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Automotive

US EV Industry Shifts Back Into Reality Gear

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6 minute read

From the Daily Caller News Foundation

By DAVID BLACKMON

 

At the start of each year, I write a piece in which I make a set of predictions about what will happen in the energy space during the coming 12 months. One prediction I made in this year’s story focused on the likelihood of a big fallout in America’s EV manufacturing industry.

Citing Fisker and Rivian as examples, I questioned whether any of the pure-play electric vehicle companies based in the United States had the ability to compete with Tesla in that market.

I took some heat from viewers that same week after I predicted on a podcast that every one of the U.S. pure-play EV makers besides Tesla would be either in bankruptcy or teetering on the brink by the end of 2024. As things are turning out, my only regret there is that I did not predict they would all be in that state by the middle of 2024 instead of the end of the year.

This week, Fisker filed for bankruptcy, becoming the latest in a series of casualties in the growing falling-out in the EV sector. As The New York Times noted in its story on the matter, Fisker was one of a number of pure-play EV makers who were able to raise billions in startup funds from investors who got caught up in the EV frenzy during 2020 and 2021.

Several of those firms, like ProterraArrival, and Lordstown Motors already preceded Fisker down the bankruptcy path. Others, like Rivian, are right on the verge of taking the same plunge.

Lucid makes just one model, a luxury sedan, and is struggling to find buyers. It boasted about setting a new delivery “record” in the first quarter of this year, but a closer search reveals that was for only 1,967 units. The carmaker followed that announcement with another in May that it would lay off 400 employees in an apparent effort to conserve cash.

Oof.

EV truck maker Nikola, meanwhile, saw its stock price hit a record low this week amid ongoing softening in the US EV market. At the close of June 20 trading, Nikola’s price had dropped to just 33 cents per share. The stock collapse comes months after the company had delivered its first hydrogen fuel cell heavy truck during Q1, but that amounted to sales of just 42 units.

These and other pure-play EV makers are not in any way serious competition for Tesla.

Note also that Tesla is having major struggles of its own as the pace of EV adoption growth slows to a snail’s pace. The company laid off 10% of its workforce in May amid the ongoing slowing of the EV market. Tesla’s rollout of its radically designed Cybertruck has been plagued by recalls, technical issues and customer complaints, and the company’s overall Q1 2024 sales numbers fell dramatically from both Q4’s numbers and year-over-year.

But its decade-long head start on the competition, vertical integration of supply chains and diversification into other ventures give Tesla advantages these other pure-play EV companies do not and cannot enjoy. It remains uniquely situated among its peer group to survive the market contraction.

Traditional automakers like Ford and GM have been able to placate investors about their stunning losses in EV ventures (Ford somehow managed to lose $132,000 per unit sold in Q1 2024) by offsetting them against major profits from their traditional gas and diesel-powered car divisions. But even those companies have invoked an array of strategic shifts over the past six months in which they have delayed or cancelled planned new investments in their EV dreams.

What we are seeing here is a rapid shifting back to reality in the US auto industry. EVs always have been, are today, and will remain a niche product that can fill specific needs for a limited segment of our population, mainly the wealthy. The reason why the traditional, gas-and-diesel-powered auto segments at companies like Ford and GM remain wildly profitable is because that is where the real auto market remains.

No amount of Soviet-style central planning, industrial policy and command-and-control edicts and regulations coming down from Washington, D.C., are going to change that reality.

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.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

Featured image screenshot: (Screen Capture/PBS NewsHour)

Alberta

Premier Smith says Auto Insurance reforms mean lower premiums and better services for Alberta drivers

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Premier Smith says Auto Insurance reforms may still result in a publicly owned system

Better, faster, more affordable auto insurance

Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.

After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.

Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.

“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”

Danielle Smith, Premier

“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”

Nate Horner, President of Treasury Board and Minister of Finance

Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.

Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.

Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.

In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.

Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.

By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.

“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”

Nathan Neudorf, Minister of Affordability and Utilities

Quick facts

  • Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
  • A 2023 report by MNP shows
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Automotive

Bad ideology makes Canada’s EV investment a bad idea

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Dan McTeague

Written By

It doesn’t bode well for our country that our economic security rests on tariff exceptions to be negotiated by Liberal politicians who have spent the majority of Trump’s public life calling him a “threat to liberal democracy” and his supporters racists and fascists. Their hostility doesn’t lend itself to fruitful diplomacy. In any event, Trump’s EV rollback and aggressive tariffs will spell disaster for the Canadian EV sector.

What does Donald Trump’s resounding win in the recent U.S. election mean for Canada? Unfortunately, there doesn’t seem to have been much thought about the answer to this question in Ottawa, because the vast majority of our political and pundit class expected his opponent to be victorious. Suddenly they’re all having to process this unwelcome intrusion of reality into their narrow mental picture.

Well, what does it mean?

It is early days, and it will take some time to sift through the various policy commitments of the incoming Trump Administration to unpack the Canadian angle. But one thing we do know is that a Trump presidency will be no friend to the electric vehicle industry.

A Harris administration would have been. But, Trump spent much of his campaign slamming EV subsidies and mandates, pledging at the Republican National Convention in July that he will “end the electric vehicle mandate on day one.”

This line was so effective, especially in must-win Michigan, with its hundreds of thousands of autoworkers, that Kamala Harris was forced to assure everyone who listened that the U.S. has no EV mandate, and that she has no intention of introducing one.

Of course, this wasn’t strictly true.

First, the Biden Administration, of which Harris was a part, issued an Executive Order with the explicit goal of a “50% Electric Vehicle Sales Share” by 2030. The Biden-Harris Administration (to use their own formulation) instructed their Environmental Protection Agency (EPA) to introduce increasingly stringent tailpipe emission regulations on cars and light trucks with an eye towards pushing automakers to manufacture and sell more electric and hybrid vehicles.

Their EPA also issued a waiver which allows California to enact auto emissions regulations that are tougher than the federal government’s, which functions as a kind of back-door EV mandate nationally. After all, auto companies aren’t going to manufacture one set of vehicles for California, the most populous state, and another for the rest of the country.

And as for intentions, though the Harris camp consistently held that her prior policy positions shouldn’t be held against her, it’s hard to forget that as senator she’d co-sponsored the Zero-Emission Vehicles Act, which would have mandated that all new vehicles sold in the U.S. be “zero emission” by 2040. During her failed 2020 presidential campaign, Harris accelerated that proposed timeline, saying that the auto market should be all-electric by 2035.

In other words, she seemed pretty fond of the EV policies which Justin Trudeau and Steven Guilbeault have foisted upon Canada.

For Trump, all of these policies can be filed under “green new scam” climate policies, which stifle American resource development and endanger national prosperity. Now that he’s retaken the White House, it is expected that he will issue his own executive orders to the EPA, rescinding Biden’s tailpipe instructions and scrapping their waiver for California. And though he will be hindered somewhat by Congress, he’s likely to do everything in his power to roll back the EV subsidies contained in the (terribly named) Inflation Reduction Act and lobby for changes limiting which EVs qualify for tax credits, and how much.

All of this will be devastating for the EV industry, which is utterly reliant on the carrots and sticks of subsidies and mandates. And it’s particularly bad news for the Trudeau government (and Doug Ford’s government in Ontario), which have gone all-in on EVs, investing billions of taxpayer dollars to convince automakers to build their EVs and batteries here.

Remember that “vehicles are the second largest Canadian export by value, at $51 billion in 2023 of which 93% was exported to the U.S.,” according to the Canadian Vehicle Manufacturers Association, and “Auto is Ontario’s top export at 28.9% of all exports (2023).”

Canada’s EV subsidies were pitched as an “investment” in an evolving auto market, but that assumes that those pre-existing lines of trade will remain essentially unchanged. If American EV demand collapses, or significantly contracts without mandates or tax incentives, we’ll be up the river without a paddle.

And that will be true, even if the U.S. EV market proves more resilient than I expect it to. That is because of Trump’s commitment to “Making America Great Again” by boosting American manufacturing and the jobs it provides. He campaigned on a blanket tariff of 10 percent on all foreign imports, with no exceptions mentioned. This would have a massive impact on Canada, since the U.S. is our largest trading partner.

Though Justin Trudeau and Chrystia Freeland have been saying to everyone who will listen how excited they are to work with the Trump Administration again, and “Canada will be fine,” it doesn’t bode well for our country that our economic security rests on tariff exceptions to be negotiated by Liberal politicians who have spent the majority of Trump’s public life calling him a “threat to liberal democracy” and his supporters racists and fascists. Their hostility doesn’t lend itself to fruitful diplomacy.

In any event, Trump’s EV rollback and aggressive tariffs will spell disaster for the Canadian EV sector.

The optimism that existed under the Biden administration that Canada could significantly increase its export capacity to the USA is going down the drain. The hope that “Canada could reestablish its export sector as a key driver of growth by positioning itself as a leader in electric vehicle and battery manufacturing, along with other areas in cleantech,” in the words of an RBC report, is swiftly fading. It seems more likely now that Canada will be left holding the bag on a dying industry in which we’re invested heavily.

The Trudeau Liberals’ aggressive push, driven by ideology and not market forces, to force Electric Vehicles on everyone is already backfiring on the Canadian taxpayer. Pierre Poilievre must take note — EV mandates and subsidies are bad for our country, and as Trump has demonstrated, they’re not a winning policy. He should act accordingly.

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