Connect with us

Automotive

Canada should get out of EVs before bubble bursts

Published

4 minute read

From the Fraser Institute

By Kenneth P. Green

A recent article in the The Daily Mail asks, “Is the global EV bubble bursting?” The article then answers the question by looking at electric vehicle (EV) sales figures for six major manufacturers. Sales are down across the industry—Tesla, down 20 per cent in the first quarter this year compared to the same time last year; China’s EV manufacturer, BYD, down 43 per cent; GM down 20.5 per cent; and Volkswagen down 3.3 per cent. Honda saw an anemic uptick of 0.2 per cent. Only BMW experienced a substantial increase in EV sales, up 41 per cent. Not surprisingly, share prices have also dropped across the industry.

An Associated Press article shines more light on EV sales, which in the United States grew only 3.3 per cent in the first quarter of this year, a tiny fraction of the 47 per cent growth that fuelled record sales. The EV share of total U.S. sales fell to 7.15 per cent in the first quarter, down from 7.6 per cent last year. The slowdown, led by Tesla, “confirms automakers’ fears that they moved too quickly to pursue EV buyers.”

In other EV news, Ford has announced it will cut back on EV battery orders, signalling that the company anticipates less EV sales in the future. That would seem to be a good thing for Ford shareholders, as the company also admitted it’s lost $100,000 on every EV it sold in the first quarter of 2024. Ford expects to lose some $5.5 billion from EV sales this year.

So what does it all mean?

Countries that adopted EV sales mandates earlier than Canada are already finding their EV sales targets moving out of reach. In the United Kingdom, which has a 2024 EV sales target of 22 per cent, according to the Society of Motor Manufacturers and Traders, the share of the new car market held by pure battery EVs will be only 19.8 per cent by the end of 2024. The U.K.’s EV sales targets, like Canada’s, require 100 per cent of new vehicle sales to be electric by 2035.

And the rest of Europe is also falling short of EV transition mandates. Forbes reports that current sales of EVs in Europe have flattened at just over 2 million a year, essentially because the continent has run out of early adopters and corporate purchases. Forbes also observes that “other leading market forecasters still expect sales to explode and reach close to 9 million in Europe by 2030,” but that this rate of growth won’t be enough to let the EU and Britain reach target goals of EVs achieving close to an 80 per cent market share.

Meanwhile, the Trudeau government clings to its mandated EV transition, gambling with taxpayer money hand over fist as it pours more than $44 billion into various EV and battery manufacturing operations. And as Andrew Coyne observes in the Globe and Mail, it’s worse than that, as “all of that money will be borrowed, interest costs should also be included. The PBO estimates these at $6.6-billion. All told, that’s $50-billion of other people’s money. For three factories.”

Ottawa’s EV transition policy is deeply misguided, and already shows signs of incipient failure. And likely more failed taxpayer “investments” lie ahead. A smart government would tap the brakes on its EV transition policy. The bubble is growing.

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

Automotive

Trump warns U.S. automakers: Do not raise prices in response to tariffs

Published on

MXM logo MxM News

Quick Hit:

Former President Donald Trump warned automakers not to raise car prices in response to newly imposed tariffs, arguing that the move would ultimately benefit the industry by strengthening American manufacturing. However, automakers are signaling that price increases may be unavoidable.

Key Details:

  • Trump told auto executives on a recent call that his administration would look unfavorably on price hikes due to tariffs.
  • A 25% tariff on imported vehicles and parts is set to take effect on April 2, likely driving up costs for U.S. automakers.
  • Industry analysts predict vehicle prices could rise 11% to 12% in response, despite Trump’s insistence that tariffs will benefit American manufacturing.

Diving Deeper:

In a conference call with leading automakers earlier this month, former President Donald Trump issued a stern warning: do not use his new tariffs as an excuse to raise car prices. While Trump presented the tariffs as a boon for American manufacturing, industry leaders remain unconvinced, arguing that the financial burden will inevitably lead to higher costs for consumers.

Trump’s administration is pressing ahead with a 25% tariff on all imported vehicles and parts, set to take effect on April 2. The move is aimed at reshaping trade dynamics in the auto industry, encouraging domestic manufacturing, and reversing what Trump calls the damaging effects of President Joe Biden’s electric vehicle mandates. Despite this, automakers say that rising costs on foreign parts—which many depend on—will leave them little choice but to pass expenses onto consumers.

“You’re going to see prices going down, but going to go down specifically because they’re going to buy what we’re doing, incentivizing companies to—and even countries—companies to come into America,” Trump stated at a recent event, reinforcing his stance that the tariffs will ultimately lower costs in the long run.

However, industry insiders are pushing back, warning that a rapid shift to domestic production is unrealistic. “Tariffs, at any level, cannot be offset or absorbed,” said Ray Scott, CEO of Lear, a major automotive parts supplier. His concern reflects broader anxieties within the industry, as automakers calculate the financial strain of the tariffs. Analysts at Morgan Stanley estimate that vehicle prices could increase between 11% and 12% in the coming months as the new tariffs take effect.

Automakers have been bracing for the fallout. Detroit’s major manufacturers and industry suppliers have voiced their concerns, emphasizing that transitioning supply chains and manufacturing operations back to the U.S. will take years. Meanwhile, auto retailers have stocked up on inventory, temporarily shielding consumers from price hikes. But once that supply runs low—likely by May—the full impact of the tariffs could hit.

Within the Trump administration, inflation remains a pressing concern, though Trump himself rarely discusses it publicly. His economic team is aware of the potential for tariffs to drive up costs, yet the administration’s stance remains firm: automakers must adapt without raising prices. It remains unclear, however, what actions Trump might take should automakers defy his warning.

The auto industry isn’t alone in its concerns. Executives across multiple sectors, from oil and gas to food manufacturing, have been lobbying against major tariffs, arguing that they will inevitably result in higher prices for American consumers. While Trump has largely dismissed these warnings, some analysts suggest that public dissatisfaction with rising costs played a key role in shaping the outcome of the 2024 election.

With the tariffs set to take effect in just weeks, automakers are left grappling with a difficult reality: absorb billions in new costs or risk the ire of a White House determined to remake America’s trade policies.

Continue Reading

Automotive

Trump announces 25% tariff on foreign automobiles as reciprocal tariffs loom

Published on

From The Center Square

By 

President Donald Trump announced a permanent 25% tariff on automobiles made in other countries that will go into effect on April 2.

Trump made the announcement Wednesday in the Oval Office. He also hinted that the reciprocal tariffs he plans to announce on April 2 could be more lenient, suggesting the tariffs would be less than fully reciprocal.

“What we’re going to be doing is a 25% tariff on all cars not made in the U.S.,” the president said.

Asked if any changes could avert the auto tariffs, Trump said they would be “permanent.”

“This will continue to spur growth like you haven’t seen before,” Trump said.

Trump said the tariffs will be good news for auto companies that already build products in the U.S. He also said carmakers that don’t build in the U.S. are looking to do so.

“We’re signing an executive order today that’s going to lead to tremendous growth in the automobile industry,” Trump said.

The White House said it expects the auto tariffs on cars and light-duty trucks will generate up to $100 billion in federal revenue. Trump said eventually he hopes to bring in $600 billion to $1 trillion in tariff revenue in the next year or two.

Trump also said the tariffs would lead to a manufacturing boom in the U.S., with auto companies building new plants, expanding existing plants and adding jobs.

Trump also urged House Speaker Mike Johnson to approve a measure that would allow car buyers to deduct the interest on loans for cars that are made in America. Trump said that such a plan would make cars nearly free for buyers.

“So when you get a loan to buy a car … I think it’s going to pay for itself, I don’t think there’s any cost,” he said.

Trump also said the reciprocal tariffs he plans to unveil on April 2 would be fair.

“We’re going to be very nice actually,” he said. “It’ll be, in many cases, less than the tariff they’ve been charging us for decades.”

European Commission President Ursula von der Leyen said tariffs would hurt businesses and consumers.

“I deeply regret the U.S. decision to impose tariffs on European automotive exports,” she said. “Tariffs are taxes – bad for businesses, worse for consumers, in the U.S. and the EU.”

Business groups, including the U.S. Chamber of Commerce and American Farm Bureau Federation, have urged Trump to back off tariff threats.

Trump has promised that his tariffs would shift the tax burden away from Americans and onto foreign countries, but tariffs are generally paid by the people who import the products. Those importers then have a choice: absorb the loss or pass it on to consumers through higher prices. He also promised tariffs would make America “rich as hell.” Trump has also used tariffs as a negotiating tactic to tighten border security.

Tariffs are taxes charged on imported products. The company importing the products pays the tariffs and can either try to absorb the loss or pass the additional costs on to consumers.

Continue Reading

Trending

X