Not Ready For Prime Time

I find the political establishment's infatuation with electric cars to be very interesting.

Governments around the world are attempting to mandate the future use of electric cars.

This is supposed to be an important step to wean ourselves from vehicles that run on fossil fuels and help to protect the world from climate change.

Policies have been enacted to provide generous subsidies for the purchase of electric vehicles at the federal level in the United States. 

Lawmakers in the EU, Canada and Australia have already approved bans on the sale of gas-powered cars in 2035 and forward.

At the state level in the United States, California is requiring that all new cars and light trucks sold in the state must be all-electric beginning in 2035.

Source: https://www.npr.org/2023/01/30/1152627751/new-cars-in-california-must-be-zero-emissions-by-2035-can-the-power-grid-handle-

By the end of this decade, California is requiring that 68% of new vehicles sold in the state must be zero-emissions. That is just 7 years away.

For California to be able to charge all of those electric vehicles it needs to triple the amount of electricity it currently produces.

Who wants to wager whether that is going to occur in the next decade or so?

Beyond the obvious disconnect between mandating EV's but not having the power generation infrastructure to support the conversion, all of this sounds like something you would have expected in the the Soviet Union or Communist China when government economic planners would solely determine what was produced and what was available to be purchased by consumers.

Predictably, the results were disastrous.

Both had to abandon their communist economic policies in favor of a market-based approach.

These types of mandates have no business being government policy in the United States of America.

I am all for cleaner, more efficient and cost-effective forms of energy or transportation. However, it makes absolutely no sense to ban proven energy sources or to mandate EV's.

They simply are not ready for prime time right now.

What Biden and the Democrats want us to do would be akin to banning horses and mandating the purchase of automobiles in the early 20th century because horse manure was polluting all of the country's roads.

Did we mandate gas stoves in all homes in the late 19th to limit the use of firewood to heat people's homes because of smoke pollution in the late 19th century?

Or electricity to insure that we did not continue to kill whales for the oil that was used in lamps of the day?

Technology advances solved these problems but we did not ban what worked to keep the world going in the meantime. 

The new technology was adopted naturally by consumers when it made economic and commercial sense  as it became apparent the new alternatives were demonstrably better.

Electric vehicles may someday be proven to be superior to internal combustion powered vehicles.

However, that is not where we are today.

Putting Tesla aside, there is little consumer interest in most electric vehicles currently.

For example, consider electric vehicle sales in the United States in the first half of this year.

Here is a more detailed breakdown of EV sales by individual models in the first 6 months of 2023.

For context, there were approximately 8 million vehicles sold in the United States in the first half of 2023 with EV's accounting for just over 5% of all sales.

Right now there isn't any general consumer interest in EV's.

There is only interest in Elon Musk's Tesla and that is more of a high-end niche luxury model right now.

However, Tesla is aggressively attempting to reach into the middle market by lowering the prices on some of its car models. Tesla has cut the prices for some of its Model Y and Model 3 vehicles at least six times this year. The Model Y price is 20% lower today than it was at the beginning of the year at a list price just under $50,000.

That being said, the mass of consumers are just not interested in EV's at this point.

Electric vehicles are currently piling up on dealer lots (except Tesla) as this Axios article documents.

Source: https://www.axios.com/2023/07/10/unsold-electric-cars-are-piling-up-on-dealer-lots

Similar trends are being seen in Europe.

Volkswagen just announced that sales of EV's are running 30% below company forecasts.

Source: https://finance.yahoo.com/news/volkswagen-slashes-electric-vehicle-production-102056720.html

Layoffs are occurring in the German plant that manufactures EV's.

A company executive explained why sales are down.

"We are experiencing strong customer reluctance in the electric vehicle sector."

Ford is experiencing similar headwinds in its efforts to sell EV's.

It currently has a 117-day supply of its Mustang Mach-E electric vehicle.

Ford also lost $34,000 on every EV it sold last year.

Ford is now in the process of laying off as many as 3,000 workers to cut costs in its transition to electric vehicles.

Of course, it was just last September that the Biden administration was touting the fact that the EV manufacturing boom was going to create tens or thousands good-paying jobs at companies like Ford.

Worse still is the plight of Lordstown Motors, an enterprise that was going to see electric pickup trucks manufactured in a former GM assembly in Ohio, 

Lordstown filed for bankruptcy last week.

This was another "green" plant that Biden hailed as transformative which was provided with over $1 billion in federal money.

Lordstown Motors is not alone.

Take a look at these other electric vehicle manufacturers which were going to be "the next Tesla".

One automobile company has resisted the political pressure from governments around the world to go all-in on electric vehicles---Toyota.

Toyota's CEO for the last 13 years, Akio Toyoda, has taken a lot of criticism for Toyota's resistance to the EV strategy. He recently stepped down from the top job in the face of pressure from critics and stakeholders for this politically unpopular stance.

However, Toyota's position on EV's has been well considered and researched.

An article in Top Speed provided the background and reasoning for the Toyota position.

Toyota is concerned that switching to pure electric vehicles is not practical in the near future. Outgoing CEO Akio Toyoda held the opinion that EVs are simply “overhyped” and that having too many of them could potentially be problematic. In his view, the lack of supporting infrastructure coupled with the high cost of EVs makes their mass adoption infeasible. But all that is now concealed from the public eye since EVs currently make up only about one-percent of the world’s automotive fleet. If the number of electric cars surges, the reality will start to sink slowly. Electricity demand will top the list of problems to address when EVs flood the market. The U.S alone needs a 40-percent increase in power production to withstand the load demand that EVs will create by 2030. 

Toyota feels that going all-electric will leave a significant proportion of its customers in total darkness. With over 10.5 million copies sold across 200 countries in 2021, no automaker has penetrated the world’s market like Toyota. The company boasts a substantial share of all markets, and more so, in developing countries where charging infrastructure is very poor. These regions cannot afford to put up infrastructure to support EVs by 2035. On top of that, electric cars are very expensive. The government subsidies to incentivize people to buy EVs make them a little cheaper at the moment. However, it’s unknown how long governments will hold on to these incentives, especially when mass production commences. Without incentives, many consumers would not be willing to break their banks just to own an electric car. 

Toyota is not opposed to EV's per se. Their view is that a balanced approach that includes EV's, hybrids, gas-powered and even hydrogen-powered vehicles would be much more effective in reducing carbon emissions.

On the surface, going fully electric looks like a perfect plan to reduce carbon emissions. But Toyota's chief scientist, Gill Pratt, refutes this idea not just by word of mouth, but with evidence from a mathematical model he devised. Pratt’s model revealed that having a blend of gas-powered and hybrid cars on the roads leads to less overall emissions compared to electric-only. This forms the basis of Toyota’s reluctance to go fully electric. The company believes that adopting a diverse powertrain instead of pure electric is more viable. They call it a balanced approach - implying hybrid cars. That’s why Toyota is aggressively pushing to produce hydrogen-powered vehicles too.

Of course, it seems that no one is interested anymore in logic, practical reasoning and common sense.

You may soon be forced into buying an electric vehicle whether you want one or not.

If you are, you actually may be lucky.

Many others may soon be in a position where they will not be able to own a private vehicle because the price has surpassed their ability to pay or there is simply not enough power in the electric grid available to power it.

EV's may not be ready for prime time.

However, the politicians seem to be determined for their show even though their thesis is contradicted by climate history and to the detriment of the people they are supposed to serve.