Extortion is Better Than “Investing” in EVs

  • March 2, 2024

Toyota’s North American CEO Ted Ogawa didn’t put it exactly like that – but that’s exactly what he meant when he said:

I know that EPA is now reconsidering what the regulation level should be. However, again, our starting point is what the customer demand should be. So, for example, 2030 regulations said the new-car market, more than half of it should be BEV, but our current plan is like 30 percent. We are respecting the regulation, but more important is customer demand.”

Mark the italics.

Customers don’t want devices anymore than most people want mRNA drugs that aren’t vaccines – but the government continues to push both. This presents a problem for vehicle manufacturers (as regards the devices) because the regulations effectively require each of them to have some of them in their model lineup.

Mark the italics.

They are not yet required to actually design and build them. They can do as Honda is doing – which is to say, buying a device made by someone else and offering it for sale under their own brand label. Voila! The “Honda” Prologue. Which is in fact a Chevy Blazer device. Honda gets credit for offering this so-called “zero emissions” device, satisfying one reg – and also credit for the “96 MPGe” the EPA says it gets. This latter helps Honda’s fleet – all the vehicles it sells – average closer to the federally mandated 35-plus miles-per-gallon each vehicle manufacturer’s fleet must average, else not be compliant with CAFE regs – and fined by the government for its “noncompliance.”

But there’s a third and easier way.

It’s the one Toyota has decided to follow. Rather than “waste money” – Ogawa’s words – building its own devices or buying devices made by others and re-selling them as “Toyotas,” it is easier and cheaper to just pay extortion.

It’s not called that, of course. For much the same reason that the piece of paper you’re forced to sign after you get “pulled over” by an armed government worker over some no-harm-caused “violation” – such as failing to wear a seatbelt – is called a “ticket.”

Instead, it’s called a “credit” – implying it’s something good and desirable.

What it actually is, though, is something less worse.

Instead of wasting money – as Ogawa puts in plain, honest language – manufacturing devices of its own that buyers don’t want or sullying its brand buying some other manufacturer’s devices, Toyota figures it’s cheaper and easier to just pay over the money – to Tesla, chiefly – and get credit for Tesla’s having made the devices.

This is the grift that built – and still sustains – Tesla.

It is the sole manufacturer of devices exclusively. It doesn’t have to buy credit for what it makes. But it makes a lot of money selling credits to other manufacturers that don’t make enough devices to be compliant with all the regs. That plus some heady stock market valuation based on the expectation that the government will use the regs to “encourage” more devices such as those made by Tesla to be manufactured – and more credits bought for manufacturing them – keeps Tesla in the green.

It’s extortion, plain and simple.

The only difference is that people have been trained to think of it as what it isn’t, much the same as they have been trained to regard the “taxes” they’re force to pay as something other than theft, which is exactly what they are. The only difference – in both cases – being that when the government takes your money (or forces a company to pay money) it is able to get away with calling what it does something else – and it’s a “crime” to not pay or comply.

But paying to buy credits for not building devices is still a better investment than wasting money on the devices, themselves. Or, as Ogawa put it himself: “Wasted investment is worse than the credit purchase.” 

This gives some sense of the degree of waste involved in designing and manufacturing devices.

It’s cheaper to just write a check to Tesla. And then at least there’s no bother about having devices on hand that dealers can’t sell.

Toyota – one of the largest and most profitable vehicle manufacturers – can afford to buy the credits precisely because it is not bleeding to death manufacturing devices it cannot sell. Unlike, say, Ford – which has already lost something in the vicinity of $6 billion dollars on devices like the F-150 Lightning, for which there is so little market Ford recently stopped shipping any new (2024 model year) devices to its dealers. Chiefly because there are still so many brand-new examples of last year’s devices (2023 models) taking up valuable inventory space on Ford dealership lots around the country.

Toyota hardly sells any devices at all – because the people running Toyota aren’t stupid. Nor are they cowardly.

Note the straightforwardness of Ogawa’s language. He does not quibble; he did not mewl the usual unctions about devices being “the future” and how necessary they are to stop the “climate” from “changing.” He all but called bullshit on the whole thing.

Akio Toyoda – grandson of the company’s founder – has been similarly forthright. He has said publicly that devices will never constitute more than perhaps 30 percent of the total vehicle market.

More of this, please.

If other vehicle manufacturers would call bullshit on all this, the bullshit – and the grift – would end as quickly as butter melts in the sun on the 4th of July.

. . .

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