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Automotive

Electric vehicle mandates mean misery all around

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4 minute read

From the Fraser Institute

By Matthew Lau

The latest news of slowing demand for electric vehicles highlight the profound hazards of the federal government’s Soviet-style mandate that 100 per cent of new light-duty vehicles sold must be electric or plug-in hybrid by 2035 (with interim targets of 20 per cent by 2026 and 60 per cent by 2030, with steep penalties for dealers missing these targets).

The targets were wild to begin with—as Manhattan Institute senior fellow Mark P. Mills observed, bans on conventional vehicles and mandated switches to electric mean, in jurisdictions such as Canada, “consumers will need to adopt EVs at a scale and velocity 10 times greater and faster than the introduction of any new model of car in history.”

Indeed, when the Trudeau government announced its mandate last December, conventional vehicles accounted for 87 per cent of the market, and today the mandated switch to electric looks even more at odds with actual consumer preferences. According to reports, Tesla will cut its global workforce by more than 10 per cent (or more than 14,000 employees) due to slowing electric vehicle demand.

In Canada, a Financial Post headline reads, “‘Tall order to ask the average Canadian’: EVs are twice as hard to sell today.” Not only has Tesla’s quarterly sales declined, Ford Motor Co. announced in April it will delay the start of electric vehicle production at its Oakville plant by two years, from 2025 to 2027.

According to research from global data and analytics firm J.D. Power, it now takes 55 days to sell an electric vehicle in Canada, up from 22 days in the first quarter of 2023 and longer than the 51 days it takes a gasoline-powered car to sell. This is the result, some analysts suggest, of a lack of desirable models and high consumer prices—and despite federal subsidies to car buyers of up to $5,000 per electric vehicle and additional government subsidies in six provinces, as high as $7,000 in Quebec.

Similarly in the United States, the Wall Street Journal reports that on average, electric vehicles and plug-in hybrids sit in dealer lots longer than gasoline-powered cars and hybrids. Again, that’s despite heavy government pressure to switch to electric—the Biden administration mandated two-thirds of new vehicles sold must be electric by 2032.

In both Canada and the U.S., politicians banning consumers from buying vehicles they want and instead forcing them to buy the types of vehicles that run contrary to their preferences, call to mind famed philosopher Adam Smith’s “man of system,” described in his 1759 book, The Theory of Moral Sentiments.

The man of system, Smith explained, “is apt to be very wise in his own conceit” and “seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess–board.” But people are not chess pieces to be moved around by a hand from above; they have their own agency and if pushed by the “man of system” in a direction opposite to where they want to go, the result will be misery and “society must be at all times in the highest degree of disorder.”

That nicely sums up the current government effort to mandate electric vehicles contrary to consumer preferences. The vehicle market is in a state of disorder as the government tries to force people to buy the types of cars many of them do not want, and the outcomes are miserable all around.

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Automotive

Canadians’ Interest in Buying an EV Falls for Third Year in a Row

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From Energy Now

Electric vehicle prices fell 7.8 per cent in the last quarter of 2024 year-over-year, according to the AutoTader price index

Fewer Canadians are considering buying an electric vehicle, marking the third year in a row interest has dropped despite lower EV prices, a survey from AutoTrader shows.

Forty-two per cent of survey respondents say they’re considering an EV as their next vehicle, down from 46 per cent last year. In 2022, 68 per cent said they would consider buying an EV.

Meanwhile, 29 per cent of respondents say they would exclusively consider buying an EV — a significant drop from 40 per cent last year.

The report, which surveyed 1,801 people on the AutoTrader website, shows drivers are concerned about reduced government incentives, a lack of infrastructure and long-term costs despite falling prices.

Electric vehicle prices fell 7.8 per cent in the last quarter of 2024 year-over-year, according to the AutoTader price index.

The survey, conducted between Feb. 13 and March 12, shows 68 per cent of non-EV owners say government incentives could influence their decision, while a little over half say incentives increase their confidence in buying an EV.

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Automotive

Hyundai moves SUV production to U.S.

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MXM logo MxM News

Quick Hit:

Hyundai is responding swiftly to 47th President Donald Trump’s newly implemented auto tariffs by shifting key vehicle production from Mexico to the U.S. The automaker, heavily reliant on the American market, has formed a specialized task force and committed billions to American manufacturing, highlighting how Trump’s America First economic policies are already impacting global business decisions.

Key Details:

  • Hyundai has created a tariffs task force and is relocating Tucson SUV production from Mexico to Alabama.

  • Despite a 25% tariff on car imports that began April 3, Hyundai reported a 2% gain in Q1 operating profit and maintained earnings guidance.

  • Hyundai and Kia derive one-third of their global sales from the U.S., where two-thirds of their vehicles are imported.

Diving Deeper:

In a direct response to President Trump’s decisive new tariffs on imported automobiles, Hyundai announced Thursday it has mobilized a specialized task force to mitigate the financial impact of the new trade policy and confirmed production shifts of one of its top-selling models to the United States. The move underscores the gravity of the new 25% import tax and the economic leverage wielded by a White House that is now unambiguously prioritizing American industry.

Starting with its popular Tucson SUV, Hyundai is transitioning some manufacturing from Mexico to its Alabama facility. Additional consideration is being given to relocating production away from Seoul for other U.S.-bound vehicles, signaling that the company is bracing for the long-term implications of Trump’s tariffs.

This move comes as the 25% import tax on vehicles went into effect April 3, with a matching tariff on auto parts scheduled to hit May 3. Hyundai, which generates a full third of its global revenue from American consumers, knows it can’t afford to delay action. Notably, U.S. retail sales for Hyundai jumped 11% last quarter, as car buyers rushed to purchase vehicles before prices inevitably climb due to the tariff.

Despite the trade policy, Hyundai reported a 2% uptick in first-quarter operating profit and reaffirmed its earnings projections, indicating confidence in its ability to adapt. Yet the company isn’t taking chances. Ahead of the tariffs, Hyundai stockpiled over three months of inventory in U.S. markets, hoping to blunt the initial shock of the increased import costs.

In a significant show of good faith and commitment to U.S. manufacturing, Hyundai last month pledged a massive $21 billion investment into its new Georgia plant. That announcement was made during a visit to the White House, just days before President Trump unveiled the auto tariff policy — a strategic alignment with a pro-growth, pro-America agenda.

Still, the challenges are substantial. The global auto industry depends on complex, multi-country supply chains, and analysts warn that tariffs will force production costs higher. Hyundai is holding the line on pricing for now, promising to keep current model prices stable through June 2. After that, however, price adjustments are on the table, potentially passing the burden to consumers.

South Korea, which remains one of the largest exporters of automobiles to the U.S., is not standing idle. A South Korean delegation is scheduled to meet with U.S. trade officials in Washington Thursday, marking the start of negotiations that could redefine the two nations’ trade dynamics.

President Trump’s actions represent a sharp pivot from the era of global corporatism that defined trade under the Obama-Biden administration. Hyundai’s swift response proves that when the U.S. government puts its market power to work, foreign companies will move mountains — or at least entire assembly lines — to stay in the game.

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