Automotive
Federal government EV mandates destined to fail
From the Fraser Institute
By Julio Mejía, Elmira Aliakbari, and Jason Clemens
According to reports, the Trudeau government will soon unveil regulations meant to phaseout the sale of new internal combustion vehicles and compel Canadians to buy zero-emission vehicles. The Biden administration is also mandating a similar shift. But these initiatives overlook two realities—consumer preferences are not easily swayed by top-down government directives, and the unrealistic timeline for minerals crucial for electric vehicles (EV) raises serious doubts about the likelihood of success.
Specifically, according to the Trudeau government’s new regulations, all new passenger vehicles and light trucks sold in Canada must be electric zero-emission vehicles by 2035, with interim targets of 20 per cent by 2026 and 60 per cent by 2030. And the Biden administration has mandated that two-thirds of new vehicles sold in the United States must be electric by 2032.
And yet, despite multibillion-dollar subsidies and governmental efforts to promote EV adoption, consumers are not embracing them. In Canada, only 6.5 per cent (98,589) of the 1.5 million new vehicles sold in 2022 were electric, according to Statistics Canada. Achieving the Trudeau government’s 2026 target would require a rapid increase in EV sales to more than 300,000 in coming years and more than 900,000 in 2030 (assuming no change in total vehicle sales). Such rapid growth in a short timeframe is at best questionable.
South of the border, data from the U.S. Department of Energy indicates that, out of 283.5 million registered vehicles in 2022, EVs comprised a mere 0.9 per cent of total vehicle registrations. In response, automakers are making strategic business decisions. Ford, for example, is delaying the construction of $12 billion worth of EV production facilities, citing a lack of consumer demand. Similarly, General Motors is abandoning the goal of producing 400,000 EVs by mid-2024 due to lower-than-expected sales.
But even in the unlikely scenario of sudden shift in consumer preferences, production-side barriers loom large. For example, the extraction (i.e. mining) of lithium, nickel, manganese, cadmium, graphite, zinc and other rare-earth elements necessary for EVs requires a rapid and marked expansion.
According to a recent study, to meet international EV adoption mandates (including mandates in Canada and the U.S.) 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 battery cells, and 81 new mines for EV bodies and motors, 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.
And historically, the development of mining and refining facilities has been slow. Production timelines range from six to nine years for lithium and 13 to 18 years for nickel—two elements critical for EV batteries. The aggressive government timelines for EV adoption clash with historically sluggish metal and mineral production, raising the risk of EV manufacturers falling short of needed minerals.
Not only are consumers resistant to top-down regulations, but the ambitious short-term EV adoption mandates in Canada and the U.S. are on a collision course with the reality of metal and mineral production capacity. Simply put, it’s not at all clear that sufficient capacities will be available to produce enough EVs to achieve the mandates being imposed on Canadians and Americans, nor is it clear consumers in either country are willing to spend their own money to purchase them.
Authors:
From the Daily Caller News Foundation
Toyota’s North American Chief Operating Officer (COO) Jack Hollis criticized U.S. policies promoting electric vehicle adoption (EV) on Friday, according to Bloomberg.
The Toyota COO said that electric vehicle policies are “de facto mandates” that are not in sync with consumer demand, according to Bloomberg. Hollis also said that EV mandates such as those in California are impossible to meet, according to CNBC.
“The whole EV ecosystem is ahead of the consumer,” Hollis told reporters Friday, “It’s not in alignment with consumers. It’s just not.”
The Biden-Harris administration has introduced various EV-related policies as part of President Joe Biden’s climate agenda, including introducing a tailpipe emissions rule in March that would require about 67% of all light-duty vehicles sold after 2032 to be EVs or hybrids. Biden has been leading a push to build half a million public EV chargers nationwide by 2030, that has so far been met with various slowdowns.
Various American automakers have backpedaled on EV goals despite the current administration funneling billions of dollars in subsidies as part of its EV agenda. The California Air Resources Board’s “Advanced Clean Cars II” regulations require that 35% of 2026 model-year vehicles be zero-emission.
“I have not seen a forecast by anyone … government or private, anywhere that has told us that that number is achievable. At this point, it looks impossible,” Hollis said of the zero-emission regulations. “Demand isn’t there. It’s going to limit a customer’s choice of the vehicles they want.”
Many automakers have experienced issues with EV sales, including used EV models experiencing drastic price cuts due to slackening consumer demand. Ford Motor Company announced in October that it lost an additional $1.2 billion on EVs in the third quarter and announced in September that it would offer free EV chargers and home installations to incentivize customers.
Toyota did not immediately respond to a request for comment from the Daily Caller News Foundation.
(Featured Image Media Credit: Flickr/Ivan Radic)
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.
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