The new administration under US President Joe Biden is set to introduce significant policy shifts that will impact the US automotive sector, says GlobalData, a leading data and analytics company.

Mike Vousden, Automotive Analyst at GlobalData, comments: “President-Elect Biden has stated that he intends for the US to rejoin the Paris Climate Agreement. That highly symbolic gesture is likely to precede the introduction of stricter emissions and fuel economy standards for vehicles sold in the US.

“While that will increase costs to US auto companies on their combustion-powered vehicles, they are transitioning to electrified vehicles anyway. On the plus side, they will benefit from greater clarity on future emissions requirements and the greater ease of exporting to markets with similarly stringent regulations.”

Under the Trump administration, vehicles sold in the US would only have to demonstrate a 1.5% increase in average fuel economy between 2022 and 2025, a sharp decrease from the 4.7% mandated by the previous Obama administration.

Vousden continues: “It is not yet clear whether Biden will return standards to the level they were under Obama, but they will certainly be raised from the level set by the Trump administration.

“Tighter fuel economy standards will encourage automakers to build more efficient vehicles, pushing them away from combustion-powered SUVs and pickup trucks that sell particularly well in the US. Automakers will increase the number of electrified models, especially electric SUV and pickup options. We are already seeing this through the introduction of models including the Ford Mustang Mach-E, the GMC Hummer EV, the Cadillac Lyriq, and the Tesla Model Y and Cybertruck.”