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Climate

After Billions In Subsides, Reality Is Sinking In That EVs May Be The New ‘Edsels’

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The year 1957 is memorable for at least two historic launches. The launch by the Soviet Socialist Union of Sputnik, the world’s first artificial satellite, prompted the U.S. to create the National Aeronautics and Space Administration (NASA) the very next year. …

The other historic 1957 launch was Ford Motor Company’s much-heralded Edsel. [emphasis, links added]

Ten years in the making, at a development cost of $250 million ($2.78 billion in 2024 dollars), Ford dealers saw thousands lining up to buy the new dream car that September, but by yearend monthly sales had fallen by a third.

Two years later, Ford ceased production of the Edsel and revamped its production lines to build compact cars. According to Time reporter Lily Rothman, “As it turned out, the Edsel was a classic case of the wrong car for the wrong market at the wrong time.

Much as with the space program, the federal government has spent huge sums subsidizing the construction and purchase of electric vehicles, including 18-wheelers, airplanes, and tanks. All of this has been driven, ostensibly, by the perceived threat posed by the plant food carbon dioxide.

Much as with the Edsel, the electric vehicles that European, American, and other Western governments have been subsidizing are “the wrong car for the wrong market at the wrong time.”

Around the planet, individuals, automakers, and even policy advisors are waking up to this gross miscalculation.

Meanwhile, the Chinese, who long ago cornered the market on the primary raw materials and technologies needed for producing EVs in quantity, stand to be the primary sellers of vehicles that Western governments have mandated that the hoi polloi purchase.

The largest Chinese automaker, Biyadi (BYD), uses the slogan “Build Your Dream” to lure buyers into even greater reliance on Chinese technology that will erase tens of thousands of American jobs.

BYD sells battery-electric vehicles in China for US$26,000. BYD makes its own batteries, semiconductors, and seal upholstery, and its nearly 30,000 patents owned or filed put BYD light years ahead of any Western automaker.

The only brakes on China destroying the world auto market are tariffs and other import restrictions – or ending the EV mandates. But the tariffs would likely be passed onto customers, forcing Americans to pay double if Washington forces Chinese EVs down their throats.

And, as noted, without the tariffs, Ford, General Motors, and every other non-Chinese automaker could quickly be forced into bankruptcy.

The United Auto Workers know this and hedged their bets for 2024 by throwing money in both directions. Western automakers, joining Toyota, have already pulled back from their EV production commitments.

Ford, which has been losing $60,000 – more than the selling price – on every EV it sells, saw sales of its Lightning F-150 fall 46% in the third quarter of 2023.

Mercedes downsized its EV sales projections by 2030 by 50% and announced it will update its petrol-fueled fleet engines into the next decade. Now Ford has halted all shipments of the Lightning F-150.

Rivian, too, has fallen on hard times, laying off 10% of its workforce, signaling a significant decline in demand. With prices starting at $70,000 for its pickup and $75,000 for its SUV, the sales downturn led to a corporate loss of $1.52 billion in the first quarter of fiscal 2023.

Slackening demand for EVs has even led to entire mines shutting down as the supply of rare earth minerals now exceeds demand.

Albemarle announced it was deferring spending on a planned $1.3 billion plant in North Carolina. The price of lithium has shrunk by 90%, and the price of nickel has been cut in half. As a result, a nickel mine in New Caledonia recently suspended operations.

In the UK, auto dealers are offering discounts of up to 25% on EVs sitting idle on their lots. The Lords Committee says British drivers are “giving the cold shoulder” to the electric transition despite dramatic drops in finance rates for EVs [to] boost flagging sales.

Non-fleet EV purchases in the UK fell by 25% from the prior year, with yet another reason being much higher auto insurance rates.

The obvious ability of China to dominate the EV market, coupled with increasing public resistance to EV mandates, has put pressure on the European Union and its member states.

A year ago, the EU took a baby step backward, agreeing to allow sales and registration of internal combustion engine vehicles after the 2035 deadline if they operate only on carbon-neutral fuels.

In the U.S., President Biden had until very recently doubled down on his EV demands, ignoring the concerns of automakers, auto unions, and the auto-buying public.

Just a week ago, the EPA indicated it was “considering” delaying EV mandates beyond 2030, an election-year concession that could quickly be reversed.

A 2023 Gallup poll showed that only 16% of Americans with incomes between $50,000 and $100,000 either own or are “seriously” considering purchasing an electric vehicle.

The most likely EV buyer is a Democrat who lives in a Pacific Coast state, but only 28% of U.S. Democrats and 25% on the West Coast either own or are “seriously” considering an EV.

Top image shows a BYD retro electric vehicle taken by Wu Zhongyi on Unsplash

Read full post at RealClearEnergy

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