Can the EV Juggernaut be Stopped?

  • October 16, 2023

Here’s the problem with the battery powered devices being pushed on us as the mandatory replacement for vehicles:

See that business about mandatory.

Even if the mandates – which chiefly come in the form of regulations, a sneaky way to mandate something evasively – were to be repealed tomorrow, the car industry has already bought in.

Literally.

It is not merely a matter of feigning a kind of vapid belief in the merit of the Latest Thing. The car industry is an industry. It makes things, in other words. Complex things that require an enormous investment in physical things, such as tooling and assembly lines to make the things. As well as the things themselves. One does not simply draw a vehicle – or a battery-powered device – on a napkin, though that may the starting point insofar as how the end result might look. But to transform that drawing into a finished vehicle that moves – and that complies, with all the myriad regulations – takes years of careful planning and millions of dollars put toward making it happen.

It generally takes four years to develop a new vehicle. Thus, the vehicles that will be available four years from now are just now in the process of being fleshed out. And almost all of these are battery-powered devices, because the car industry has bought into the narrative  – and the attending need to manufacture only that which they’ll be allowed to sell.

That’s not unreasonable – assuming people are willing (and able) to buy.

But absent a breakthrough of some kind – the kind we’ve been told is just around the corner for the past several decades – this is going to be a problem for the industry because many people who want a vehicle have no interest in buying a battery powered device and won’t buy one, unless they are forced to buy one. And force only works when it’s possible to force people. How will it be possible to force people to spend $50k – the current average sales price of a battery powered device – if they do not have it and so cannot spend it?

It is possible, of course, that the industry is counting on the government to buy these devices and then (effectively) rent them to the people forced to use them, by eliminating alternatives to them. But that does not eliminate the need to pay for it all – and it’s very clear that while a limitless supply of money can be conjured into existence by the “federal” reserve, that money increasingly has the purchasing power of Monopoly money. The government can offer to subsidize battery-powered devices for all. But government cannot make them cost less.

The distinction is important.

Ford is losing billions on battery-powered devices yet hasn’t stopped devoting resources to making more of them. The same for the rest of them, with a handful of sticks-in-the-mud such as Mazda, which tepidly feigns vapid agreement with the “need” to “electrify” . . . at some point down the road.

In the meanwhile, though, the major players in the industry have already largely ceased fleshing out new designs that aren’t battery powered devices. Volkswagen, for instance, announced earlier this year that it would henceforth not be developing any new engines – in favor of electric motors. In other words, what they have available now is all that will be available going forward.

And that not for long.

Here’s why:

An engine (or family of engines) that is compliant with the regulations for this model year is unlikely to be compliant with the next slew of regulations emanating from the government for subsequent model years. Keep in mind that regulations are always temporary; they change regularly. It is why an engine made in say 2018 that met (or even exceeded) all of the regulatory requirements that were in force when it was manufactured is likely no longer compliant today. This does not mean the vehicle it’s powering cannot (legally) be driven. But it does mean that vehicle – with that engine – would probably be illegal to sell today, as a new vehicle.

Not because it is “dirty” – the word used to anathematize engines that are not compliant with the latest regulations – but simply because it does not quite meet whatever the requirements of the latest regulations happen to be.

A good (because actual) example of this are the pending regulations that will require new vehicles to average nearly 50 miles-per-gallon less than three years from now.

This de facto requires “electrifying” everything, because nothing that isn’t equipped with a diesel engine (already out-regulated) or that is very light (also out-regulated) or a hybrid and so partially “electrified” can average more than 50 miles per gallon.

Thus, there is little incentive for the industry to invest in new engines – and a massive (artificial) inducement for them to “invest” in battery powered devices. And so they have, most of them.

Which means it is already too late for many of them.

When it becomes clear there is no compensatory market for all of this “investment,” the brands that have bought-in to “electrification” will probably go the way of brands like Edsel, which Ford convinced itself would sell like tamales in El Paso, provided it could convince people to buy them.

That didn’t work out so well for Edsel. But Ford survived – because the whole company wasn’t committed to selling nothing but Edsels.

We’ll see how it works out for Ford – and the rest who are trying to sell electrified Edsels – today.

And most of all, tomorrow.

. . .

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