Electric vehicles are overhyped

In the automotive world, there's a madcap scramble on to produce electric vehicles (E.V.s).  It's not just Elon Musk's Telsa.  All the major car companies are on board with the endeavor.  The industry as a whole is said to have plowed some $300 billion of capital into building E.V.s, with more money to come.  This is all due to two interrelated factors, neither of which, by the way, is market-driven.  The first is the hysteria over alleged man-made global warming.  The second is government mandates and inducements.

Inducements come in the form of tax rebates.  This handout, which started out at $7,500 for a buyer of an E.V., later dropped in half and will soon be $1,875.  The tax rebates were and still are vital for E.V.s.  A report from McKinsey management consultants says electric cars cost about $12,000 more to produce than they can get in the marketplace.  Even with tax rebates, E.V.s are a losing proposition for the auto industry.  So why are E.V.s being manufactured?

There's the hysteria over global warming.  It has affected auto executives (although not necessarily their customers).  Groupthink drives these decision-makers to be politically correct and "go Green," whether it makes sense or not.  Government mandates play an even bigger role, however. 

There are no government requirements stipulating that X percent of a car company's fleet of vehicles must be E.V.s.  Instead, Washington has done that indirectly by nudging the companies to produce E.V.s by means of the fuel-mileage mandates.  The government mandate is called the Corporate Average Fuel Economy (CAFE) standards.  It does not require every model a company manufactures to meet the mileage standard.  It applies to the harmonic mean of all models the company sells.

In 2012, then-president Obama finalized an ambitious fuel economy standard that would require cars and light trucks to get 54.5 miles per gallon by 2025.  The Trump administration wants to lessen this, announcing its desire to hold the mpg requirement at 2020 levels, around 37 mpg.  This is being challenged.  In any event, to meet the Obama fuel-mileage mandate, car companies have to produce a certain number of highly fuel-efficient cars to offset their higher-mileage models.  And that's where E.V.s come in.  Basically, the companies are subsidizing their losing E.V. lines with profits from their traditional products to satisfy the government fuel-mileage requirements.  

Here Elon Musk is at a great disadvantage.  Tesla produces only E.V.s.  It doesn't have a profitable line of conventional vehicles to cover the losses of its plug-ins.  For now, investors are subsidizing Tesla's E.V.  How much longer they'll pour money in is anyone's guess.

Not to be deterred, Toyota says it wants all its cars to be "zero emissions" by 2050.  General Motors announced that it plans someday to be an all-electric, zero-emissions car company.  And then there's Europe.  The British and French governments are committed to outlawing the sale of gasoline- and diesel-powered cars by 2040.  And Volvo pledges to sell only hybrids and electric cars beginning in 2019. 

The car companies say their E.V.s are zero-emissions.  But that refers only to what comes out the tailpipe of the car.  In reality, the pollution associated with driving an E.V. merely transfers the generation of pollutants from the car to the power plant, which provides the electricity for recharging it.  Although it seems to evade many environmentalists, the fact is that every time an E.V. has its bank of batteries recharged, CO2 is generated somewhere else. 

How much CO2?  Investor's Business Daily gives a good answer to that question.  Citing a study by the University of Michigan's Transportation Research Institute, IBD says:

The report — authored by Michael Sivak and Brandon Schoellte — notes that an eclectic car recharged by a coal-fired plant produced as much CO2 as a gasoline-powered car that gets 29 miles per gallon.  For context, the average mpg of all cars, SUVs, vans and light trucks sold in the U.S. over the past year is 25.2 mpg.  A plug-in recharged by a natural gas–powered plant is like driving a car that gets 58 miles per gallon.

Solar, wind, and geothermal do far better on this score, but they generate a small portion of the nation's electricity.

According to the U.S. Energy Information Agency, the amount from the various sources of electricity generation in the U.S. for 2018 is as follows:

Various fossil fuels — 63.5%
Nuclear — 19.3%
Total Renewable — 17.1%

Given this mix, the U of M researchers estimate that the average plug-in produces as much CO2 as a gasoline-powered car that gets 55.4 mpg.  Looking worldwide, the researchers found that CO2 emissions from E.V.s are equal to a 51.5-mpg conventional car.

There are other pollution concerns regarding E.V.s.  The Union of Concerned Scientists found that, depending on the type of plug-in being built, manufacturing an E.V. generates between 15 and 68 percent more CO2 emissions than a conventional gasoline-powered car.  The main reason for this is that producing the batteries is extremely energy-intensive.  Worse yet, most lithium batteries are made in China, which relies heavily on coal for electricity and has little concern for other pollution issues related to manufacturing.  And the question has yet to be resolved of what to do with the all the spent lithium batteries.  Probably recycle them, but at what cost in dollars and energy?

So although E.V.s can result in a significant reduction in CO2 emissions over gasoline and diesel-powered cars, they are far from zero emissions.  And even then, so what?

Electric cars were never going to make a dent in global carbon-dioxide emissions — passenger cars aren't that big part of the alleged problem.  To make any dent at all, the electricity they run on can't be from burning coal.  After a decade's boom, wind and solar investments are predictably leveling off in line with the inability of these intermittent sources to meet non-intermittent electricity demand.  Coal is again the fuel of choice for up-and-coming countries with the fastest growing emissions[.]

E.V.s are not a total fraud, but one can state without equivocation that they're not the cat's meow their proponents claim.  E.V.s might be the future, say, in Europe, where the governments could outright ban gasoline and diesel cars.  In such a case, the consumer will have no choice.  But in the U.S., without continued taxpayer subsidies for E.V.s and onerous government fuel-mileage mandates, expect conventional vehicles to be with us for a long, long time.

In the automotive world, there's a madcap scramble on to produce electric vehicles (E.V.s).  It's not just Elon Musk's Telsa.  All the major car companies are on board with the endeavor.  The industry as a whole is said to have plowed some $300 billion of capital into building E.V.s, with more money to come.  This is all due to two interrelated factors, neither of which, by the way, is market-driven.  The first is the hysteria over alleged man-made global warming.  The second is government mandates and inducements.

Inducements come in the form of tax rebates.  This handout, which started out at $7,500 for a buyer of an E.V., later dropped in half and will soon be $1,875.  The tax rebates were and still are vital for E.V.s.  A report from McKinsey management consultants says electric cars cost about $12,000 more to produce than they can get in the marketplace.  Even with tax rebates, E.V.s are a losing proposition for the auto industry.  So why are E.V.s being manufactured?

There's the hysteria over global warming.  It has affected auto executives (although not necessarily their customers).  Groupthink drives these decision-makers to be politically correct and "go Green," whether it makes sense or not.  Government mandates play an even bigger role, however. 

There are no government requirements stipulating that X percent of a car company's fleet of vehicles must be E.V.s.  Instead, Washington has done that indirectly by nudging the companies to produce E.V.s by means of the fuel-mileage mandates.  The government mandate is called the Corporate Average Fuel Economy (CAFE) standards.  It does not require every model a company manufactures to meet the mileage standard.  It applies to the harmonic mean of all models the company sells.

In 2012, then-president Obama finalized an ambitious fuel economy standard that would require cars and light trucks to get 54.5 miles per gallon by 2025.  The Trump administration wants to lessen this, announcing its desire to hold the mpg requirement at 2020 levels, around 37 mpg.  This is being challenged.  In any event, to meet the Obama fuel-mileage mandate, car companies have to produce a certain number of highly fuel-efficient cars to offset their higher-mileage models.  And that's where E.V.s come in.  Basically, the companies are subsidizing their losing E.V. lines with profits from their traditional products to satisfy the government fuel-mileage requirements.  

Here Elon Musk is at a great disadvantage.  Tesla produces only E.V.s.  It doesn't have a profitable line of conventional vehicles to cover the losses of its plug-ins.  For now, investors are subsidizing Tesla's E.V.  How much longer they'll pour money in is anyone's guess.

Not to be deterred, Toyota says it wants all its cars to be "zero emissions" by 2050.  General Motors announced that it plans someday to be an all-electric, zero-emissions car company.  And then there's Europe.  The British and French governments are committed to outlawing the sale of gasoline- and diesel-powered cars by 2040.  And Volvo pledges to sell only hybrids and electric cars beginning in 2019. 

The car companies say their E.V.s are zero-emissions.  But that refers only to what comes out the tailpipe of the car.  In reality, the pollution associated with driving an E.V. merely transfers the generation of pollutants from the car to the power plant, which provides the electricity for recharging it.  Although it seems to evade many environmentalists, the fact is that every time an E.V. has its bank of batteries recharged, CO2 is generated somewhere else. 

How much CO2?  Investor's Business Daily gives a good answer to that question.  Citing a study by the University of Michigan's Transportation Research Institute, IBD says:

The report — authored by Michael Sivak and Brandon Schoellte — notes that an eclectic car recharged by a coal-fired plant produced as much CO2 as a gasoline-powered car that gets 29 miles per gallon.  For context, the average mpg of all cars, SUVs, vans and light trucks sold in the U.S. over the past year is 25.2 mpg.  A plug-in recharged by a natural gas–powered plant is like driving a car that gets 58 miles per gallon.

Solar, wind, and geothermal do far better on this score, but they generate a small portion of the nation's electricity.

According to the U.S. Energy Information Agency, the amount from the various sources of electricity generation in the U.S. for 2018 is as follows:

Various fossil fuels — 63.5%
Nuclear — 19.3%
Total Renewable — 17.1%

Given this mix, the U of M researchers estimate that the average plug-in produces as much CO2 as a gasoline-powered car that gets 55.4 mpg.  Looking worldwide, the researchers found that CO2 emissions from E.V.s are equal to a 51.5-mpg conventional car.

There are other pollution concerns regarding E.V.s.  The Union of Concerned Scientists found that, depending on the type of plug-in being built, manufacturing an E.V. generates between 15 and 68 percent more CO2 emissions than a conventional gasoline-powered car.  The main reason for this is that producing the batteries is extremely energy-intensive.  Worse yet, most lithium batteries are made in China, which relies heavily on coal for electricity and has little concern for other pollution issues related to manufacturing.  And the question has yet to be resolved of what to do with the all the spent lithium batteries.  Probably recycle them, but at what cost in dollars and energy?

So although E.V.s can result in a significant reduction in CO2 emissions over gasoline and diesel-powered cars, they are far from zero emissions.  And even then, so what?

Electric cars were never going to make a dent in global carbon-dioxide emissions — passenger cars aren't that big part of the alleged problem.  To make any dent at all, the electricity they run on can't be from burning coal.  After a decade's boom, wind and solar investments are predictably leveling off in line with the inability of these intermittent sources to meet non-intermittent electricity demand.  Coal is again the fuel of choice for up-and-coming countries with the fastest growing emissions[.]

E.V.s are not a total fraud, but one can state without equivocation that they're not the cat's meow their proponents claim.  E.V.s might be the future, say, in Europe, where the governments could outright ban gasoline and diesel cars.  In such a case, the consumer will have no choice.  But in the U.S., without continued taxpayer subsidies for E.V.s and onerous government fuel-mileage mandates, expect conventional vehicles to be with us for a long, long time.