation or adopting favorable EV policies. China’s titanic economic might dominates Asian EV adoption, but is that bubble about to burst? Other Asian countries are coming around to the practicalities of EVs, especially two- and three-wheelers and are introducing policies reflecting a new attitude.

While most government incentives deal with purchasing and manufacturing EVs, little help is aimed at tier-one and two automotive suppliers or the raw materials needed to build them. Just the opposite, some country’s policies have the potential to hurt the growing industry, and in 2019, some administrations began to play international trade politics. 

In a surprise move that rattled metal markets and threatened to cut global supply, Indonesia, one of the world’s top nickel producers, said in September it would stop ore exports on Jan. 1, 2020, two years earlier than initially indicated, to promote more domestic processing. Nickel is a vital component of EV batteries.

Chris Berry, president of House Mountain Partners, a New York-based advisor to battery material companies and investors, warned that if Indonesia took this action, then nickel prices could reach U.S. $18,000 per metric ton, up from about $13,000. In August last year, they passed that threshold. 

Indonesia is one of the world’s top nickel ore producers, but when the government halted exports, metal markets were sent into a spin. Nickel is a key component of EV batteries. Photo © Hariandi Hafid/ZUMA Press/Newscom

Also this year, the Chilean government announced that a new national lithium plan was in the works – an ambiguous policy that has EV battery makers worried, even as lithium prices are in a global slump. Meanwhile, Bolivia cancelled a finalized lithium extraction deal after public pressure about royalty sharing. Political chaos ensued.

Another political situation that could hinder the spread of EVs is the diplomatic skirmish between China and India. Lingering border issues between the two giant economies, China’s anti-India stance after New Delhi revoked the special status of Jammu and Kashmir, and the ballooning trade deficit in favor of China helped deteriorate relations further. 

There has been concern in the Indian media over how this these issues will influence the country’s reliance on China for EV parts. Meanwhile, India is hoping to push technology advances in battery know-how, which would help the country to become less dependent on China for power banks.

The tit-for-tat trade war between the U.S. and China hindered Tesla and General Motors from importing key components from China, even when the companies appealed for exemptions.4 

There were also domestic battles brewing in America over the future of EVs. This time, legal matters were afoot in California. In September, the federal government notified Sacramento that it had begun an antitrust probe of the state’s agreement with Ford, Honda, BMW and Volkswagen over exhaust emission standards.

Additionally, President Donald Trump’s administration, through the Environmental Protection Agency, proposed to slow down plans to tighten the country’s Corporate Average Fuel Economy legislation and greenhouses gas emissions for passenger vehicles and light trucks and establish new standards, covering models made in 2021 until 2026. The administration said it wants to retain model year 2020 standards for both programs until 2026. A number of states, many with EV-friendly regulations, have taken the administration to court.

All these developments concern EV proponents, who have remarked that the success of EVs depends on government policies helping to develop the industry.