President Joe Biden has made it clear he is committed to putting the United States on a greener course than ever before. Targeted transformation of the federal vehicle fleet is one of his first actions to tackle both climate change and address head on the decline of domestic manufacturing in the United States.
Several of President Biden’s earliest actions as President focus on the role the federal government’s procurement authority can play in transitioning the United States to electric transportation that’s made in the United States, while strengthening America’s critical supply chains. The “Made in America” executive order is specific to federal government procurements as well as financial assistance awards and creates a Made in America office to centralize oversight of the protocol. President Biden also announced that the U.S. government would replace its vehicle fleet with electric vehicles manufactured in the United States. Additionally, in late February, President Biden issued an executive order to address and review vulnerabilities in key supply chains, including in minerals, semiconductors, and large batteries, including those used in electric vehicles. Combined, these changes in U.S. policy could spur domestic manufacturing of electric vehicles of all classes while creating thousands (perhaps, millions) of jobs, and help make sure we are able to access the elements needed to build this critical industry in the United States. These actions should be applauded and Arrival is committed to playing its part in the transportation electrification revolution.
Arrival shares President Biden’s vision for domestic manufacturing of electric vehicles. Last October, we announced our first U.S. Microfactory in Rock Hill, SC, a $46 million investment that will create 240 new jobs and manufacture the Arrival Bus. Just this week we announced our second U.S. Microfactory in Charlotte, NC, a $41.2 million investment that is expected to bring more than 250 jobs to the area and will manufacture the Arrival Van. We’ve also recently announced our North American headquarters, also in Charlotte. We can situate Arrival Microfactories closer to our customers, leverage local supply chains, and help lower the cost of electric vehicles to accelerate mass adoption. As Arrival grows, so will the number of Microfactories in the U.S. to meet the demand of our public and private-sector customers. Arrival will lead the way for creating new good-paying jobs as President Biden charts the course for the energy and transportation revolution.
Mike Ableson, CEO of Arrival Automotive, described the advantages of Microfactories in his Medium post:
“We can deploy Microfactories into standard 200,000-square foot warehouses, and start production within six months. Using this process, we maintain a high degree of flexibility to build different types of vehicles that are customized for our customers. By eschewing the traditional, large, centrally-located factory in favor of the Microfactory, we can locate close to our customers, reducing the costs and emissions of shipping our finished vehicles. Importantly, Microfactories also then bring economic benefits to the local communities where they’re located.”
Biden’s supply chain executive order closely aligns with Arrival’s manufacturing strategy. In fact, it even calls out the need for “steps to ensure the Government’s supply chain policy…ensures geographic dispersal of economic activity across all regions of the United States.” What better way to spread out the benefits of the transition to electric transportation than by Microfactories in the communities that will most benefit from them?
A quick review of Buy America and Buy American. Much domestic procurement policy is guided by these two very different, but similarly named policies:
- The Buy American Act, passed by Congress in 1933 during the Great Depression, created a national preference for the federal government to purchase American-built products.
- The Buy America Act was established in the 1982 Surface Transportation Act, setting certain requirements for domestically produced materials used in mass-transit procurements for state and local government projects, such as transit buses and the construction of highways, railways, or transit systems.
- President Biden’s Made in America executive order focuses on tightening the more general “Buy American” rules, especially pertaining to waivers or exemptions that allow federal agencies to buy foreign goods.
President Biden has taken a critical first step by tightening Buy American rules and shoring up key supply chains. In addition, the Administration has even more opportunities for developing domestic manufacturing policy to best harness the technological transformation electric vehicles can bring to the United States.
- Current Buy America laws and regulations for transit buses are outdated and do not reflect technological advancements; they also fail to maximize domestic manufacturing. The Buy America domestic calculation, which looks at the various components of each part and product and determines whether or not it qualifies, does not include the cost of the final assembly of the bus. Further, the current definitions do not include any zero emission technologies, resulting in a patchwork of interpretations of the rule. Some improvements were passed by the House in 2020 (H.R.2), but there are many areas that need to be improved to maximize domestication and provide certainty in the supply chain. We broadly support the proposed regulatory reforms outlined by the American Public Transportation Association’s (APTA) 2018 report.
- While the supply chain Executive Order will provide governmental review of global producers and shippers for large-capacity batteries, the Administration should also prioritize an Advanced Battery Manufacturing Tax Credit, which will strengthen the entirety of the supply chain, from raw material processing to recycling. Our allies at the Zero Emission Transportation Association (ZETA) have outlined more specifics on their policy platform.
- The Administration should also advocate for expanding the Advanced Technology Vehicle Manufacturing (ATVM) program to support medium- and heavy-duty EVs and the expansion of the battery supply chain.
- After a multi-year bidding process, the United States Postal Service’s (USPS) Next Generation Delivery Vehicle acquisition will be a primarily non-electric option. Postmaster General Louis DeJoy told Congress the postal service only plans to electrify 10% of its fleet. This decision is a missed opportunity for the United States to lead on the global EV transition and kickstart domestic procurement of zero emission vehicles and components. President Biden should consider all options to review and alter this decision by the USPS.
- Any further reforms should strengthen the FTA Disadvantaged Business Enterprise rules to increase opportunities for supply chain businesses owned by women, minorities, and other diverse businesses.
President Biden is right to link our fight against the climate crisis to the need for well-paid jobs and a revitalization in manufacturing. Addressing the issues described above will enable more benefits to American workers and Americans more broadly: a more localized, domestic supply chain reduces emissions involving these vital technologies, and re-structuring U.S. domestic manufacturing programs can mean even more jobs right here in the United States. Establishing a local supply chain for federal government procurement will create opportunities for state and local governments, as well as the private sector, to make use of domestic manufacturing. It’s time we harness the power of the federal government’s procurement to take us to a fully-electric, American-made future.
Suzanne Merkelson is Public Policy Manager at Arrival. For more information on Arrival visit our website.
