Biden hands out $1.77 billion for EVs: effective policy or political gimmick?

The US Energy department has decided to hand out $1.77 billion to existing automotive companies with shuttered or at-risk plants. The move is aimed at saving the traditional auto industry by helping them join in on the EV trend.

Earlier in May, Biden announced increased tariffs on Chinese EVs and batteries in May in a bid to stop the Chinese from dominating the US market. Now he's pumping money into some businesses so they can fight the Chinese better.

Who will benefit from this policy?

There are two main beneficiaries of this policy.

General Motors (GM)

GM will receive $500 million to convert its Lansing, Michigan site into an EV production factory. The company and the city have already spent millions after closing down some of the plants there. With fresh money, they can do the clean-up job quickly and start working on EVs.

Stellantis (STLA)

Stellantis is going to receive $335 million to convert its idled plant in Belvidere, Illinois into an EV production facility.

It will also receive an additional $250 million for its facility in Kokomo, Indiana. The facility currently produces IC powertrains, which the company can now turn into electrified versions.

As per the government, this policy will help around 15,000 union workers retain their jobs. Additionally, 3,000 new jobs will also be created.

A sound political move

Donald Trump has been criticizing Biden of late on the issue of Electric Vehicles. He is a staunch supporter of oil companies and traditional automakers.

So when Biden does something to support the Electric Vehicles industry in the US, it is bound to provoke a strong reaction to Trump. Is his current decision an attempt at that? Or a smart move to strengthen the EV industry?

Some of the beneficiaries of this policy are in swing states, mainly Michigan and Pennsylvania. Considering the fact that the move is also going to benefit existing autoworkers and possibly create new such jobs, the political angle that Biden is trying to play is clear.

In September last year, Trump rushed to Michigan to join a protest in favor of autoworkers. He was critical of EVs and how the industry, particularly due to imports, will destroy the American automobile industry.

When one looks at the just announced policy, one can't help but admire how Biden has killed two birds with one stone. He has not only helped the EV industry, but also ensured that autoworkers can retain their jobs 'because' of his EV policy.

It is unlikely that Trump will stay quiet on this. But whatever he will have to say will become clear in the next few days. If you thought Biden wasn't up for some political moves, think again!