Biden’s EV Plan Benefits Kia, Hyundai, GM and Ford; Leaves Tesla In the Cold
President Joseph Biden in remarks to reporters said he wants the federal government to move to an all-electric fleet. If accomplished, it benefits manufacturers like Kia, Hyundai, GM and Ford. It hurts Tesla in many ways.
“The federal government also owns an enormous fleet of vehicles, which we’re going to replace with clean electric vehicles made right here in America made by American workers,” Biden said Monday, according to a Reuters article.
So, how does this help manufacturers? Look at these stats (via Reuters). As of 2019, the U.S. government owned 645,000 vehicles that were driven 4.5 billion miles consuming 375 million gallons of gasoline and diesel fuel, according to the General Services Administration (GSA). Of U.S.-government vehicles, just 3,215 were electric vehicles as of July 2020, GSA said.
Now, all of those 645,000 vehicles probably won’t be electric but a great deal will be. As whiners in the pickup community claim, at this point it’s not practical for federal workers in remote areas “who drive hundreds of miles a day” to go electric. OK, so let’s say the federal government will need 640,000 EVs.
Tesla isn’t positioned to meet that demand. Not because of production reasons. It doesn’t have the fleet sale operation in place that Kia, Hyundai, Ford and GM have. They have years of experience in this field that Tesla would need to build from scratch.
Kia and Hyundai are probably best positioned because of the upcoming E-GMP platform. It can more easily produce vehicles that meet specific needs like for the 140,000-vehicle USPS fleet.
Also, Tesla still markets itself from an exclusivity angle. It doesn’t want to be seen as a fleet vehicle manufacturer. It could the marque’s resale values to plummet, which creates all types of internal accounting issues when it comes to leasing and, more importantly, customer perception.
The issue of servicing also needs to be addressed. Electric vehicles don’t require the same levels of servicing as internal combustion vehicles but they still occasionally need to go in for maintenance. Tesla just doesn’t have the repair infrastructure in place that other OEMs do. The federal government is going to want its vehicles sidelined for long periods awaiting repairs.
Elon Musk will look down on this move by the federal government. It’s just not his style to build something so common. Other manufacturers, though, should see it as a boon to their research and development needs for electric vehicles as they seek to satiate the demands of a large customer like the federal government. And, once they come through for the feds, don’t be surprised to see a lot of states piggyback.
What do you think? Does an all electric-vehicle fleet make sense for the federal government? Comment below.
Keith Griffin covers Hyundai and Kia at Torque News. He has been writing continuously about cars since 2002. Keith used to be a researcher/writer for US News & World Report, as well as numerous car sites, including Carfax and Car Gurus, and a contributor to The Boston Globe. Most recently, Keith was the managing editor for American Business Media. Follow Keith at @indepthauto on Twitter, on @LinkedIn and on his Indepth Auto Facebook page.