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Automotive

The EV ‘Bloodbath’ Arrives Early

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From the Daily Caller News Foundation

By David Blackmon

 

Ever since March 16, when presidential candidate Donald Trump created a controversy by predicting President Joe Biden’s efforts to force Americans to convert their lives to electric-vehicle (EV) lifestyles would end in a “bloodbath” for the U.S. auto industry, the industry’s own disastrous results have consistently proven him accurate.

The latest example came this week when Ford Motor Company reported that it had somehow managed to lose $132,000 per unit sold during Q1 2024 in its Model e EV division. The disastrous first quarter results follow the equally disastrous results for 2023, when the company said it lost $4.7 billion in Model e for the full 12-month period.

While the company has remained profitable overall thanks to strong demand for its legacy internal combustion SUV, pickup, and heavy vehicle models, the string of major losses in its EV line led the company to announce a shift in strategic vision in early April. Ford CEO Jim Farley said then that the company would delay the introduction of additional planned all-electric models and scale back production of current models like the F-150 Lightning pickup while refocusing efforts on introducing new hybrid models across its business line.

General Motors reported it had good overall Q1 results, but they were based on strong sales of its gas-powered SUV and truck models, not its EVs. GM is so gun-shy about reporting EV-specific results that it doesn’t break them out in its quarterly reports, so there is no way of knowing what the real bottom line amounts to from that part of the business. This is possibly a practice Ford should consider adopting.

After reporting its own disappointing Q1 results in which adjusted earnings collapsed by 48% and deliveries dropped by 20% from the previous quarter, Tesla announced it is laying off 10 percent of its global workforce, including 2,688 employees at its Austin plant, where its vaunted Cybertruck is manufactured. Since its introduction in November, the Cybertruck has been beset by buyer complaints ranging from breakdowns within minutes after taking delivery, to its $3,000 camping tent feature failing to deploy, to an incident in which one buyer complained his vehicle shut down for 5 hours after he failed to put the truck in “carwash mode” before running it through a local car wash.

Meanwhile, international auto rental company Hertz is now fire selling its own fleet of Teslas and other EV models in its efforts to salvage a little final value from what is turning out to be a disastrous EV gamble. In a giant fit of green virtue-signaling, the company invested whole hog into the Biden subsidy program in 2021 with a mass purchase of as many as 100,000 Teslas and 50,000 Polestar models, only to find that customer demand for renting electric cars was as tepid as demand to buy them outright. For its troubles, Hertz reported it had lost $392 million during Q1, attributing $195 million of the loss to its EV struggles. Hertz’s share price plummeted by about 20% on April 25, and was down by 55% for the year.

If all this financial carnage does not yet constitute a “bloodbath” for the U.S. EV sector, it is difficult to imagine what would. But wait: It really isn’t all that hard to imagine at all, is it? When he used that term back in March, Trump was referring not just to the ruinous Biden subsidy program, but also to plans by China to establish an EV-manufacturing beachhead in Mexico, from which it would be able to flood the U.S. market with its cheap but high-quality electric models. That would definitely cause an already disastrous domestic EV market to get even worse, wouldn’t it?

The bottom line here is that it is becoming obvious even to ardent EV fans that US consumer demand for EVs has reached a peak long before the industry and government expected it would.

It’s a bit of a perfect storm, one that rent-seeking company executives and obliging policymakers brought upon themselves. Given that this outcome was highly predictable, with so many warning that it was in fact inevitable, a reckoning from investors and corporate boards and voters will soon come due. It could become a bloodbath of its own, and perhaps it should.

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.

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Automotive

Biden-Harris Admin’s EV Coercion Campaign Hasn’t Really Gone All That Well

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From the Daily Caller News Foundation 

 

By David Blackmon

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.

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Automotive

Trudeau’s new vehicle ban is a non starter

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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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