Automotive
Electric vehicle sales mandates doomed to fail
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From the Fraser Institute
By Julio Mejía and Elmira Aliakbari
Nearly 30 per cent of EV owners worldwide intend to switch back to internal combustion engine (ICE) vehicles.
According to new data released this week, electric vehicle (EV) sales in Europe plummeted by 36 per cent in Europe including a 69 per cent drop in Germany, the continent’s largest auto market. And according to a recent survey by McKinsey & Company, nearly 30 per cent of EV owners worldwide intend to switch back to internal combustion engine (ICE) vehicles. Clearly, in light of growing consumer hesitation and a global slowdown in EV sales, the ambitious timelines set by governments for the EV transition are increasingly at odds with market realities.
In Canada, the Trudeau government has mandated that all new passenger vehicles and light trucks must be zero-emission by 2035, with interim targets of 20 per cent by 2026 and 60 per cent by 2030. But only 8.1 per cent (139,521) of the 1.7 million new vehicles sold in Canada in 2023 were electric, according to Statistics Canada. And it takes an average of 55 days to sell an EV in Canada—33 days longer than in 2023 and four days more than a gasoline-powered car. To achieve the Trudeau government’s 2026 target, EV sales would need to more than double in just two years and increase more than sevenfold by 2030 (assuming no change in total vehicle sales). Such rapid growth within a short timeframe is questionable at best.
It’s a similar story in the United States where the Biden administration has mandated that nearly 60 per cent of new vehicles sold must be electric by 2032 even though demand in 2024 has been lighter than expected and nearly half of American EV owners say they’re likely to switch back to ICEs. In Europe, the United Kingdom and the European Union plan to ban the sale of new ICE vehicles by 2035 yet, as previously noted, EV sales are plummeting.
Some automakers have already responded to the realities of the EV market. In April, Tesla laid off 10 per cent of its global workforce. Ford announced it will cancel the production of an electric SUV, delay the production of an electric pickup truck, and postpone the start of EV production at its Oakville, Ontario plant by two years. General Motors abandoned its goal of producing 400,000 EVs by mid-2024 due to lower-than-expected sales and revealed in August it would delay the start of production at its battery plant in Indiana by about one year, pushing the timeline to 2027.
The EV transition also faces another major hurdle—a shortage of minerals for EV batteries that can only be addressed by opening a massive number of new mines in record time. According to a 2023 study, to meet international EV adoption mandates by 2030, the world would need 50 new lithium mines, 60 new nickel mines, 17 new cobalt mines, 50 new mines for cathode production, 40 new mines for anode materials, 90 new mines for minerals needed to produce battery cells, and 81 new mines for the body and motors of the EVs themselves, for a total of 388 new mines worldwide. For context, in 2021 there were only 340 metal mines operating in Canada and the U.S. combined.
Identifying, planning and constructing a mine is a slow process. For instance, lithium production timelines range from six to nine years and for nickel 13 to 18 years—both of these elements remain critical for EV batteries. Clearly, today’s aggressive government timelines for EV adoption clash with the realities of mineral mining.
The facts are undeniable. Governments can’t dictate consumer choices via mandate. The fantastic EV adoption timelines of the Trudeau government and other governments in the western world are increasingly out of touch with the realities of production and market demand. These governments have overestimated their ability to shape the auto industry, which is why EV mandates will fail.
Authors:
Automotive
Nissan, Honda scrap $60B merger talks amid growing tensions
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Quick Hit:
Nissan is reportedly abandoning merger talks with Honda, scrapping a $60 billion deal that would have created the world’s third-largest automaker. The collapse raises questions about Nissan’s turnaround strategy as it faces challenges from electric vehicle competitors and potential U.S. tariffs.
Key Details:
- Nissan shares dropped over 4% following the news, while Honda’s stock surged more than 8%, signaling investor relief.
- Honda reportedly proposed making Nissan a subsidiary, a move Nissan rejected as it was initially framed as a merger of equals.
- Nissan is struggling with financial challenges and the transition to EVs, still reeling from the 2018 scandal involving former chairman Carlos Ghosn.
Diving Deeper:
Merger talks between Nissan and Honda have collapsed, according to sources, after months of negotiations to form an auto giant capable of competing with Chinese EV makers like BYD. The proposed deal, valued at over $60 billion, would have created the world’s third-largest automaker. However, differences in strategy and control ultimately derailed the discussions.
Reports indicate that Honda, Japan’s second-largest automaker, wanted Nissan to become a subsidiary rather than an equal merger partner. Nissan balked at the idea, leading to the collapse of negotiations. Honda’s market valuation of approximately $51.9 billion dwarfs Nissan’s, which may have fueled concerns about control. The failure of talks sent Nissan’s stock tumbling more than 4% in Tokyo, while Honda’s shares rose over 8%, reflecting investor confidence in Honda’s independent strategy.
Nissan, already in the midst of a turnaround plan involving 9,000 job cuts and a 20% reduction in global capacity, now faces mounting pressure to restructure on its own. Analysts warn that the failed merger raises uncertainty about Nissan’s ability to compete in an industry rapidly shifting toward EVs. “Investors may get concerned about Nissan’s future [and] turnaround,” Morningstar analyst Vincent Sun said.
Complicating matters further, Nissan faces heightened risks from U.S. tariffs under President Donald Trump’s trade policies. Potential tariffs on vehicles manufactured in Mexico could hit Nissan harder than competitors like Honda and Toyota. The stalled deal also impacts Nissan’s existing alliance with Renault, which had expressed openness to the merger. Renault holds a 36% stake in Nissan, including 18.7% through a French trust.
While both Nissan and Honda have stated they will finalize a direction by mid-February, the collapse of this deal signals deep divisions in Japan’s auto industry. With Nissan’s financial struggles and the growing dominance of Chinese EV makers, the company must now navigate an increasingly challenging market without external support.
Automotive
Trudeau must repeal the EV mandate
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Last Monday, Transport Canada released a bombshell statement, announcing that the Trudeau government’s program granting a $5,000 rebate to Canadians purchasing an Electric Vehicle (EV) had run out of money and would be discontinued, “effective immediately.” This followed a prior announcement from the government of Quebec that they would be suspending their own subsidy, which had amounted to $7,000 per EV purchased.
This is, of course, a game changer for an industry which the Trudeau government (as well as the Ford government in Ontario) has invested billions of taxpayer dollars in. That’s because, no matter the country, the EV industry is utterly dependent upon a system of carrots and sticks from the government, in the form of subsidies and mandates.
EVs have remained notably more expensive than traditional Internal Combustion Engine (ICE) vehicles, even with those government incentive programs. Without them the purchase of EVs becomes impossible for all but the wealthiest Canadians.
Which is fine. Let the rich people have their toys, if they want them. Though if they justify the expense by saying that they’re saving the planet by it, I may be tempted to deflate them a bit by pointing out that EVs are in no way appreciably better for the environment than ICE vehicles, how all the lithium, nickel, cobalt, manganese, aluminum, copper, etc, contained in just one single EV battery requires displacing about 500,000 lbs of earth. Mining these materials often takes place in poorer countries with substandard environmental regulations.
Moreover, the weight of those batteries means that EVs burn through tires more quickly than gas-and-diesel driven vehicles, and wear down roads faster as well, which among other issues leads to an increase in particulate matter in the air, what in the old days we referred to as “pollution.”
That is a potential issue, but one that is mitigated by the fact that EVs make up a small minority of cars on the road. Regular people have proved unwilling to drive them, and that will be even more true now that the consumer subsidies have disappeared.
Of course, it will be an issue if the Trudeau Liberals get their way. You see, Electric Vehicles are one of the main arenas in their ongoing battle with reality. And so even with the end of their consumer subsidies, they remain committed to their mandates requiring every new vehicle purchased in Canada to be electric by 2035, now just a decade away!
They’ve done away with the carrots, and they’re hoping to keep this plan moving with sticks alone.
This is, in a word, madness.
As I’ve said before, the Electric Vehicle mandate is a terrible policy, and one which should be repealed immediately. Canada is about the worst place to attempt this particular experiment with social engineering. It is famously cold, and EVs are famously bad in the cold, charging much slower in frigid temperatures and struggling to hold a charge. Which itself is a major issue, because our country is also enormous and spread out, meaning that most Canadians have to do a great deal of driving to get from “Point A” to “Point B.”
Canada is sorely lacking in the infrastructure which would be required to keep EVs on the road. We currently have less than 30,000 public charging stations nationwide, which is more than 400,000 short of Natural Resources Canada’s projection of what we will need to support the mandated total EV transition.
Our electrical grid is already stressed, without the addition of tens of millions of battery powered vehicles being plugged in every night over a very short time. And of course, irony of ironies, this transition is supposed to take place while our activist government is pushing us on to less reliable energy sources, like wind and solar!
Plus, as I’ve pointed out before, the economic case for EVs, such as it was, has been completely upended by the recent U.S. election. Donald Trump’s victory means that our neighbors to the south are in no immediate danger of being forced to ditch gas-and-diesel driven cars. Consequently, the pitch by the Trudeau and Ford governments that Canada was putting itself at the center of an evolving auto market has fallen flat. In reality, they’ve shackled us to a corpse.
So on behalf of my fellow Canadians I say, “Thank you,” to the government for no longer burning our tax dollars on this particular subsidy. But that isn’t even half the battle. It must be followed through with an even bigger next step.
They must repeal the EV mandate.
Dan McTeague is President of Canadians for Affordable Energy.
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