Dividends and The future of the American auto industry is electric, President Biden

The government can be the great influencer in the industry although for the most part government tries to help industry as industry makes it own decisions. Around the world we see climate patterns changing, highly likely due to global warming. Governments have a choice, do nothing and live with the changing climate patterns or try to ensure climate does not change too much where the population lives.

In President Biden he has decided part of the broader plan to fight climate change is to target emissions from cars and trucks. In an an article by David Shepardson and Jeff Mason, President Biden signed an executive order making half of all vehicles sold in 2030 electric. If you ever driven behind an electric vehicle they are the ones without tail pipes.

It is relatively easy to say 50% of vehicles sold should be electric, but the harder part and this is where the government will be helping is the cost to produce the millions of cars and trucks that are sold annually. President Biden has committed funding to the auto producers of GM, Ford and Stellantis (Chrysler).

You may or may not remember, former President Trump disagreed with California Air Pollution standards and wanted to lower them. The Biden administration agrees with the California model and in fact so do the big three auto makers.

Consulting company Alix Partners reported electric vehicles (EV) represent 2% of total global vehicle sales and will be about 24% in 2030. To get there will require billions in charging systems, incentives and changes in factory production. President Biden’s infrastructure bill addresses some of this funding.

Linking to dividend paying stocks, governments are wonderful in announcing big plans, but the execution takes time and money. One of the reasons you buy profitable companies that can pay dividends is they know how to execute to the consumer at a profit. As an investor you can follow the trends and see how companies adapt to government policies.

There are more questions than answers, till the next time – to raising questions.

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