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Biden Aims to Replace Federal Auto Fleet With Electric Vehicles

By Eric Volkman - Jan 25, 2021 at 9:10PM

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The goal is part of a broader effort to boost American manufacturing.

President Joe Biden said on Monday that internal combustion cars and trucks in the federal government's existing vehicle fleet will eventually be swapped out for electric vehicles (EVs). 

Biden made the remarks after signing his latest executive order. Titled straightforwardly "Buy American," it's an initiative aimed at supporting domestic industry, including the thriving EV segment.

"The federal government... 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 auto worker jobs, and clean energy, and vehicles that are net zero emissions," Biden said.

Hand holding an EV charger plugged into a car's port.

Image source: Getty Images.

At the moment, the federal government's standards mandate that it purchase cars in which at least 50% of their parts are made in the U.S. Biden promised to raise that standard, although exact details weren't provided.

The president also did not offer a time frame for the switch to be fully realized. It is likely that it could take many years, given the size and scope of the federal fleet.

Nevertheless, if the program proceeds relatively smoothly to any degree, it will make the Feds reliable and steady customers of EV manufacturers. Tesla (TSLA -3.75%) is currently the poster child for the segment, though the company seems determined to cater to more affluent consumers. Last November, for example, it stopped selling the budget ($35,000) version of its Tesla Model 3.

So General Motors (GM -3.55%), which is very active in the alt-fuel space and has decades of experience pricing for the mass market, could be a bigger winner in the federal game.

The nation's automakers, including Tesla and General Motors, haven't yet formally responded to Biden's announcement, although investors are sure to be pleased by the coming initiative.


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