Will electrical autos conquer the nation?
It seems like all the bright minds have decided that the future of the automobile belongs to electric vehicles. In August 2022, California passed an ordinance banning gasoline-powered cars by 2035; and in September 2022, New York promptly followed with its own ban, also by regulation, also set for 2035. And at the federal level, in 2021 the Biden administration ordered all agencies to work toward 100 percent EV procurement, also by 2035. Meanwhile, the government is trying through a maze of regulations — from vehicle mileage standards to emissions caps and more – open to forcing manufacturers to switch their product range to electric vehicles as soon as possible.
So, are electric vehicles about to take over the country and become the dominant mode of transportation? I bet against it. This is just one specific example of the general principle that it is always wise to bet against the central planning of the economy. EVs may be a successful niche product for a small number of affluent consumers, but the idea that they will completely replace gasoline-powered cars in a short period of time is the dream of central planners who believe they can achieve their dream through coercion. Central planning never works and will not work this time. The reason for this is that the would-be central planners do not and never can know enough to put all the elements together into a fully functioning economic sector.
Mark Tapscott has an interesting article at PJ Media today entitled ‘Three Big Reasons Electric Vehicles Will Never Dominate America’s Streets’. Tapscott’s reasons are all good, which I would summarize as follows: (1) Despite huge government subsidies and rebates, electric vehicles are still far more expensive than gas-powered cars, (2) even with sharply increased sales, the existing gas-powered cars will not go away and will still be on the road and in the dominant vehicles in 2035 and even 2050, and (3) the increased levels of minerals necessary for batteries, from lithium to nickel to cobalt, will never materialize. key quote:
[All the] Federal tax credits are available to disguise the fact that electric vehicles remain extremely expensive for consumers and offer unproven maintenance and reliability records. No wonder that despite the tremendous pressure on consumers to buy electric vehicles, they still only account for about seven percent of all new car purchases.
Let me generalize from this. The current automotive sector of the economy represents thousands of elements that come together through private markets to meet customer demand. Each of the elements fit together because someone sees an opportunity to make money by providing that element. Just one example: gas stations do not exist because the state ordered them, but because entrepreneurs have realized that they could make money by building gas stations, buying pumps and providing petrol locally at a cost-covering price and a allow profit.
Compare that to what is now set to happen for electric vehicles. The government will reportedly pay for around half a million charging stations across the country. Maybe that happens, but I don’t notice any of them near where I live. And why does the state have to do this? If the demand were there, entrepreneurs would already be installing the stations. It turns out that the stations are pretty expensive to build (at least the ‘fast charging’ variant) and then you can’t really beat up on the electricity that has to be bought from the local utility. So with government grants.
And in the next step, the same thing happens to the charging stations as with any other government-mandated operation: the stations break down, and since no one is making any more money for keeping them running, they are not repaired. Among many, many articles on the subject, here is one from August 2022 at The Verge entitled “EV owners are fed up with broken EV chargers and jerky software”.
JD Power surveyed 11,554 EV and plug-in hybrid vehicle owners from January through June 2022 for its second annual public EV charging study. Despite the huge growth in the number of public EV charging stations in the US, EV owners say the overall experience still sucks.
Well, look at the status of elevator operations or plumbing on New York City Housing Authority projects. That’s how socialism works.
Likewise, who has the incentive to ensure there is enough electricity on the grid to charge all EVs when owners want to charge them? In the gas car arena, oil companies make big bucks by finding the product, refining it, and delivering it to the locations where the customer wants to buy it. Over in the EV arena, the same jurisdictions like New York and California that anticipate ordering an EV-only fleet are also organizing their grid under a central planning/regulated pricing model. Reliable fossil fuel power plants are to be shut down and replaced with intermittent wind and solar power. The omniscient regulators then order everything to be electrified, and somewhere the little folks are supposed to respond and implement it, with no economic incentive to match. We will see.
Inside EVs reported Jan. 18 that EVs in the US experienced a sharp increase in sales and market share in 2022, to a 5.8% market share, up from just 3.1% in 2021. The article continues somehow mentioning how much of the sales surge has been fueled by recent rounds of massive government subsidies. I have no doubt that the 5.8% could rise a little over the next few years, especially since government subsidies are pouring in. But ultimately, a successful business sector needs market incentives at all levels of the food chain. EVs don’t, and almost certainly never will — except in the highly unlikely event that consumers suddenly decide the benefits of EVs are so great that they’re willing to pay double or more for a car. I’m making a solid bet that EV penetration will collapse at low levels well before 2035.