This is the first in an occasional series of articles on electric vehicles. The series will address issues of technological readiness, the policies needed to help shape the market, and the character e of the 21st-century “auto” industry. It will conclude with a discussion of special purpose acquisition companies (SPAC) and how stock market investors are responding to the future of electric vehicles.
Introduction
While the Trump administration was fiddling with the auto fuel efficiency standards of the Obama administration, auto manufacturers in the US and around the world were designing, manufacturing, and selling 21st century electrified vehicles (EVs). A fact President Trump and his cabal were content to ignore.
Now that Trump has left the building, the federal government can be expected to work in consort—rather than at cross-purposes—with the US auto industry. There’s much to be done, including building out the infrastructure required for wide-spread deployment, training workers, and shaping markets. It will prove a heavy lift.
How big a lift? A recent report by the California Energy Commission offers some insight into what it would take to meet Governor Newsom’s order banning the sale of internal combustion vehicles by 2035.
The Commission estimates the Golden State would need 1.5 million charging stations by 2030. The current count for California is around 70,000 stations. The total “plugs” in the nation is estimated at 84,000. It should be noted that twenty-five percent of the nation’s total is proprietary to Teslas and not available to other car brands.
President Biden has set a goal of adding 500,000 charging stations to the national inventory. Do the math. If all those new stations were in California, another million would still be needed just to service the Golden State’s electric vehicle population.
There are myriad other practical, political, and technological problems that need solving to electrify the transportation sector. The good news is there are readily available solutions.
The not so good news? It requires politicians to put aside their partisan problems and act as if addressing climate change might be necessary to Earth’s and the nation’s continued well-being. If only politicians could be reprogrammed as easily as a cell phone.
President Biden is hoping to transition the nation to a sustainable low-carbon economy long on good-paying jobs and short on harmful emissions.
A bit of context
The task of electrifying just the auto and light truck portions of the transportation sector is huge, but the rewards are gigantically greater—one might even say bigly better.
President Biden has set a goal of creating one million new auto industry jobs in manufacturing, supply chains, and infrastructure. The target may be too conservative as the Los Angeles County Economic Development Corporation (LAEDC) estimates there are currently 276,000 direct jobs associated with the state’s emerging EV sector.
The economy’s move to cleaner and more sustainable energy sources will create a significant dislocation of the workforce in fossil fuel-related industries, including power and auto. It is critical to understand that the move will happen—whether Donald Trump or Joe Biden is in the White House.
The unstoppable movement of the market independent of federal auto emission standards was the fatal flaw in Trump’s regulatory fiddling. In the Trumpian mind, the undoing of President Obama’s climate legacy and blanket deregulation took precedence over everything else.
The electrification of motor vehicles is job-rich, and as crucial to the economy as it is to the environment.
The Trump administration bollixed things up for four years by infusing the thing markets hate most—uncertainty. The sources of the uncertainty were the absence of new fuel-efficiency targets and the suspension of California’s waiver, allowing it to set a more strident standard than the federal government’s.
Although no other state is eligible for the California exception, states are permitted the option of following California’s lead. Thirteen states and the District of Columbia have adopted California’s regulatory regime. A sign others might be willing to follow the Golden State’s lead can be found in the list of 22 states that joined its suit against the Trump administration for rescinding the waiver.
To bring some certainty back into the marketplace, five auto companies[i] indicated they would follow the California standard, notwithstanding what the Trump administration chose to do. The move was not without risk.
In a move that would be incomprehensible under any other administration, Trump ordered the Justice Department to launch an antitrust probe into five automakers that agreed to follow California’s stricter emissions standards irrespective of anything the administration was going to do.
Trump pressured General Motors and other manufacturers to back its play against the five companies that chose to go California’s way. Biden’s becoming president has drastically changed the game for the auto industry.
Those in favor?
The auto industry and organized labor understand the transition has started, and there’s no going back. The United Auto Workers union (UAW) is on record about what needs to be done:
The auto industry is facing a new shift in technology with the proliferation of electric vehicles (EVs). This shift is an opportunity to re-invest in US manufacturing. But this opportunity will be lost if EVs or their components are imported or made by low-road suppliers who underpay workers. In order to preserve American jobs and work standards, what is needed is a proactive industrial policy that creates high-quality manufacturing jobs making EVs and their components.
Decarbonizing the auto and light truck segments of the transportation sector isn’t about the technologies. It is about aligning industry, labor, and government to speed the transition. Large swaths of the auto and light truck industries are more than ready for prime time.
Don’t take my word for it. Between July and December 2020, Tesla delivered just under 320,000 vehicles, roughly 140,000 units more than during the first six months of 2020. Tesla’s full-year total is almost 500,000 units.
Are these 21st century autos technically and commercially viable? In its most recent earnings report, Tesla earned $721 million in 2020, in contrast to its 2019 loss of $816 million. In the last three months of 2020, Tesla made $270 million. It is noteworthy that the company’s success was made possible in large part by rising sales in China and Europe and the addition of a fourth car, the Model Y, that appears to have become its top seller in the United States.
Although fourth-quarter earnings were below analyst expectations, the company is on a solid footing—enough so—that it is helping make Elon Musk the richest man[ii] in the world.
Tesla is only one of a growing number of companies planning for the transition. General Motors (GM) has announced its plans to introduce 30 new electric models by 2025 and make its last gas-powered auto and SUV by 2035. The company will invest over $27 billion in planned EV and AV[iii] product development to achieve those goals.
GM is not alone. Ford has stopped manufacturing passenger cars in North America, with the single exception of the Mustang.
The new Mustang Mach-E will be hitting Ford showrooms months from now. The five-passenger, four-door crossover SUV is powered by batteries and was declared the 2021 SUV of the Year.
Virtually every automaker in the world is expanding its stable of electric vehicles. GM has even turned the Hummer—that homage to crass consumption and blatant disregard of the environment—into a totally electric vehicle. With a starting price of $112,595, the 1000 horsepower Hummer is still an homage to consumerism. But at least now, it’s better for the environment.
The Alliance for Automotive Innovation, along with other groups like the Zero Emission Trans-portation Association, has pledged to work with the Biden administration to electrify the transportation sector. According to the Alliance, the nations that lead the development and adoption of innovative technologies, such as electrification, connectivity, and automation, will also shape supply chains and define global standards.
What’s at stake here is the place of US companies in a burgeoning global market built on a foundation of environmental integrity and respect for Mother Earth. Notwithstanding the immense economic and ecological benefits of decarbonizing the transportation sector, there are those in opposition.
Those opposed?
It should come as no surprise that there are members of the oil and gas industry who are opposed to the passing of the internal combustion engine. They have, after all, made handsome profits these past 150 years[iv] powering the automobile.
The pressure is on the oil and gas industry to stay auto-relevant in today’s marketplace. It doesn’t take a seer to see the writing on the wall—if not in Trump’s America, certainly in Biden’s.
The right-leaning Competitive Enterprise Institute (CEI) asked and answered—in the negative—the question: Would More Electric Vehicles be Good for the Environment? The paper lays out the arguments of EV naysayers like the American Petroleum Institute and CEI itself.
The arguments put forth in the report are hackneyed and have generally been debunked by the science and engineering communities. CEI has long contested the findings of mainstream science about the existence, causes, and consequences of climate change. The Institute was a leading source of information for the Trump White House.
CEI’s arguments question the life-cycle costs of EVs and the environmental impacts of mining and battery manufacturing put forward by environmental defenders and the auto industry. The Congressional Research Service disputes the Institute’s claim with a finding that the reduced emissions of vehicle operation more than compensate for any differences in the production cycle.
It should be noted that the offset is contingent on the source of the electric power used to charge vehicle batteries. CEI dismisses the environmental benefits of vehicle electrification by assuming the dirtiest fossil fuels will continue being used to generate electricity.
It’s hard to disagree with the statement, but who said anything about continuing the use of fossil-fueled electricity? It is both possible and critically important to decarbonize both the power and transportation sectors. A path the Biden administration intends to follow. (See also the Transportation Integrity Project for more clean car facts.)
Those breaking ranks
Traditional fossil fuel companies like Total, Royal Dutch Shell, and BP are moving away from what made them rich. As reported by Stanley Reed:
Prodded by governments and investors…Europe’s oil companies are accelerating their production of cleaner energy — usually electricity, sometimes hydrogen — and promoting natural gas, which they argue can be a cleaner transition fuel from coal and oil to renewables.
Shell has just announced it is buying Ubitricity. The company operates more than 2,700 charging stations in the UK and another 1,500 across Europe.
Oil and gas companies like Total and Shell are also leaving organizations that have historically led the charge against climate science’s validity. Earlier this year, Total announced it was quitting the American Petroleum Institute (API) because of its opposition to methane regulation and electric vehicles. The company, along with BP and Shell, left the American Fuel and Petro-chemical Manufacturers group in 2019 over its position on climate defense.
The electrification of the transportation sector is not just about the environment. It is about the global competitiveness of US industry. To compete abroad requires the ability and capacity to compete domestically.
The question lawmakers on Capitol Hill need to answer is whether they are prepared to cede US and international markets for clean energy technologies in power and transportation to China and the European Union? If not, they need to work constructively with the Biden administration to make up for the time wasted by the Trump administration.
Look for the next article of the series, when I’ll be addressing the politics of electrifying the transportation sector.
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[i] The companies were Ford, Honda, BMW, Volvo, and Volkswagen.
[ii] [ii] Whether Musk or Jeff Bezos is the richest man in the world depends on the day. As of January 7, 2021, the crown sat on Musk’s head.
[iii] EVs are electric vehicles, BEVs are battery-electric vehicles, AVs are autonomous (generally) electric vehicles.
[iv] John D. Rockefeller established his refining business in 1862 and about the time Etienne Lenoir of France claimed to have invented his benzene powered Hippomobile.
The lead image is of a Renault Formula E racer. Formula E cars are capable of speeds in excess of 200 km/h. All that’s missing from a Formula E race is the noise. Instead of VROOM! VROOM the cars go hmmmmm.
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