Biden is handing big money to the electric car industry (there may be a problem)

Biden is handing big money to the electric car industry (there may be a problem)

The US government and automakers seem to be on the same page about shifting the nation’s car culture from one based on the internal combustion engine to one based on battery electric cars.

Both sides seem to understand that such a major change will require tens of billions of dollars in investment before consumers migrate in large numbers toward electric vehicles.

This week Ford (F) He unveiled plans to ask nearly 3,000 merchants to invest $500,000 or $1.2 million to install the upgrades needed to become “EV-certified.”

Funds will go towards training, out-of-home shipping infrastructure, e-commerce upgrades, remote delivery and pickup options, and upgrades toward the digital customer experience.

But 90% of the money will go to charging the infrastructure.

Biden to the rescue?

This week, President Joe Biden happened to be in Ford’s backyard in Detroit, Michigan.

The president stopped by the North American International Auto Show to announce his inflation-reduction law and the impact of the $749 billion bill on the auto industry.

The IRA grants tax credits for new EV purchases as well as first-time EV purchases.

Meanwhile, the bipartisan infrastructure law passed last November invests $7.5 billion in building electric vehicle charging stations “across America.” At the event, Biden announced that the first $900 million will be approved to build 500,000 charging stations across the country

Billions of federal dollars are pouring into the EV space, and with EV charging stations being the biggest cost to dealers looking to earn certification, that money could prove beneficial to dealers looking to stick with a Ford.

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But individual auto dealers are not eligible to apply for financing as direct recipients, according to the bill. Funding is allocated to states and one of the legal requirements related to the funding is for charging stations to be publicly accessible.

Trader Alert

Biden mentioned auto workers several times to the pro-union crowd in Motor City this week. But he did not mention the auto dealers that would be necessary to achieve the company’s vision for the future of electric vehicles.

Ford dealers will have until October 31 to decide what they want to do and they will have until the end of the year to start investing.

Farley also said he wants dealers to reduce selling and distribution costs by $2,000 per vehicle in order to compete with the direct-to-consumer model that Tesla is successfully using.

So dealers have until the end of the year to see if they want to work with Ford going forward.

If a dealer decides that electric cars won’t sell as much in their area over the next few years, they can skip the first window, but there will be a second window for Model e certification starting in 2027.

Dealers who want this certification program will need to commit by 2025. Ford is betting big on electric vehicles as the company looks to take the lead in the Tesla market.

The company plans to invest $11.4 billion to build two new electric vehicle production facilities in Stanton, Tennessee, and Glendale, Kentucky, and another $525 million to train skilled technicians to service its new models.

Ford’s plan is to get half of its sales from electric cars by 2030 and says it will have the capacity to build more than two million electric cars a year by 2026. That would represent about a third of the company’s global production.

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