U.S. Market: Biden Administration Plans to Promote EVs and Strengthen Semiconductors
U.S. market new vehicle inventories falls below 1.8m units due to chip shortage
This report provides an overview of the U.S. market as of mid-2021, including developments since President Biden took office and the impact and outlook of the semiconductor shortage issue.
|Monthly vehicle sales in the U.S. market (January - June)
(Source: MarkLines monthly vehicle sales data)
Since his inauguration, new U.S. President Biden has signed a number of executive orders one after another. On the automotive industry front, he ordered a review of fuel economy regulations and announced that approximately 645,000 vehicles used by federal agencies will be replaced with EVs produced in the U.S. by Americans, creating one million new jobs in the auto industry.
On March 31, the U.S. government announced its intention to invest about USD 2 trillion in infrastructure development. As part of the plan, the government plans to invest a total of USD 174 billion to promote electrification, including USD 100 billion to support consumer purchases of EVs and USD 15 billion to install 500,000 charging stations nationwide. However, it is a huge investment plan, and although tentative agreement was reached on June 23 to narrow the scope of the plan to a total of USD 1.2 trillion in physical infrastructure development, it seems that more time will be required to finalize the details of the agreement.
In addition, the U.S. Senate passed the U.S. Innovation and Competition Act on June 8, a USD 250 billion bill. It is a bipartisan bill aimed at countering China’s technological ambitions and aims to ensure that the U.S. remains competitive with China in the development and manufacturing of a wide range of advanced technologies, including AI, batteries, and semiconductors. USD 52 billion will be earmarked to support research, development, and manufacturing of semiconductors.
At the beginning of 2021, it was thought that the semiconductor shortage problem would begin to dissipate in the second half of 2021, but it is now believed that a short-term solution will be difficult and that the shortage will continue until 2022 or later. The finished vehicle plants of OEMs in North America have repeatedly suspended vehicle production due to the shortage of semiconductors, and from the beginning of 2021 to mid-May, the production of about 1 million finished vehicles planned for North America was suspended.
On the other hand, sales in the U.S. recovered rapidly sharply from since March due to the U.S. Government’s generous support measures against the COVID-19 pandemic and the resumption of economic activity accompanying the expansion of vaccinations, with SAAR (seasonally adjusted annualized sales) reaching 18 million units in March, 18.54 million units in April, and 17.09 million units in May.
As a result, new vehicle inventories in the U.S. fell from 3 million units on January 1 to 1.78 million units as of June 1. Dealers are more profitable than ever before due to strong demand and inventory shortages, but it seems that securing inventory has become a top priority for them. Several major U.S. automotive retailers are also concerned that if the current trend continues, inventory shortages will become a major obstacle to sales through the third quarter of 2021.
Japanese OEMs announce and update policies for electrification and carbon neutrality (Jun. 2021)
Tesla: Aiming for annual production and sales of 1 million vehicles in 2022 (May 2021)
GM: Introducing 30 BEV models by 2025, next-gen Ultium battery will cost 60% less (Mar. 2021)
Shortage of Automotive Semiconductors (Mar. 2021)
U.S. Biden Administration to Enact Tougher Fuel Economy Regulations to Promote EVs (Jan. 2021)
Emerging U.S. EV Makers on the Move: Many announce plans to launch in 2021 (Jan. 2021)
OEM Operations in the U.S. in 2020 (Dec. 2020)
Ford (Part 1): Collaboration with VW and targeted investment under new CEO (Nov. 2020)
Electric Powertrain Market Forecast in Major Countries (Oct. 2020)