EV Absolutism, the Impacts on What You Drive and National Security
While there are numerous opinions and reporting daily on the auto industry and especially on the push for Electric Vehicles, very few if any have been sought from people like myself who have been on the front line of the auto retail industry in sales for over two decades. We sell both EV and traditional vehicles and we see the intensifying socialization by government coercive influence on misallocation of capital in the industry and the effects it will have on consumer choice. As a result many of us like myself will soon be leaving the auto industry. In addition, the effects of government policy on the absolutism for motorized transport to be EV and anti fossil fuel energy policies will have severe consequences on national security. Government mandates will cause many automakers to become government dependent. Consequentially, a growing government bureaucratic shadow sits between customers’ transportation needs and what their actual choices will be.
Throughout automotive history the best products and choices have been driven by ingenuity, market needs and competition. All these factors influenced the evolution of powertrains to where they were best suited to peoples needs. In the last decade technological breakthroughs in electric vehicles (EV) led by Tesla have shown too that electric powertrains can also be a credible choice for some applications. Ironically, Elon Musk acquisition of Twitter may now allow the proper scientific debate on climate policies including EV mandates which were previously suppressed. There has been an absolutist mindset by policy makers that EV technology should serve all needs and that it must be the future. It is the quintessential cycle of political spoils to policy makers coffers. Make alarmist policies, dole out tax payer funded subsidies to support them, and get a large part of it back in donations
EVs should evolve the same way traditional powertrains have through competing on their own merits. Like most people I embrace EV in the market as it will be part of the automotive future, but I resent the implication of EV absolutism. Many auto executives lured by taxpayer funded subsidies tailor their product portfolios to pander to the government, not the needs of their customers. I have never seen a time where so many auto executives are detached from the needs of their most loyal customers. However, many know that EV announcements boost stock prices short term but long enough before the viability of profits from such announcements comes into question, and by then they will be gone with a nice golden parachute. The same for some self acclaimed auto industry experts in the financial industry who taunt the auto industry to go all-electric to boost stock prices. Very often ‘profit’ is based on selling regulatory credits to other automakers so they can actually sell profitable trucks and SUVs. Announcements of how many people have made reservation deposits for EVs are rarely or ever followed up with announcements by how many people actually take delivery of vehicles after making the deposit or cancelled.
The Absolutist push for EV lacks transparency on the actual profit of the vehicles themselves or how those costs are offset not only by subsidies but also by the EV-flation in prices of traditional vehicles to compensate for lack of profits on the EVs. Despite the valid arguments for supply chain disruptions there has been a correlation of sharp increases in traditional vehicle prices as automakers try to meet EV mandates. Ford’s sales leader Ford Transit commercial van had a $6000 increase in its price last year within months. While the company stopped taking orders on the high demand gas engine model last summer due to component shortages and to catch up on production of previous orders, the EV model which actually uses a lot more of scarce micro chips is still available to order. Ford has also implemented expensive EV mandates for dealers that will constrain allocation and choices of conventional vehicles to customers who still want them. Ford CEO Jim Farley supports the model of fewer inventories on lots and the model where customers order vehicles and wait weeks to get it. The reality is that most people when they buy a vehicle want or need it within a day, especially the contractor with one work van that a tree just fell on.
GM CEO Mary Barra outlined last year that GM would go fully electric. In one of the most contradictory statements by a CEO, she said GM wanted to give people who wanted an EV a ‘choice’. An absolutist product portfolio of ‘fully electric’ is not a choice and totally ignores the millions other customers who would like real choices. Last month Stellantis decided to lay off 1,350 workers at a Jeep plant in IL so the automaker can finance its government –mandated and subsidized electric-vehicle expansion. Mercedes Benz announced it wants to go fully electric, but it is also calling for more government subsidies towards electric vehicles.
Not only do EV absolutism defy market forces, it defies scientific realities and the key law of basic economics, which is scarcity. The industry and especially customers have been severely impacted by the shortages of microchips and components over the last two years. This was partly due to a concentration of the microchips coming from vulnerable parts of the world. However, China controls up to 80 percent of the supply chain for the very scarce minerals for EV batteries that are often not extracted in the most environmental conditions. If America was to succumb to the EV Absolutists fallacy mandates of banning the internal combustion engine (IC) and that everything runs on electricity, any conflict with China would literally ground us to a halt. Even without that happening, scarcity of minerals limits everything running on electricity. This is separate from the other aspect of scarcity and viability of electricity (often from fossil fuels) and the electric grid to support it. Russia’s war on Ukraine was also another warning to the West on the vulnerabilities of energy security and EV absolutism. In the shadow of these vulnerabilities, there is a movement in Europe and even states like California and New York to ban the sale of internal combustion engine. Some Western automakers like Ford ( who wants to exit IC vehicles by 2030 in Europe) and Mercedes are purging their engineers and intellectual capacities to further develop (IC) engines and even hybrids. If this trend continues, should a major global conflict break out with a China-Russia axis, Western automakers would not be in the position as in WWII to be an arsenal of democracy to quickly transition to making engines and vehicles like tanks and other vehicles that need IC engines to counter them. China and Russia won’t be forcing their industries into the absolutism of a single powertrain type anytime soon.
EV absolutism also crowds out viable alternatives and technologies that have limited emissions but enhanced efficiency. However so much taxpayer money is attached to EVs that competition from the constantly evolving internal combustion is seen as a threat. So too are hybrids and even plug in hybrids which for many people are much more viable and sustainable than EVs. Sustainability and EVs are often used synonymously but the laws of economics, markets and physics say otherwise. Both the consumer and the environment have always benefited more from a fair market competition of evolving technologies than virtuous sounding regulators and woke CEOs who try to appease them.
American automakers have capitulated and pulled legal challenges to California Electric car mandates. A state, which has environmental rules that have already led to darkness, blackouts and even calling limitations on charging EVs. Imagine if in the 1800s the government mandated steam engines as the way of the future and regulated out the alternatives. The automobile industry shouldn't be constrained with that mindset and certainly not with the dictates from a state which often can't keep its lights on, as if it were still the 1800s.
My parting predictions. Automakers who capitulate to state and government rules like EV mandates and don’t defend the market needs of their customers or the viability to remain independently profitable, will become government motors and will need more government assistance to stay open. They should remember to leave their private jets when they show up in Washington D.C for a bailout. Many European auto companies will be in the same position. The most viable and profitable auto companies will be the ones who show the fortitude to resist the EV absolutist mindset of government and financial analysts trying to micro manage their business. Instead they will serve the needs of their customers with an all the above portfolio including electric, gas, hybrids, hydrogen, diesel and other choices including combining those technologies. These companies would include Toyota and other Japanese companies in addition to South Korean companies who will also be the able to maintain dominant worldwide footprints in international markets where others have withdrawn or can’t compete in anymore.