Automotive
Electric vehicles facing uphill climb
From Resource Works
Ford shifts from EVs to gasoline trucks in Oakville due to declining demand and financial losses, challenging government EV targets.
In October 2020, the federal and Ontario governments announced with fanfare that they would each pour $295 million into helping Ford upgrade its assembly plant in Oakville to start making electric vehicles.
“The upgrade of the Ford plant will make Oakville into the company’s No 1. electric vehicle factory in North America,” we were told.
And Prime Minister Trudeau declared: “This is a win-win. . . . helping accelerate our transition to a low-carbon, clean-growth economy, which will help protect our environment, drive innovation, and create many good middle-class jobs.”
In April 2023, Ford announced it will spend $1.8 billion to retool its Oakville Assembly Complex, beginning in mid-2024, to build next-generation passenger electric vehicles in 2025.
Then the target date of 2025 becomes 2027.
And now, in July 2024, reality strikes: Ford confirmed that the Oakville plant would no longer produce electric three-row SUVs but would instead turn out larger, gasoline-powered versions of its flagship F-Series pickup truck.
The reason: a global slowdown in electric vehicle demand, with hesitant customers delaying plans to buy EVs, and many opting instead for hybrid-electric vehicles.
Ford, for one, said it will step up hybrid offerings and that by 2030 it expects to offer hybrid powertrains across its lineup of gas-powered vehicles. Ford has also delayed production of electric pickup trucks in Tennessee.
Ford now says its electric vehicle unit lost $1.3 billion USD in the first quarter alone. It sold 10,000 vehicles in that period, and thus lost about $132,000 US for every EV it sold.
General Motors also announced it would cut production of EVs, citing slowing demand.
As far as we know, Honda Canada is proceeding with a $15 billion plan to create Canada’s first comprehensive electric-vehicle supply chain, comprising four plants in Ontario. It includes Honda’s first EV assembly plant in Alliston, ON, which Honda said will produce up to 240,000 vehicles per year.
Flavio Volpe, president of the Automotive Parts Manufacturers Association, said the Ford decision is “not good news,” and he fears there will be similar announcements from other car companies.
And automotive industry analyst Robert Karwel says: “I would definitely not be surprised to see announcements from other companies.”
“People are getting payment fatigue right now generally, and EVs are more expensive,” said Karwel, a senior manager of J.D. Power’s Power Information Network. “The average car payment hit $900 a month in January.”
In the first quarter of this year, 46,744 light and medium-duty EVs were registered across Canada, 11.2% of the market share.
B.C. has long led Canada in the uptake of electric vehicles, and in May they made up 10.7% of light-duty vehicle sales.
But another factor weighing on consumers is B.C.’s recent reduction in rebates for electric vehicles.
B.C. reduced rebates to $3,000 for battery, fuel-cell and longer-range plug-in hybrid electric vehicles and $1,500 for shorter-range plug-in hybrid electric vehicles. The previous incentives ranged from $2,500 to $6,000, depending on the kind of car.
And now, only vehicles sold for under $55,000 qualify for the rebates. Previously, the maximum price was $77,000 to qualify. The federal rebate of $5,000 for qualifying vehicles, introduced on May 1, is still available.
If the slowdown in demand continues, it will only help power producers such as B.C. Hydro, which face staggering demand for power, for EVs and for industrial and clean-energy use.
The federal government requires at least 20% of new vehicles sold in Canada to be zero-emission vehicles (ZEVs) by 2026, at least 60% by 2030, and 100% by 2035. (ZEVs include battery electric vehicles and plug-in hybrid electric vehicles.)
Prime Minister Trudeau: “As a great Canadian once said, that is where the puck is going and that is where we’re going to be.”
B.C. is even more ambitious: It has set targets requiring 90% of all light-duty new vehicle sales to be zero-emission by 2030 and 100% by 2035.
That means B.C. needs substantially more power to cope with EVs — and will require even more than that to handle expected population growth and the province’s plans to electrify BC’s economy and push clean energy.
Now the Energy Futures Institute (EFI) calls in a new report for “a dramatic increase in domestic electricity production” in B.C., and cancellation of current plans to wind down some existing power-generation facilities.
EFI chair Barry Penner: “After years without new generation coming online, the long-awaited Site C dam is expected to start producing power by next year. Even if Site C was available last year or this year, it wouldn’t be enough to avoid having to import electricity from the United States and Alberta to keep our lights on.”
As for the federal target, the Public Policy Forum says Canada must build more electricity generation in the next 25 years than it has over the last century in order to support a net-zero emissions economy by 2050.
All in all, Canada’s electric vehicle transition could cost more than $300 billion by 2040 as the installation of charging infrastructure expands, upgrades to the electrical grid are made, and other changes take place, according to a report released by Natural Resources Canada.
Among other things, it says Canada needs to add 40,000 public charging ports per year on average between now and 2040. There now are around 32,000 public ports across the country, and roughly 11,000 were installed in 2023.
The Canadian Vehicle Manufacturers’ Association says lack of charging infrastructure is already deterring some would-be EV buyers. A lack of charging station availability was cited as a top concern by 72% of consumers, according to an Autotrader Canada survey conducted in March.
- Cornelius van Kooten, an economics professor and Canada Research Chair in Environmental Studies and Climate Change at the University of Victoria, said the federal timeline for electric vehicles “isn’t realistic or feasible.”
In a study for the free-enterprise Fraser Institute, he said that to meet the goal, Canada would need the equivalent of 10 big new hydro dams (or 13 large natural-gas power plants).
Quebec, for one, has already had to start limiting industrial expansion because it can’t fill all the power needs.
So you can but sigh when you hear of Quebec’s latest plan for electric vehicles: it is moving ahead with regulations that not only mandate EV sales but actually prohibit sales of any internal combustion engines — including plug-in hybrids, from January 1, 2035.
Automotive
Biden-Harris Admin’s EV Coercion Campaign Hasn’t Really Gone All That Well
From the Daily Caller News Foundation
The future direction of federal energy policy related to the transportation sector is a key question that will be determined in one way or another by the outcome of the presidential election. What remains unclear is the extent of change that a Trump presidency would bring.
Given that Tesla founder and CEO Elon Musk is a major supporter of former President Donald Trump, it seems unlikely a Trump White House would move to try to end the EV subsidies and tax breaks included in the Inflation Reduction Act (IRA). Those provisions, of course, constitute the “carrot” end of the Biden-Harris carrot-and-stick suite of policies designed to promote the expansion of EVs in the U.S. market.
The “stick” side of that approach comes in the form of stricter tailpipe emissions rules and higher fleet auto-mileage requirements imposed on domestic carmakers. While a Harris administration would likely seek to impose even more federal pressure through such command-and-control regulatory measures, a Trump administration would likely be more inclined to ease them.
But doing that is difficult and time-consuming and much would depend on the political will of those Trump appoints to lead the relevant agencies and departments.
Those and other coercive EV-related policies imposed during the Biden-Harris years have been designed to move the U.S. auto industry directionally to meet the administration’s stated goal of having EVs make up a third of the U.S. light duty fleet by 2030. The suite of policies does not constitute a hard mandate per se but is designed to produce a similar pre-conceived outcome.
It is the sort of heavy-handed federal effort to control markets that Trump has spoken out against throughout his first term in office and his pursuit of a second term.
A new report released this week by big energy data and analytics firm Enverus seems likely to influence prospective Trump officials to take a more favorable view of the potential for EVs to grow as a part of the domestic transportation fleet. Perhaps the most surprising bit of news in the study, conducted by Enverus subsidiary Enverus Intelligence Research (EIR), is a projection that EVs are poised to be lower-priced than their equivalent gas-powered models as soon as next year, due to falling battery costs.
“Battery costs have fallen rapidly, with 2024 cell costs dipping below $100/kWh. We predict from [2025] forward EVs will be more affordable than their traditional, internal combustible engine counterparts,” Carson Kearl, analyst at EIR, says in the release. Kearl further says that EIR expects the number of EVs on the road in the US to “exceed 40 million (20%) by 2035 and 80 million (40%) by 2040.”
The falling battery costs have been driven by a collapse in lithium prices. Somewhat ironically, that price collapse has in turn been driven by the failure of EV expansion to meet the unrealistic goal-setting mainly by western governments, including the United States. Those same cause-and-effect dynamics would most likely mean that prices for lithium, batteries and EVs would rise again if the rapid market penetration projected by EIR were to come to fruition.
In the U.S. market, the one and only certainty of all of this is that something is going to have to change, and soon. On Monday, Ford Motor Company reported it lost another $1.2 billion in its Ford Model e EV division in the 3rd quarter, bringing its accumulated loss for the first 9 months of 2024 to $3.7 billion.
Energy analyst and writer Robert Bryce points out in his Substack newsletter that that Model e loss is equivalent to the $3.7 billion profit Ford has reported this year in its Ford Blue division, which makes the company’s light duty internal combustion cars and trucks.
While Tesla is doing fine, with recovering profits and a rising stock price amid the successful launch of its CyberTruck and other new products, other pure-play EV makers in the United States are struggling to survive. Ford’s integrated peers GM and Stellantis have also struggled with the transition to more EV model-heavy fleets.
None of this is sustainable, and a recalibration of policy is in order. Next Tuesday’s election will determine which path the redirection of policy takes.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
Automotive
Trudeau’s new vehicle ban is a non starter
From the Canadian Taxpayers Federation
Author: Kris Sims
The Trudeau government’s ban on new gas and diesel vehicles is a nonstarter for three powerful reasons.
First, Canadians want to drive gas-powered minivans and diesel pickups.
Second, Canada does not have the electrical power to fuel these battery-powered cars.
Third, Canadians do not have the money to build the power-generating stations that would be needed to power these government-mandated vehicles.
Let’s start on the showroom floor.
The Trudeau government is banning the sale of new gasoline and diesel-powered vehicles by 2035.
In about 10 years’ time, Canadians will not be allowed to buy a new vehicle powered by an internal combustion engine because the government will forbid it.
Canadians disagree with this.
The Canadian Taxpayers Federation released Leger polling showing 59 per cent of Canadians oppose the federal government’s ban on new gas and diesel vehicles.
Among those who are decided on the issue, 67 per cent of Canadians, and majorities in every demographic, oppose the Trudeau government’s ban.
Now let’s look under the hood.
Canada does not have the electricity to charge these battery-powered cars. The government hasn’t presented any plan to pay for the power plants, transmission lines and charging stations for these government-mandated vehicles.
That leaves a big question: How much will this cost taxpayers?
Canada’s vehicle transition could cost up to $300 billion by 2040 to expand the electrical grid, according to a report for Natural Resources Canada.
Let’s look at why this will cost so much.
The average Canadian household uses about 10,861 kWh in electricity per year. The average electric car uses about 4,500 kWh of energy per year.
The average household’s electricity use would jump by about 40 per cent if they bought one EV and charged it at home.
Canada is home to 24 million cars and light trucks that run on gasoline and diesel, according to Statistics Canada.
If all those vehicles were powered by electricity and batteries, that fleet would use about 108 million mWh of power every year.
For context, one large CANDU nuclear reactor at the Darlington nuclear plant in Ontario generates about 7,750,000 mWh of power per year.
Canada would require about 14 of these reactors to power all of those electric cars.
Building a large nuclear reactor costs about $12.5 billion.
That’s a price tag of about $175 billion just for all the power plants. The Natural Resources report estimates the transition to electric vehicles could cost up to $300 billion in total, when new charging stations and power lines are included.
Who would be paying that tab? Normal Canadians through higher taxes and power bills.
Canadians cannot afford the cost of these mandatory electric vehicles because they’re broke.
Canadians are broke largely because of high taxes and high inflation, both driven by the Trudeau government’s wasteful spending.
About half of Canadians say they are within $200 of not being able to make the minimum payments on their bills each month. That’s also known as barely scraping by.
Food banks are facing record demand, with a sharp increase in working families needing help. That means parents who are holding down jobs are still depending on donated jars of peanut butter to feed their kids.
Rubbing salt into the wound, the federal government also put taxpayers on the hook for about $30 billion to multinational corporations like Honda, Volkswagen, Stellantis and Northvolt to build EV battery factories.
The roadside sobriety test is complete, and the Trudeau government is blowing a fail on this policy.
Canadians are opposed to the Trudeau government banning the sale of new gasoline and diesel-powered vehicles.
Canada does not have the electricity to charge these battery-powered cars.
Canadians don’t have the money to build the new power plants, transmission lines and charging stations these vehicles would demand.
It’s time to tow this ban on new gas and diesel vehicles to the scrapyard.
Franco Terrazzano is the Federal Director and Kris Sims is the Alberta Director of the Canadian Taxpayers Federation
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