Biden Administration Turns to Tesla
The Biden Administration turned to Tesla for help on its renewable fuel policy reform. The updated policy is expected to include benefits for electric vehicles from the United States’ renewable fuel subsidies.
Reuters reviewed the emails from the Biden Administration to Tesla. Based on the emails, the Biden Administration contacted Tesla on its first day of office. The administration also reached out to other companies tied to the EV industry. The emails suggest that Biden might expand the scope of the U.S. Renewable Fuel Standard (RFS) Program.
The RFS is a federal program that requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels. The final volume requirements set for 2022-2022 are available in the chart below.
The U.S. Congress created the program in 2005 to reduce greenhouse gas emissions. It is also meant to expand the renewable fuel sector while reducing the country’s reliance on imported oil. Renewable Identification Numbers (RINs) are used like currency in the RFS program.
Renewable fuel producers generate RINs and market participants trade RINs. The Biden Administration is considering the introduction of electric RINS or e-RINS for companies like Tesla. It is also thinking of expanding the subsidy program to other clean energy industries, like car charging companies.
The U.S. Environmental Protection Agency (EPA) oversees the RFS program. Earlier this month, the EPA announced its goal to strengthen the RFS Program. It plans to diversify the United States’ fuel supply by increasing domestic biofuel production. The agency also plans to include biointermediates—which are feedstocks processed into RFS-qualified biofuel—to the program.
The EPA’s announcement did not mention e-RINs or benefits for other forms of renewable energy.
“At EPA, we are laser-focused on providing more options for consumers at the pump, and today we are taking steps to increase the availability of homegrown biofuels,” said EPA Administrator Michael S. Regan.
“Today’s actions will help to reduce our reliance on oil and put the RFS program back on track after years of challenges and mismanagement. We remain committed to working with all RFS stakeholders to build on today’s actions and deliver certainty and stability in the RFS program.”
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Elon Musk talked about the advantages of Tesla ads in an interview with Tesla supporters, including the President of Tesla Owners Silicon Valley, the President of My Tesla Adventure, and the Kilowatts founder.
Musk noted that public support for Tesla is appreciated, and the Tesla community’s efforts to shoot down FUD (fear, uncertainty, and doubt) for the company have also been helpful. Musk has opposed the idea of Tesla ads in the past. However, during the interview, he acknowledged that Tesla ads might have some advantages.
“There’s an argument for maybe we should advertise because the traditional media will not run negative pieces about automotive. Because automotive is like one of the biggest—if not the biggest—advertisers in their paper,” Musk said.
“So Tesla is basically free game [for traditional media]. Whereas, its safe to say that if they run some negative piece about General Motors right next to a General Motors ad, a General Motors marketing executive would call them and say,’ um—why did you do that?’” Musk added.
Statista calculated that the automotive industry in the United States spent $12.42 billion on digital advertising in 2020. A 10-Q SEC filing in 2021 revealed that Tesla spends drastically more on Research and Development for its vehicles than advertising.
Despite the advantages of ads, Tesla has been doing well without them. During Super Bowl LVI, Tesla did not run a single TV advertisement. A slot during the Bengals vs. Rams game had a hefty price tag of $6.5 million for 30-seconds of air time. Tesla revealed that it saw an increase in order volume the day after the Super Bowl, even though it did not run any ads.
Elon Musk has considered the possibility of Tesla investing in ads, but more informational ones. Tesla ads focusing on information about its cars and features would help customers, and potential buyers better understand the company’s products.