Biden behind the wheel: the race to electric cars
Despite seeing accelerated growth over the last few years, electric vehicles have yet to see a boom, making up only 2 per cent of the new car market and 1 per cent of all cars on the road, including vans, pickup trucks and sport-utility vehicles.
On Wednesday, Biden unveiled a $2 trillion infrastructure plan to rebuild infrastructure, boost the economy, and tackle climate change. By spending $174 billion Biden hopes to get Americans over the speed bumps that are slowing down the move to electric vehicles. Biden believes the US can gain more market share of plug-in electric vehicle sales, currently only one-third the size of the Chinese EV market, and create new jobs in the process.
“His plan will enable automakers to spur domestic supply chains from raw materials to parts, retool factories to compete globally, and support American workers to make batteries and EVs. It will give consumers point of sale rebates and tax incentives to buy American-made EVs while ensuring that these vehicles are affordable for all families and manufactured by workers with good jobs,” read The White House statement.
President Biden hopes to squash this “you first” mentality by lowering the cost of entry through tax credits, rebates and other incentives for individuals, businesses and governments. He also hopes to ease concerns on the availability of charging stations, aiming to build a national network of 500,000 EV chargers by 2030.
Through a new Clean Buses for Kids Program at the Environmental Protection Agency, and with support from the Department of Energy, Biden’s plan will also replace 50,000 diesel transit vehicles and electrify at least 20 per cent of the US’s yellow school bus fleet. The investments are the first move towards the goal of 100 per cent clean buses.
And it seems once again that Biden and his administration understand the power of procurement. The plan also looks to “utilize the vast tools of federal procurement to electrify the federal fleet, including the United States Postal Service.”
“The top three reasons consumers give for not buying EVs are lack of charging stations, time to charge, and the cost of EVs,” said Sam Abuelsamid, an analyst at Guidehouse Insights. “They seem to be really emphasizing all three. So, overall, it looks very promising.”
Total Cost of Ownership
It’s a concept procurement professionals know well. When procuring assets, a longer scope that accounts for both direct and indirect costs ensures you get the most value for your dollar over time.
Electric vehicles can cost up to $10,000 more than comparable gas and diesel vehicles. However, research has shown that electric vehicles cost less to own as electricity is cheaper on a per-mile basis and also require less routine maintenance than standard combustion-engine cars. Gone are the days of routine oil changes. Sweet.
However, the battery represents the single most significant cost of an electric vehicle, coming in at around $15,000 for a midsize sedan, something which is expected to continue to drop but may require another technological breakthrough before we see a more drastic price drop.
And then there’s the issue of convenience and the fear of running out of juice. Gasoline stations are widely available, and it takes only minutes to fill up a vehicle. Comparatively, charging an electric vehicle is both slower and more difficult. However, according to Nature International Journal of Science, “A fully-charged battery in an existing, affordable EV is enough to get 87 per cent of American drivers where they need to go throughout the day.”
When it comes to making the switch from combustion to electric, there’s a lot to take into consideration. Luckily, PG&E offer a handy little total cost of ownership calculator for 52 vehicles on the California market, including hybrids. They even help you to see if you’re eligible for incentive programs.
Germany Adopts Revolutionary Supply Chain Human Rights Laws
While the title states that Germany’s newly adopted that targets human rights abuse across global supply chains is “revolutionary” ─ which it is ─, it certainly shouldn’t be. But nonetheless, today, on June 11th, 2021, the German Parliament has ushered in a long-awaited shift to mandatory company compliance rules. After months of negotiation, the German lawmakers finally pushed it over the finish line within the final days of the current legislative period. The bill will see German multinational corporations held legally responsible for any human rights or environmental abuses found across their global supply chains.
“The German government has taken a critical step to ensure that companies operate responsibly,” said Juliane Kippenberg, associate director, children's rights division, at Human Rights Watch. “Respect for human rights in global supply chains is not something that should be optional.”
This news comes at a time when global corporations are already being pushed towards environmental, social and governance (ESG) compliance, with a massive drive to reduce Scope 1, 2, and 3 carbon emissions from their supply chain operations and a concerted effort to avoid suppliers and manufacturers that do not meet the standards that industry-leading companies are now expected to meet.
Who will the new law affect?
With Germany’s new legislation, organisations that fail to meet the rules and regulations could be forced to pay fines potentially equivalent to 2% of their annual global turnover. However, it isn’t applicable to all.
According to Reuters, under the act, companies above a certain size will be forced to establish set due diligence procedures that prevent the abuses; from 2023, only companies with more than 3,000 employees in Germany will be affected. From 2024, the rules will expand to companies with more than 1,000 employees.
Statistics from within the country suggest that the first stage of this regulation rollout will affect 900 companies, while the second stage will put 4,800 companies under the spotlight. The bill will also enable the government to temporarily exclude from public tenders companies that receive fines in excess of €175,000.
“Incalculable risks arise for companies,” said Joachim Lang, general manager at the Federation of German Industry. A word of warning from a respected leader, at a time when industry lobby groups and wholesale businesses fear that the new law increases bureaucracy and suggest that price rises may be inbound.
The Take of German Giants
After looking at the incoming legislation, Daimler AG, known more commonly as the automotive giant Mercedes-Benz, a company which, should there happen to be any ESG-compliance issues along its multinational supply chain, would pay a hefty fee, is welcoming of the push for change but hesitant about certain aspects of the bill.
“Daimler's position is: The respect for human rights is a central aspect of our sustainable business strategy. We, therefore, welcome the progress made on the Supply Chain Act. Although the regulations are very ambitious, the proposed legislation has a sound approach overall. It is based on internationally recognised human rights and on international agreements. And it gives companies more legal certainty in an area that has so far only been partially regulated.
Supply chains are not "chains" but rather exceedingly complex networks: Daimler alone has over 60,000 direct suppliers - and many more sub-suppliers. For this reason, we also consider the proposed risk-based gradual model to be sensible. The responsibility of the companies lies primarily in their own business area and with their direct suppliers. Companies must then take action in the deeper supply chain if there are concrete indications of human rights violations. Daimler AG already does that today.
Even though we support the proposed legislation in principle, we consider some aspects to be critical, e.g. the planned fines of up to 2% of the average annual turnover. Instead of threats of sanctions, we consider concrete measures, which companies must take in the event of deficits, to be more expedient. In addition, certain wordings are still vague and leave room for interpretation. Terms such as, e.g. "fair standard of living" should be phrased precisely in order to create legal certainty. Furthermore, documentation and reporting requirements should not lead to unnecessary bureaucracy and should be harmonised with existing rules. On the one hand, this does not help the people on the ground, and on the other hand, it puts a burden on the companies – and the implementation can pose substantial challenges for smaller companies in particular.”
This law is arguably one of the most important developments in the supply chain space so far this year. But it must be remembered that changes do not and will not happen at the push of a button and that democratic principles should be applied to the discussion prior to enshrining legislation into tablature. Environmental and human rights advocacy is a hike, not a brisk walk around the park ─ so, for German companies, it’s time to get their boots on the ground and start assessing their global, interconnected supply chain operations. And, hopefully, they’ll set a stellar example for the rest of us.