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Biden’s Latest Electric Vehicle Dream Hits Market Hurdles (2)

Dec. 10, 2021, 10:15 AMUpdated: Dec. 10, 2021, 6:01 PM

President Joe Biden’s latest call for the federal government to phase out the internal-combustion engine from its car and truck fleet runs up against the marketplace challenges that have so far muddled his all-electric dream.

Biden on Wednesday directed the U.S. government to purchase only American-made, electric-powered passenger cars beginning in 2027, and electric versions of other vehicles by 2035. He set up a task force of federal environmental, national security, and transportation officials to work on that goal, and ordered his team to help state governments stock up on electric cars as well. The directive builds on Biden’s order from the first month of his presidency.

But the market still offers few, if any, zero-emissions options to meet certain agencies’ needs, such as the Interior Department’s use of medium-duty trucks to carry equipment over dirt roads in remote areas where there are few charging stations. They often also have a higher up-front sticker price than gasoline-powered models —a deterrent for agencies conditioned to pick the least expensive option.

Federal agencies ordered 643 zero-emission cars in fiscal year 2021—meaning electric cars made up a little more than 1% of their car purchases last fiscal year, according to the agency that does most of the government’s vehicle buying.

“This is still pretty ambitious and pretty bold,” said Ben Prochazka, who leads a group pushing for electric vehicle adoption, of Biden’s latest pledge. “Fleets don’t typically turn over everything tomorrow.”

To be sure, the situation has changed since Biden first made electric vehicle pledges in January.

The new infrastructure law includes $7.5 billion to build out hundreds of thousands of new EV chargers, making it more feasible for consumers and the federal government to go electric. Government car shoppers at the General Services Administration have added more electric passenger car options to their list of what agencies can buy, and the agency has let out contracts to supply fast-charging equipment.

Biden’s economic package (H.R. 5376), which Biden and Senate Majority Leader Chuck Schumer (D-N.Y.) are aiming to finish by Christmas, includes $3 billion for civilian agencies and $6 billion for the Postal Service to make it more attractive for them to buy electric vehicles.

Sales of electric cars in North America are also up 27% in 2021 compared to all of last year, according to data compiled by Bloomberg and published in November, giving manufacturers more incentive to produce them.

“Each agency really needs to then get in the weeds and figure out how to get from here to there, but this executive order lays out the path, said Dorothy Robyn, a public policy scholar who led the General Services Administration’s real estate arm during the Obama administration.

The federal government owned or leased more than 657,000 vehicles as of fall 2020. GSA managed about 250,000 of those vehicles, a fleet comparable in size to delivery giants FedEx Corp. or United Parcel Service Inc.

The White House on Wednesday also clarified that Biden’s promise to buy only zero-emission passenger cars by 2027 isn’t absolute—he’ll accept plug-in cars that use some gasoline.

Challenges Remain

The federal fleet won’t suddenly get rid of its gasoline-powered vehicles to replace them with electric models. Federal agencies can only replace fleet vehicles when they hit certain age and mileage criteria, which vary by vehicle type, according to a GSA spokeswoman.

Once agencies are ready to retire an older model, electric passenger vehicles are easier to find than heavy-duty trucks—making it more feasible for Biden’s government to green its sedans by 2027.

Trucks can be trickier because there are fewer electric options.

The U.S. Postal Service angered environmentalists earlier this year after it said only 10% of its new truck fleet would be electric. Postmaster General Louis DeJoy, in testimony before the House Oversight Committee, said committing to a greater number of electric vehicles would be too expensive. The Biden economic package, if it becomes law, targets that need.

The Postal Service in February awarded Wisconsin-based Oshkosh Corp. a $6 billion contract to replace its fleet of delivery vehicles.

Sustainability also runs up against the “persistent tyranny of low price” in federal contracting, George Washington University professors Steven Schooner and Markus Speidel said in a 2020 report. Agency metrics can reward paying less up front even if electric vehicles could cost less in the long run, they said.

One example: No agency as of late August had bought a Tesla Inc. vehicle after government car buyers made them available, according to records obtained by Bloomberg Government. Tesla models can costs thousands more than a gasoline-powered car but are more environmentally-friendly.

Agencies typically tell potential suppliers up front whether they’re looking for the lowest price or certain qualities, such as environmental impact, when picking what products to buy, said Liza Craig, government procurement attorney at Reed Smith LLP.

States have set an example of how to make EV adoption more achievable, opening up opportunities for the federal government. Sixty-nine percent of mayors said they had a specific strategy or plan to build out the charging infrastructure, according to a survey released in November by the U.S. Conference of Mayors

While his government takes steps to meet his promises on the federal fleet, Biden has used both photo ops and proposals to Congress to stimulate the market for electric cars.

He’s taken a spin in Ford Motor Co‘s electric F-150, a feasible option for federal agencies looking for pickup trucks. He’s driven Stellantis NV‘s Jeep on the White House South Lawn and visited the General Motors Co plant that’s producing the GMC Hummer electric pickup.

In Congress, he’s backing a proposal to give an extra tax break for the purchase of electric cars made in the U.S. built by unionized workers, though it’s unclear if Senate rules will allow the idea to move forward as part of Biden’s economic bill.

(Adds percentage of cars agencies acquired in fiscal year 2021 that were electric in fourth paragraph. )

To contact the reporter on this story: Courtney Rozen in Washington at crozen@bgov.com

To contact the editors responsible for this story: Bernie Kohn at bkohn@bloomberglaw.com; Meghashyam Mali at mmali@bloombergindustry.com