Categories: General Market Commentary
Topics: General Market Commentary

Cities Shop for $10 Billion of Electric Vehicles to Defy Trump

Cities Shop for $10 Billion of Electric Vehicles to Defy Trump

  • L.A., New York among 30 cities seeking up to 114,000 vehicles
  • Trump said planning to re-examine Obama fuel-economy standards

Dozens of U.S. cities are willing to buy $10 billion of electric cars and trucks to show skeptical automakers there’s demand for low-emission vehicles, just as President Donald Trump seeks to review pollution standards the industry opposes.

Thirty cities including New York and Chicago jointly asked automakers for the cost and feasibility of providing 114,000 electric vehicles, including police cruisers, street sweepers and trash haulers, said Los Angeles Mayor Eric Garcetti, who is coordinating the effort. That would be comparable to about 72 percent of total U.S. plug-in sales last year. 

While urban leaders want more low-emission vehicles to ease the role city traffic plays in altering the climate, automakers say there aren’t enough buyers. They also have advocated for relaxing rules on traditional fuel vehicles. The Trump administration, which seeks to cut regulations it sees as too costly or onerous, is poised to announce Wednesday that it will reconsider tighter standards finalized a week before President Barack Obama left office.

“No matter what President Trump does or what happens in Washington, cities will continue leading the way on tackling climate change,” Matt Petersen, Los Angeles’s chief sustainability officer, said in an email.

The initiative is still in the early stages, and the cities haven’t actually ordered any of the 114,000 vehicles. Rather, they’ve taken what’s typically the first step in a formal bidding process by inviting manufactures to outline plans to supply them. Plus, some cities are asking about vehicles that don’t exist yet, such as electric fire engines and heavy-duty trucks.

The initiative could move the market nonetheless, said Colin McKerracher, an analyst with Bloomberg New Energy Finance. Orders for that many electric vehicles would be a significant driver for the U.S. plug-in market, which totaled 160,000 in 2016. While the initiative would probably be spread out over several years, it would provide electric vehicle manufacturers reliable demand as federal policies shift and gas prices fluctuate.

“I wouldn’t underestimate this,” McKerracher said. “What automakers really want in investing in electrification, whether that’s for passenger vehicles or commercial-use vehicles, is certainty.”

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