The rush to electric vehicles: A disaster for consumers?
According to a recent report in Forbes, Tesla’s stock market value is already bigger than Ford and General Motors combined, and Elon Musk, whose company as of 2015 had already received nearly $5 billion in federal subsidies, now has a net worth of about $31 billion. Whoever said government cannot make anyone rich?
But hold on. An ascendant Bernie Sanders, who claims to be no friend of billionaires,* has called for a massive expansion of government-run electricity production. [*Sanders is, after all, running against a multiple billionaires, including 23 contributors to Mayor Pete’s campaign.]
Sanders and many other politicos have championed a multi-state effort to end the sale of vehicles with internal combustion (IC) engines, as have many European nations. Other related goals are phasing out the use of coal, oil, and natural gas for both heating and electric power generation.
As Politico reports, a major part of Sanders’ $16 trillion Greener New Deal allocates massive new funding for the four existing “power marketing administrations” that are overseen by the Department of Energy, the Tennessee Valley Authority, and a new federal agency. The money would go to vastly expand their solar, wind, and even geothermal power production.
Matt Palumbo, writing in the Bongino Report, says the Sanders plan will need $2 trillion for infrastructure, dwarfing the cost of the interstate highway system, to add 800 gigawatts of wind and solar energy. While Sanders asserts today he is not “nationalizing” energy production but providing wholesale energy to public and private local suppliers, these subsidized government-run facilities will surely control the energy market. Private companies that now rely on coal or natural gas will be further squeezed by mandated deep cuts in carbon emissions. Meanwhile, energy demand for a mandated growing fleet of electric vehicles will soar.
Americans in a recent American Energy Alliance poll expressed great displeasure over subsidizing EVs for the wealthy. Only one in five voters would trust the federal government to make decisions about what kinds of cars should be subsidized – or mandated. Many do not even like, or cannot afford, the innovations already introduced, as evidenced by data showing the average age of the U.S. vehicle fleet has increased in recent years.
Despite public qualms, most automakers have joined the EV movement. Like gossip in a small town, proposals and promises to ban or end production of IC engines have spread like wildfire. The Chinese-owned Swedish automaker Volvo announced in 2017 it would stop designing new IC engines. German giant Daimler (Mercedes Benz) followed suit last year. And in the United States, General Motors in 2018 announced plans to offer only battery-powered or hydrogen-powered vehicles in the near future.
These automakers are perhaps just responding to the political climate in Europe. The United Kingdom just moved up its cutoff date for banning sales of new IC vehicles (including hybrids) to 2035. France and others are holding to a 2040 date for mandating all-electric fleets, while Norway has set a goal (not a mandate) to eliminate most IC engines (but not hybrids) by 2025. But in California, lawmakers killed a 2018 effort to ban IC engines as of 2040.
Meanwhile, European automakers have moved to profit from EV charging stations. IONITY, created in 2017 as a joint venture between the BMW Group, Mercedes-Benz AG, the Ford Motor Company, and the Volkswagen Group with Audi and Porcshe, has already built over 200 facilities with over 860 charging points, with plans to expand to 400 stations in 24 countries by yearend 2020. And IONITY is not alone. [Europe today still has over 100,000 petrol and diesel fueling stations, certain to shrink as IC engines are now pariahs.]
Until February, IONITY was charging a flat, fixed rate of eight Euros (about $8.87) for a fast charging session — under 15 cents/kWh for a 60-kW charge that might be good for 210 miles. With EU gasoline prices ranging from 1.77 euros/liter ($7.35 per gallon) in the Netherlands to to $4.41/gallon in Romania, drivers would need about $31 in Romania or $51 in the Netherlands to drive the same distance (assuming 30 mpg).
But as of February 1, IONITY switched to unit pricing at a rate of 0.79 euro/kWh (88 cents/kWh), or about $52.80 for a 60-kW charge – a 500 percent increase that makes an EV charge more expensive than a fillup. But IONITY is offering discounts that customers can purchase from IONITY partner companies. At home chargers in the EU, where residential rates average 30 cents/kWh, cost about $18 per 60-kW charge – plus about $1,000 for installation.
But here’s the rub. If Sanders gets his way, the federal government will control the price and availability of electricity in the U.S. California, which wants to mandate EVs only, has already faced multi-day electricity blackouts due to fire concerns, and if there is no power there is no charging. Many other countries also lack reliable electric power – and scarcity (almost certain in a fossil fuel free environment) drives up prices even in a government-controlled marketplace.
After the 1970s oil embargo, the United States opted for a broad-based energy sector so that shortages in one fuel would not cripple the national economy. But today, many cities have already moved to ban natural gas, nuclear is still taboo, and wind and solar are intermittent. The push toward an all-electric society plus the heavy burden on the power grid from charging an all-electric vehicle fleet – seems to be a recipe for disaster, at least for the average consumer.
The well connected always do well enough in a controlled economy – that is, until (as happened recently in Iran) the government price for energy angers the peasants. But what can a broken public do but submit to the will of the all-powerful state? Hmmm……
Duggan Flanakin is the Director of Policy Research at the Committee For A Constructive Tomorrow. A former Senior Fellow with the Texas Public Policy Foundation, Mr. Flanakin authored definitive works on the creation of the Texas Commission on Environmental Quality and on environmental education in Texas. A brief history of his multifaceted career appears in his book, “Infinite Galaxies: Poems from the Dugout.”