The electric vehicle sales mandate policy that the state of California was set to implement is now facing cancellation due to lobbying by General Motors (GM). GM has been pushing for a transition to electric vehicles for years and is a major customer of domestic battery corporations. With GM's strategy change and the failure of the electric vehicle mandate policy, battery manufacturers are expressing concerns that product demand may decrease.

On the 22nd (local time), according to Reuters, the U.S. Senate passed a resolution prohibiting the sale ban of internal combustion engine vehicles and the expansion of electric vehicles promoted by 11 states, including California.

GM has actively implemented an electric vehicle transition strategy since the mid-2010s, but recently it is in a mood to revise this. The photo shows Mary Barra, GM's chairperson, announcing the expansion of investments in future vehicles such as electric vehicles and autonomous driving, aiming for a complete transition to electrification by 2030. /Courtesy of GM

California legislated to increase the share of eco-friendly vehicles, including electric vehicles, in total new car sales to 35% by next year and 68% by 2030, ultimately expanding to 100% by 2035. Following this, 11 other states, including New York, Massachusetts, Washington, and Vermont, also decided to ban the sale of internal combustion engine vehicles starting in 2035.

The U.S. Senate's move to halt California's electric vehicle mandate policy was due to strong opposition from the existing automobile manufacturing industry. In particular, GM played a crucial role in the passage of this resolution through active lobbying.

According to The Wall Street Journal (WSJ), GM executives sent an email to thousands of employees before the Senate's decision, asking them to persuade senators to abolish the eco-friendly vehicle mandate policy. Senators from Michigan, where U.S. automobile companies are located, reportedly received communications from GM employees regarding this matter.

There are interpretations within the automobile manufacturing industry that this signals GM's intention to modify or abandon its electric vehicle transition strategy. According to WSJ, GM has abandoned its goal of producing 400,000 electric vehicles annually by mid-last year and is delaying its previously announced electric vehicle production plans.

GM's change in strategy is interpreted to be due to the electric vehicle market not growing as anticipated. The Trump administration's efforts to reduce support for electric vehicles have also influenced GM's shift back to the internal combustion engine market.

The change in GM's strategy and the cancellation of electric vehicle mandates in states like California have put domestic battery manufacturers in a difficult position. Since the mid-2010s, GM has been expanding the sales ratio of electric vehicles and has formed partnerships with several domestic battery manufacturers or parts suppliers, operating or constructing joint factories.

The construction site of the battery materials plant, Ultium CAM, a joint venture between POSCO FUTURE M and General Motors (GM), is located in Bécancour, Quebec, Canada. /Courtesy of POSCO FUTURE M

In the case of LG Energy Solution, it established a company called Ultium Cells by jointly investing in equity with GM in 2019 and currently operates two factories in the U.S. Samsung SDI is also building a factory in Indiana in partnership with GM, while POSCO FUTURE M is constructing a cathode material factory in Canada through its joint venture, Ultium CAM.

An industry insider in the automobile manufacturing sector noted, "If we sum the automobile sales of California and the 11 states promoting the electric vehicle mandate policy, it accounts for more than 30% of the entire U.S. market," expressing concerns that this Senate decision and GM's strategic change could suppress the potential recovery of domestic battery manufacturers' demand.

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