We have all watched the apparent increase in the acceptance of electric cars (EVs) thought to be a major portion of our automotive future. Tesla’s $95,000 upscale vehicles get featured almost weekly in the Wall Street Journal as their finances, good and bad, rotate their favor with the investors who keep the stock as elevated as bitcoin in recent years with no underpinning of real value based on price/earnings ratio. Wolf Richter, a San Francisco. based entrepreneur, calculated that if the company ever earned a $billion dollars with an average stock market P/E ratio of 12, the company’s stock should sell for $65, yet it regularly hovers around $400 having made no profit. Its highly touted $35,000 car for the masses never materialized, remaining in a price range of more than $10,000 over an equivalent gasoline powered vehicle. General Motors has given it a run for its money with a similar more expensive mid-sized vehicle.
All of these facts are current reality but many other chickens are coming home to roost, none laying golden eggs. For years the EVs warranted a $7500 tax credit for the first 200,000 manufactured by each company, then the credit is halved for the next 200,000, halved again for the next 200,000 and then disappears. Both GM and Tesla are near the no-credit position with Nissan, Ford and Toyota are approaching it. They are all already screaming for the credit to start over and in fact doubled to qualify for the next 400,000 vehicles. Tesla first said they did not need the credit anymore, then back-tracked on that boast.
It was long assumed that Tesla buyers, a special group of people, would buy regardless of incentives or no incentives. That appears now to have been an assumption that failed. When Hong Kong dropped its EV subsidy, Tesla sales plummeted. It is anyone’s guess what the outcome will be as to continuing the tax credit. I will bet the green lobbies will win in granting unwarranted concessions to an industry no longer in its infancy.
Yet there are more problems, many more. Up until now, believe it or not, the EV tax credit was granted on an honor system with no required affidavits to prove the credit was actually earned. The Treasury Inspector General for Tax Administration ((TIGTA) recently reported that of 239,422 EV tax credits claimed between 2014 and 2018, it identified 16,510 as potentially erroneous. Some are outright frauds, others are to second owners who do not qualify or those leasing vehicles who also do not qualify. Worse yet, a Congressional Research Service study showed that 80% of all EV tax credits go to households with incomes exceeding $100,000. Truly a wealth redistribution in the wrong direction that liberals should not like.
For unknown reasons the public does not recognize that all EVs are really coal powered or natural gas powered vehicles. Where do they think the electricity with which they charge and recharge their cars come from? I am afraid most think it comes from thin air,
As time goes by more owners will experience problems charging and recharging in very cold weather. Generators, transformers, power lines and motors consisting of metals are most efficient in cold weather. For example, copper has half the resistance at minus 65 degrees C as it does at 100 C. However all batteries use electrolytes which are liquids such as acids, bases and salts that conduct electricity by the movement of ions which perform to the opposite of metals as to rapid or slow movement. A typical electrolyte conducts a fourth as much at minus 5 degrees C as it does at 55 C. Little by little EVs in normal to cold climates will experience this problem.
It is time for the market to determine which vehicles the public will choose to not be nudged by state and federal programs. Robert Bradley CEO of the Institute for Energy Research said in an article appearing in the Heartland Institutes Environment and Climate News, “Among the programs benefitting the relatively wealthy are state rebates, reduced registration fees, car pool lane access and other programs that apply in 44 states, as well as Federal R & D monies for ‘sustainable transportation’, averaging $700 million a year”.
It is long over due that extremely flawed electric cars stop drinking at the government trough. Yet Senator Chuck Schumer of New York has pledged that if the Democrats win the 2020 presidential election, the Senate will pass a law requiring that every car in America be electric by 2040. Hopefully that pledge will cost votes among thoughtful people but who can say? Other than it will be a very damaging economic policy for our nation.
- Dr. Jay Lehr CFACT Senior Science Analyst Jay Lehr has authored more than 1,000 magazine and journal articles and 36 books.