Only fools and frauds can continue to wish their government to subsidize products that the public doesn’t want which nevertheless still sell for half or less what they cost to make — which depend upon rare earth materials mined by slave labor and monopolized by hostile adversaries — powered by replacing sources that provide more than 80% of reliable energy by increasing those that intermittently produce about 3% — all with knowingly no discernable climate nor environmental benefits — then pass the economic deficits and inflationary burdens on to gullible taxpayers and consumers represented as triumphs of free enterprise and social justice.
Enter the bizarre political era of electric plug-in vehicles.
In this upside-down new world, Ford’s loss of $62,016 on each EV it sold during this year’s third quarter is wildly successful when compared with nearly four times that much — a $227,802 hemorrhage — posted on each of a total 125 sold by Lucid Motors, a start-up luxury EV maker with a net $631 million bleed.
Meanwhile, Lucid has opened a new production facility in Saudi Arabia, whose government has pledged to buy 100,000 of its vehicles which will run on electricity produced almost entirely by oil and natural gas power plants that are under attack by the Biden administration.
Dealers report that part of the problem is that after a wealthier group of early EV adopters already purchased a vehicle, the industry is now confronting a more reticent group of consumers who are being squeezed by high interest rates and rising costs.
As Joseph Yoon, an Edmunds analyst, observes, “I think there was a miscalculation about demand and how much EVs would be coveted.”
The slowdown has occurred after car companies have plowed billions of dollars into new battery plants and factories to build more EVs when many models were in demand with long wait lists.
Now, wiser and poorer, General Motors announced in October that it will delay the opening of an EV truck plant until the end of 2025, a year later than planned, while Ford has said it was temporarily cutting a shift of production for its F-150 Lightning pickup.
Resulting industry business losses are occurring both despite and in addition to generous $7,500 federal tax credit subsidies offered as EV incentives to reluctant buyers and jacked up costs for gasoline models consumers truly want to keep vehicle manufacturers financially afloat.
Even that isn’t enough to keep EVs from piling up on unsold dealer inventory stock.
As reported in the Wall Street Journal, in September it took retailers over two months to sell an EV, compared with around a month for gas-powered vehicles and only three weeks for a gas-electric hybrid.
With his company’s profits down 6.8%, Mercedes Chief Financial Officer Harald Wilhelm recently told Reuters that EVs are “a pretty brutal space” and “I can hardly imagine the current status quo is fully sustainable for everybody.”
Nor is that brutal space sustainable for dealers forced to offer sales rebates and discounts to reduce painful interest payments on stacked-up EV inventories while simultaneously denting profits that hurt resale values for buyers owning those models.
Ford is offering a $7,500 cash rebate on top of the federal tax credit on some F-150 Lightning pickup trucks.
According to Edmunds data, September EV customers, on average, got roughly $2,000 sticker price discounts compared with $1,500 premiums last year. Industrywide, car shoppers paid around $930 less year-over-year.
Whereas the deepest EV discounts generally came with the highest sticker price luxury models, the average reported discount on a $50,000 Volkswagen ID.4 SUV was about $2,900, with Nissan Ariya around $2,200.
Volkswagen is also offering a lease deal for its EV SUV with no down payment.
Although lease agreements have historically comprised roughly 30% of the car market, according to Ed Reed who operates a Southern Calif. VW dealership, they currently account for around 80% of his ID.4 sales.
Leases, however, offer little benefit to U.S. auto manufacturers and employees since they can bypass domestic manufacturing, price and buyer income restrictions that otherwise disqualified many foreign-made vehicles from government perks.
In an EV lease transaction, lenders are eligible for a $7,500 tax credit that they can choose to pass along to the consumer in the form of a better lease deal.
Generous government taxpayer-funded incentives to subsidize a product that few consumers want or can afford to buy which put increased electricity demands on already vulnerably overloaded power grids won’t benefit those least wealthy among us whose household energy, transportation and food costs will be a disproportionate burden.
As for saving the planet from climate change, EV handouts, heaped upon newly proposed fuel standards which include a 2% increase in mandated requirements each year, would reduce average global temperatures in 2060 by 0.000% according to the Department of Transportation's own environmental assessment.
Where’s all the touted environmental and social justice we keep hearing about in that?
Larry Bell is an endowed professor of space architecture at the University of Houston where he founded the Sasakawa International Center for Space Architecture and the graduate space architecture program. His latest of 12 books is "Architectures Beyond Boxes and Boundaries: My Life By Design" (2022). Read Larry Bell's Reports — More Here.
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