As part of his Buy American program, President Joe Biden said that the US Government vehicle fleet will switch to EVs. Biden said that they would replace the entire federal fleet of cars, trucks, and SUVs with electric vehicles manufactured in the United States. This commitment is part of a broader campaign promise to create a million new jobs in the American auto industry and its supply chains.
“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 by American workers, creating millions of jobs, a million autoworker jobs in clean energy, and vehicles that are net-zero emissions,” Biden said during the signing ceremony last Monday.
Boon to EV Maker Manufacturers
Once this program hits the ground, the US government re-fleeting could boost US automakers, particularly those with electric vehicles in development for passenger cars, commercial vans, and light trucks. The executive order closes loopholes of older “Buy American” programs as it aims to increase purchases of products made in the United States. As such, the order adjusted product thresholds and price preferences for local products. Also, it tightens the conditions that qualify products from holding the “Made in the USA” designation.
Biden made the comments prior to signing the Made in America executive order, which places stricter rules on the federal government's procurement practices. The government has existed “buy American” rules, which states that a certain amount of a product must be made in the U.S. for a purchase to qualify for a federal contract. Upon hearing the announcement, shares of electric-vehicle makers Workhorse and Lordstown went up by as much as 10%. Tesla also gained a little.
According to General Services Administration reports, the US government currently holds 645,000 vehicles in its fleet. Among these vehicles, only 0.5%, or 3,215 vehicles are electric.
Around 224,000 are passenger vehicles, while more than 412,000 are trucks. The US Postal Service operates around 35% of these vehicles, or 225,000. The USPS is currently sourcing for a replacement for their 180,0000 strong fleets of Grumman Long Life vehicles. These vehicles have logged over 25 years in service.
The USPS contract does not require an EV submission, since it started the bidding process back in 2016. Due to the order to switch to EVs set by Biden, the USPS bidders may find themselves changing their specifications to reflect the EO requirements. Vehicle specs for USPS requirements remain confidential for forbidding reasons. However, only Workhouse reportedly submitted an all-electric proposal. Karsan/Morgan Olsen bid a plug-in hybrid while Oshkosh/Ford stayed with a combustion engine powered Transit van. Ford will introduce an EV version of the Transit, which may cross over to the USPS bid. GM, Ford Tesla, and Lordstown Motors will launch all-electric pickups in the next few years. They may find their way into government service.
Not As Easy As it Seems
While the objective remains very well-meaning, it won’t be easy to get off the ground. Many federal vehicles are under lease programs. Getting them out of their contracts won’t be easy, or at the least won’t be immediate. In addition, the government will not have to deal with charging infrastructure and supply. Most of all, Biden already gave his preference for companies that support union jobs.
Tesla, considered the dominant EV manufacturing company, charges higher for its vehicles. It also does not have unions among its workforce. Combined, these two factors may pose barriers to its federal bid attempts. Meanwhile, both Ford and GM are home to automotive worker unions but have yet to go all out on the electric vehicle front. Both companies are currently investing heavily to expand their EV lineup.
Watch the Bloomberg Quicktake News reporting that President Joe Biden Biden says the U.S. will replace federal government vehicles with electric cars:
Do you agree that the US Government fleet should switch to EVs? Would they prove to be a good long term investment? Let us know what you think about Buy American as it applies to government vehicles. Leave your comments below.