Supply Chain Implications of Biden’s First 100 Days
The Biden administration has placed great focus on the automotive industry during the president’s first 100 days in office, promoting the adoption of electric vehicles (EVs) and other infrastructure necessary for mass adoption of EVs such as charging stations. Biden’s proposed $1.2 trillion infrastructure spending bill contains incentives for companies to speed up research and development, install greater capacity to produce vehicles and batteries, and boost worker training. The bill also earmarks money for building a half million charging stations and provides consumer incentives of up to $12,500 per vehicle. In addition to the EV push, Biden has also asked his administration to study the supply chains of “critical parts” such as semiconductors, EV batteries, rare earth minerals used in EV batteries, and other items deemed to be important for national interests and security.
In combination with Biden’s policy activities, the industry has been facing its worst supply chain crisis in decades, perhaps in history. Challenges with service and material shortages such as microchips, raw materials, and trucking and shipping containers —combined with port delays, constrained air charters, and a host of other items— have caused great strain on the industry and driven inflationary pressures not seen in decades. In May, the annual inflation rate came in at almost 5%, a nearly thirty-year high. These challenges are causing automotive procurement organizations to reassess sourcing strategies for certain products, including shifting future programs to more efficient near-shore sourcing channels.
The confluence of these events has created a once-in-a-generation opportunity for automotive suppliers and companies in other sectors, if the organizations position themselves to take advantage of these trends. The opportunities are broad and extend beyond EVs to trucks, mass transit, infrastructure, design and engineering, software development, workforce training, and more. While the benefits of these opportunities will likely be reaped a couple of years from now, companies need to be ready by taking action now and ensuring appropriate positioning.
This presentation, originally showcased at a 2021 webinar for INA, an association for suppliers in Mexico, walks through the challenges the industry has faced in recent months with an overlay of the Biden Administration policy plans to transform the industry over time. Interesting growth opportunities await companies that enact strategic positions enabling them to capitalize on the current supply chain factors, economic climate, and policies of the Biden administration.