The auto industry is an important element of carbon transition. Efforts to boost global electric vehicle (EV) sales to cut greenhouse gas (GHG) emissions are intensifying. U.S. automakers are increasingly adding EVs to lineups. U.S. President Joseph Biden signed an Executive Order to tighten emissions standards in August 2021 and increase sales of zero-emission vehicles to 50% by 2030, compared with currently less than 5%.
Given the multi-year target of the Executive Order, there are no near-term credit effects for U.S. automakers. Elevated CAPEX and development costs associated with EV investments are factored into Fitch Ratings’ forecasts but EV sales are not yet a key rating driver over our forecast horizon.