It's not easy (or cheap) being green

Subsidies and regulatory credits for electric vehicles are keeping an ailing industry alive.

Earlier this week, we urged you to think like a skeptic. On the heels of that advice, and in the full knowledge that our overlords tried to nudge our behavior with “get a jab, get a $1,000” promotions and other moronic incentives (Shake Shack, anyone?), is it any wonder why the government is asking you to send in videos of ‘positive experiences’ with their ongoing indoctrination effort?

“Help us showcase the benefits of electric transportation! Send us your short (one- to two-minute) personal videos that convey your positive experiences using electric transportation in everyday life,” the EPA pleads in a recently launched video challenge.

Your short video could win you a prize of up to $3,000.

Massive amounts of money are being pushed into the effort to transform our nation and its transportation system. To quote Charlie Munger, if you have a dumb incentive system, you get dumb outcomes:

Here’s just a short list of those payouts — “incentives” — to big business, according to a September 2022 White House fact sheet:

• The Bipartisan Infrastructure Law: 

  • $7.5 billion to build a national network of 500,000 EV chargers

  • more than $7 billion for domestic manufacturers to access the minerals and other components for batteries

  • over $10 billion for clean transit and school buses.

• The Inflation Reduction Act: 

  • incentives for buyers of new and used EVs

  • credits to help manufacturers retool existing facilities and build new manufacturing in the United States

  • grants to deploy zero-emission heavy duty vehicles.

• The CHIPS and Science Act: 

  • critical investments in building domestic semiconductor capacity for electric vehicles.

This is not what free market capitalism is about. In fact, you might even consider it Mussolini’s wet dream — a perversion of private business with State subsidization and control thanks to unbridled access to vast quantities of money coming from government spigots to shape the outcome. It’s nothing shy of deranged.

But don’t take our word for it. We are so happy to have found the smart thinkers at the Texas Public Policy Foundation (TPPF), who recently released a report entitled ‘Overcharged Expectations: Unmasking the true costs of electric vehicles.’ The paper outlines the complete farce that is the current electric vehicle landscape.

Here are a few key points:

• The cost of producing electric vehicles (EVs) is far higher than the prices they are being sold for. Nearly $22 billion in federal and state subsidies and regulatory credits suppressed the retail price of EVs in 2021 by an average of almost $50,000.

• Thanks to an unlawful multiplier, EVs receive nearly seven times more credits under federal fuel efficiency programs than they provide in actual fuel economy benefits.

• Regulatory credits with bonus EV multipliers from federal fuel efficiency and greenhouse gas emissions standards and state EV sales mandates provide an average of $27,881 in benefits per vehicle for producers of EVs.

• Home and public charging stations used by EVs put a significant strain on the electric grid, resulting in an average of $11,833 in socialized costs per EV over 10 years, which are shouldered by utility ratepayers and taxpayers.

• Direct state and federal subsidies for EVs average $8,984 per vehicle over 10 years.

Governments around the world spend hundreds of billions of dollars subsidizing selected businesses or sectors. This money is taken out of taxpayers’ pockets and handed over to industries instead of being used for more effective purposes or, better yet, left in the pockets of individuals to do with what they please.

The case of electric vehicles is particularly perverse because government money is being poured into making a product that apparently nobody wants.

“Rarely has an industry been so heavily subsidized to make a product that so few consumers want or can afford to buy,” the Wall Street Journal Editorial Board opined last week.

Ford Motor Co. lost $62,016 on each electric vehicle it sold during this year’s third quarter. But that looks like a business success compared to Lucid Motors, the luxury electric-vehicle maker. On Tuesday the EV startup reported losing $227,802 per car sold in the latest quarter.

Like several other EV startups, Lucid went public during the pandemic through a merger with a blank-check company. In November 2021, it reached a stunning market value of $91 billion despite having delivered only 125 cars in its history. It’s been downhill since. Lucid’s stock price has fallen 93% from its peak as losses mount.

In the third quarter, it reported a $630.9 million net loss and $227,802 per car sold, not accounting for its overhead costs. It also cut its production forecast “to prudently align with deliveries”—which in plainer English means demand for its pricey EVs is flagging.

Left to the forces of the free market, electric vehicle transportation would have already gone the way of the dinosaur. But government keeps engineering incentives to keep it buoyant, despite the very impact of transferring wealth from poor to rich.

Lucid revised its production outlook for 2023 down to 8,000–8,500 vehicles from prior guidance of more than 10,000, to “prudently align with deliveries.”

The Wall Street Journal continues:

Lucid’s largest shareholder, Saudi Arabia’s Public Investment Fund, has poured billions into the company to keep it afloat. It’s no small irony that oil profits are financing an EV unicorn.

By the way, Lucid recently opened a new production facility in Saudi Arabia, whose government has pledged to buy 100,000 of its vehicles. These will run on electricity produced almost entirely by oil and natural gas power plants. Remind us, again, how EVs are supposed to benefit the climate?

According to the TPPF report mentioned above, when you add in subsidies and charging costs, fueling an electric vehicle is equal to around $17 per gallon of gasoline.

One need only look to Norway, the world’s leader in EV adoption, to understand how government subsidies end up distorting the market and causing more problems than they solve. Generous subsidies in the 2010s fueled an EV buying frenzy, according to a recent report in Vox. Almost 90 percent of the country’s new car sales are now fully electric.

But, as often happens with subsidies, the benefits flowed almost exclusively to the wealthy, widening the gap between rich and poor in a country that prides itself on being equitable. Some are also concerned that subsidies made it harder for Norwegians to change their behavior away from dependence on private cars, which climate change experts say would have had more benefit.

“Climate change gave Norway an opportunity to change how we travel,” Ulrik Eriksen, author of the book A Country on Four Wheels, told Vox. “I worry we had this once-in-a-generation chance to fix our transportation network, and we blew it.”

Is the United States going to blow it, too?

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