As an analyst at a Policy Think Tank (choose one between – Brookings Institute, Center for American Progress, Rand Corporation, or Heritage Foundation), you must write a research article on whether US automobile makers should tackle climate change issues. For the article you must conduct analysis about the impact to Global Warning and Greenhouse gases that the Big Three US automobile manufacturers contribute and whether they should seek to mitigate. Your analysis must consider the pros and cons of Electrical Vehicle (EV) manufacturing and make recommendations about whether your assigned company should reduce, continue or expand production of EVs in place of fossil-fuel powered vehicles. The impetus for this article is to summarize how EV production by US automobile manufacturers impact climate change and to publish an articleon whether the EV production by US manufacturers should be continued at same levels, expanded, or reduced. The period of study is from 2010 to present.
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without publisher’s prior permission. Violators will be prosecuted.
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Going Green: Can Automakers Invest in Environmental Solutions?
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As concerns about global warming increase, many corporations and governments around the world are
working to limit the production of so-called greenhouse gases (GHG) that have been linked to climate
change. Indeed, after taking office, President Biden committed the U.S. to limiting carbon emissions by
rejoining the Paris Climate Agreement. The administration also introduced policies encouraging the use
of solar and wind power for producing electricity as alternatives to coal and natural gas. More recently,
both China and the European Union have announced major changes to limit carbon emissions, including
restrictions on the production of gasoline powered vehicles.
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Many businesses have responded to the increased focus on climate change. For example, a group of
automakers, including General Motors (GM), has said they are looking forward to working with the Biden
administration “… to advance the shared goals of reducing emissions and realizing the benefits of an
electric future.” So, what are greenhouse gases and how are they related to global warming? What is the
Paris Climate Agreement? And what do automakers have to do with all of this?
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Global Warming and Greenhouse Gases
Global warming is defined as the long-term heating of Earth’s climate system due to human activities that
increase greenhouse gases.1 Climate data over the last 160 years suggests that the global average
temperature has increased by over 1 degree Celsius to date, with ever increasing rates of change. There
is evidence suggesting that global warming, and resulting climate change, negatively affects the
environment by way of drought, flooding, rising sea levels, and increased intensity and frequency of
severe weather. The majority of scientists today agree that greenhouse gases, including carbon dioxide
emitted when fossil fuels (e.g., coal, diesel, natural gas, and oil) are burned, are major contributors to
climate change.
The Paris Climate Agreement
Given concerns about the social and economic costs of climate change, representatives from 196
countries around the world met on December 12, 2015, in Paris, France to join the Paris Climate
Agreement. The agreement is a voluntary, but legally binding, international treaty on climate change
committing the signatories to develop and implement plans to reduce greenhouse gas emissions. The
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without publisher’s prior permission. Violators will be prosecuted.
goal of the Paris Agreement is to limit global warming to less than 2 degrees Celsius above levels in the
1850-1900 “pre-industrial” period (and if possible, less than 1.5 degrees). Having already surpassed 1degree above the pre-industrial level, the 2-degree threshold is seen by many scientists as critical in
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The Auto Industry and General Motors
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reducing the risks of climate change associated with global warming.2
Automakers, including GM, are deeply involved in issues related to fuel efficiency and carbon emissions.
In the U.S., the Environmental Protection Agency (EPA) reports that fuel used for transportation of people
and goods is the single largest source of carbon dioxide emissions (with the production of electricity
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being the second largest).3 This is largely due to the reliance on vehicles powered by internal combustion
engines that use fossil fuels.
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In late January 2021, GM announced a strategic repositioning of the company for an “all-electric vehicle
future.” This move was intended to both to address consumer concerns over the environment, and
counter the rapidly increasing market share of competitors such as Toyota and Tesla in the hybrid and
all-electric vehicle market. GM management said that the company would eliminate emissions from new
light duty vehicles by 2035, and be carbon-neutral in its global operations (i.e., have net zero carbon
emissions) by 2040.4 This would include cutting emissions where possible and using renewable energy
sources such as wind and solar to power manufacturing facilities.
GM also announced plans to invest $27 billion over the next five years to produce electric and
autonomous vehicles. This record investment for the firm includes updating manufacturing facilities in
Michigan and Tennessee to produce vehicles using the firm’s new Battery Electric Vehicle 3 platform. GM
will also build a new plant in Ohio to manufacture the firm’s new, more efficient and less costly Ultium
lithium-ion batteries. GM’s Chief Executive Officer Mary Barra has said of the firm’s strategy: “I really see
long-term value creation for General Motors and for our shareholders.”
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Printed by: pamela.queen@morgan.edu. Printing is for personal use only. No part of this book may be reproduced or transmitted
without publisher’s prior permission. Violators will be prosecuted.
Will Producing Electric Vehicles Lower Emissions?
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Some have applauded the efforts of GM and other automakers as important steps in an attempt
reducing GHG emissions and working toward the goals of the Paris Agreement aimed at limiting global
warming. Others, however, have expressed skepticism, and pointed out that GM’s investment might be
risky for their shareholders.
While EVs produce little GHGs, the sources of electricity that are used to produce and charge vehicles
and their batteries can produce GHGs. For example, vehicles produced or charged using electricity
produced by solar power will result in less total GHGs compared with those that rely on electricity
generated by coal-fired power plants.
Moreover, despite the focus on EVs, automakers will continue to produce vehicles including mid- and
heavy-duty trucks that rely on internal combustion engines. One survey reported that about 40 percent
of U.S. adults asked would consider buying an EV in the next decade.5 However, with the average price tag
of an EV at $19,000 more than a gas-powered vehicle, it is unclear how many consumers will actually
make the switch.6
It has also been suggested that the light duty vehicles that the auto manufacturers are focusing on in
their EV strategy – particularly personal vehicles – contribute relatively little to overall GHG emissions. In
the U.S., for example, the EPA reported that light duty vehicles accounted for about 17 percent of total
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without publisher’s prior permission. Violators will be prosecuted.
U.S. emissions in 2019. As a result, it has been suggested that efforts to reduce emissions would be more
effective if targeted elsewhere, for example at electricity generation.
Having said that, in other regions of the world, such as China and the European Union, the shift to EVs
looks more certain as laws have been passed that require the reduction or elimination of new vehicles
powered by internal combustion engines.7
Employees
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Investments such as those that GM and other automakers are undertaking, and a move to EVs more
generally, will result in changes in the types of employees that the auto and related industries will need.
There will be increased demand for employees with experience in EV technology at firms that produce
automobiles, batteries, and electric charging stations. But expanded production of EVs will likely result in
the loss of other jobs. For example, there will be less demand for employees with experience in the
manufacturing of internal combustion engines in the auto industry, and for employees in the related
auto parts and auto services industries as EVs require fewer moving parts, and do not need gas, oil
changes, or transmission fluids.
Communities
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While many view the growing market for EVs as environmentally beneficial, there are potential downsides
to adopting this technology. For example, the lithium-ion batteries used to power EVs have been linked to
adverse environmental and social effects. Specifically, much of the world’s cobalt, a critical input to
lithium-ion batteries, is mined in the Democratic Republic of the Congo (DRC) where there are concerns
about abusive child labor practices, a lack of worker protections from cobalt’s toxic effects, and the
pollution of local communities from mining operations. In other areas, such as Chile and the U.S, the
potential for existing and planned lithium mines to damage the environment has also attracted the
scrutiny of local communities and environmentalists.
Will EV Strategies Put Automakers in High Gear?
Discussion Questions
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It is clear that there are pressures from politicians and many segments of society to reduce GHGs. It
remains an open question, however, as to how effective the transition to EVs will be, and the impact that
the automakers’ EV strategies will have on their shareholders and other stakeholders.
1. Identify 3 sets of stakeholders at GM and explain how each might i) benefit and ii) be harmed in
some way from the firm’s plan to focus on the production of EVs in place of fossil-fuel powered
vehicles.
2. As noted in the case, light duty vehicles currently contribute about 17 percent to the total U.S.
emissions. Identify 2 factors that would limit reductions in emissions when drivers switch to EVs.
FIN 620 Going Green Social Case
Source: Going Green: Can Automakers invest in Environmental Solutions? Case financial data from annual
reports, SEC 10-K, Yahoo Finance, NASDAQ, Bloomberg Terminal, or other sources.
Assignment: As an analyst at a Policy Think Tank (choose one between – Brookings Institute, Center for
American Progress, Rand Corporation, or Heritage Foundation), you must write a research article on
whether US automobile makers should tackle climate change issues. For the article you must conduct
analysis about the impact to Global Warning and Greenhouse gases that the Big Three US automobile
manufacturers contribute and whether they should seek to mitigate. Your analysis must consider the pros
and cons of Electrical Vehicle (EV) manufacturing and make recommendations about whether your
assigned company should reduce, continue or expand production of EVs in place of fossil-fuel powered
vehicles. The impetus for this article is to summarize how EV production by US automobile
manufacturers impact climate change and to publish an article on whether the EV production by US
manufacturers should be continued at same levels, expanded, or reduced. The period of study is from
2010 to present.
ARTICLE MUST INCLUDE (narrative of your analysis with supporting tables, charts and graphs, as
appropriate). The article must be no more than 3 pages. The Excel spreadsheet of your computations, stock price
analysis, and other work must be submitted as a separate file. There should be only two files submitted
(article and Excel worksheet).
(1) The Problem: Provide a brief overview about global warming, climate change, and the Paris Climate
Agreement. Discuss how the US compares to other countries in addressing this issue. Outline why
your selected Think Tank’s knowledge/experience relates to addressing social problems like Climate
Change policy.
(2) Impact to Stakeholders. Before and After the Paris Agreement (2010 – present) for the Big Three
Detroit Auto Manufacturers (Ford, GM, and Stallantis), conduct analysis of how the following
stakeholders may benefit or be harmed from the production of EV vehicles (Answer Q1 from the
source case).
a. Employees,
b. Communities (environment),
c. Consumers, and
d. Stockholders.
(3) Future Focus of US Automakers. After the Paris Agreement (2015), discuss whether US production of
EVs has changed and what impact the US makes to the global climate change issue, especially
focusing on US light truck production (Answer Q2 from the source case).
(4) Evaluation. Based on your analysis that considers the pros and cons of Electrical Vehicle (EV)
manufacturing and its advantages and disadvantages to stakeholders, make recommendations
about whether your assigned company should reduce, continue or expand production of EVs in
place of fossil-fuel powered vehicles.
Article Format. Submit one Microsoft Word file or Adobe (*.pdf) file with all tables, graphs, figures
embedded:
Title page with your name, selected Think Tank, and article title.
All the sections must be properly labelled using the sections listed above.
All required sections must be included.
The article must be written for the target audience and be free of typographical and grammatical
errors.
Include page numbers.
Consistent font size and type. At least 12 font for text and 11 font for graphs and charts.
Title page and references are not included in the page count.
Include references, as appropriate.
Submit article and Excel file via Canvas before 11:50pm on the due date.
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