The Electric-Vehicle Booglaoo

Lawrence M Friedman, an expert in legal history and property law, was one of my favorite law professors. As a student at the University of Chicago and its law school, he had been part of the Second City cast with Elaine May and Mike Nichols, and it you think there’s no way someone can make the subject of property law engaging, you haven’t had a class with Professor Friedman. An author of a number of books (including fiction) he said something in his work, “The Horizontal Society,” which strikes me as particular appropriate as the Biden administration rolls out its fantasy energy and infrastructure plans:

The average citizen, who has no idea how... a refrigerator works. still feels that scientists, if they worked hard enough, could cure AIDS or the common cold, or get electric power out of turnip juice, or send a satellite zooming off to Pluto.

No better example of this sort of fantasy thinking can be found in the plan to transform the auto industry. And no better example can be found of the way lunatic ideas and the greedy grab by myriad interests for federal funds for ridiculous projects can be found than this one.

Like plugging in a toaster!

On March 29 something called the Alliance for Automotive Innovation , an alliance of auto manufacturers, supplies and the United Auto Workers wrote to the President  supporting the shift to electric-drive vehicles. Like courtiers praising the emperor’s new clothes, the Alliance dubs the Biden plan a “bold, comprehensive vision and innovation that will place the U.S. at the forefront of creating a cleaner future for motor vehicle transformation.” 

Then it goes on to the cost (certainly just a down payment  for something that will cost even more). It turns the notion of supply and demand on its head, seeking funds to first create demand and then to supply the products for the demand they just created. It is slathered with blather like “we need a comprehensive plan that takes present market realties [only about 2 percent of 14.5 million worth of new vehicle sales were for electric vehicles] as well as the on-going investment and innovation in internal combustion engine (ICE) technologies."

Ignoring the spin we see a bottom line that stretches out endlessly and pays off all the Democrat interest groups it can possibly grease. Here's what they want on the demand side: 

Increasing demand, however, will not increase the supply without yet more federal largesse. So here’s what they want to do to increase the supply:

  1. Expand tax credits to allow manufacturers  to “retool, expand, or build new facilities for the manufacturing, recycling, of these vehicles, batteries, fuel cells, components and infrastructure."
  2. Expand the domestic manufacturing conversion grant program to accelerate  the needed technologies.
  3. Develop (presumably through more federal money or tax credits)   extraction, processing and recycling of the critical minerals needed for these vehicles (now mostly imported from China).
  4. Research and development grants  for new innovation “that will make the zero-emission future a reality."
  5. Grants and loans  for advanced technology.
  6. Training and development programs to “upskill” the work force.
  7. New investment tax credits for hydrogen production and storage.
  8. Grants to “reequip, expand, and establish facilities for the manufacturing of clean energy technologies and components."

The cost of these ambitious efforts is predicted at the very end of this wish list: $4-12 billion in the tax-credit expansion alone and another $12-25 billion for manufacturing conversion. I don’t think this covers more than a fraction of what this proposal suggests. Do you?

No fumes, no worries, no explosions!

On the other hand, I've reread it several times, and besides scratching my head at the new economics in which we are asked to create and greatly fund a non-existent demand to deal with a non-existent problem ("climate change") and then to create a fount of new funds to meet this confected demand. Puzzling.

More puzzling in this paean to electric vehicles is the absence of the need for more electric power production. Not one word of it. Toyota’s president  is one auto manufacturing leader skeptical of the entire notion of massively increasing electric vehicles:

Toyota President Akio Toyoda said Japan would run out of electricity in the summer if all cars were running on electric power. The infrastructure needed to support a fleet consisting entirely of EVs would cost Japan between ¥14 trillion and ¥37 trillion, the equivalent of $135 billion to $358 billion, he said.

“When politicians are out there saying, ‘Let’s get rid of all cars using gasoline,’ do they understand this?” Mr. Toyoda said Thursday at a year-end news conference in his capacity as chairman of the Japan Automobile Manufacturers Association.

Toyota is a leader in hybrid autos and has no small experience to back up their president’s concerns.

In what was undoubtedly a rare moment of reality, the Washington Post  acknowledged the increased amount of electric energy these “clean cars” need is energy produced almost entirely by fossil fuels now that in this country atomic energy has been so reduced.

How much more electricity will be needed for electric cars? About 150,000 electric vehicles were sold in California in 2018 — 8 percent of all state car sales. The state projects that electric vehicles will consume 5.4 percent of the state's electricity, or 17,000 gigawatt hours, by 2030.

California, for one, doesn’t have sufficient capacity to meet existing demand, and there are no plans I know of in the works to increase it. 

There’s one more thing radically wrong with this blinkered notion that substituting more expensive transportation and servicing it when conventional transportation and the means to fuel it is cheaper, more readily available, and requires no enormous outlays to continue.

Unless someone comes up fast with a way to create electric power for electric vehicles from turnip juice, a transportation policy that has at its core an enormous switch to electric vehicles without a substantial increase in electric power production is, on its face, insane.

Toyota Chief on Electric Cars: Slow Down!

The Observer reports on some very striking comments by Toyota Motor Corporation president Akio Toyoda, on the topic of Electric Vehicles. EVs are hot right now, with the automotive industry investing heavily in them, and governments throughout the world (prominently, as The Observer mentions, those of Great Britain and California) looking to aid their development by banning the sale of gasoline and diesel engines in the not-too-distant future.

But Mr. Toyoda is not convinced that they are the answer. At a recent press conference, he pointed out a few problems with the projected shift to EVs. First, he claimed that “the current business model of the car industry is going to collapse" if the industry shifts to EVs too quickly. No word on whether he thinks that the oft-discussed 10-15 year timeline put forward by activists in and out of government falls into that category, but it wouldn't be surprising if that is exactly what he had in mind.

Next, he pointed out that "Japan [for one] would run out of electricity in the summer if all cars were running on electric power." There just isn't enough electricity to go around, especially with battery technology being what it is. He estimated that "the infrastructure needed to support a 100 percent EV fleet would cost Japan between 14 trillion and 37 trillion yen ($135 billion to $358 billion)," a hefty percentage of GDP for a famously stagnant economy like Japan's.

Worth noting that it is a lot cheaper to generate the electricity a given vehicle needs on site -- that is, within the vehicle itself, as a gasoline powered combustion engine does -- than producing it elsewhere and transporting to the car.

And, following up on that point, he called attention to the fact that "most of the country’s electricity is generated by burning coal and natural gas, anyway," so the stated goal of leaving fossil fuels behind by shifting to EVs isn't going to happen. In his words:

The more EVs we build, the worse carbon dioxide gets… When politicians are out there saying, ‘Let’s get rid of all cars using gasoline,’ do they understand this?

Unfortunately the answer to that question is probably "No," both for the politicians and the propagandists in the media.

Driving Towards Utopia, Skidding on ICE

“Against stupidity the gods themselves struggle in vain, O’Sullivan,” my grammar school teacher, quoting Goethe, would say as he handed back my weekly essay with helpful comments. “So what chance do you have against it?”

They said things like that in those days. And I have often wished that Mr. Hughes were both around and in a position to “mark” the policy announcements of various governments painting the glorious future they were shaping. Her Majesty’s Government headed by Boris Johnson especially needs his dry and weary judgmentalism.

Last week I contrasted two things: first, HMG’s apparent decision that, having already announced a ban on the sale of petrol- and diesel-fueled vehicles by 2035, it would bring forward that timescale to 2030; second, the substantial reasons why electric cars might not be the inevitable future—consumer resistance, the vast expense of expanding the electricity network to cope with EVs, and the possibility that a new battery needed to make EVs cheaper and more efficient might not materialize for a future as near as 2030.

That’s a tough contradiction. But it was resolved on the day I wrote it by the adverse reactions of both specialist writers and the market to Elon Musk’s “Battery Day” announcement that Tesla hasn’t come up with that hyped-up battery yet but it will soon.

Here’s the summing up of Tesla’s stock gyrations over the next few days by Market Watch: “Shares fell 22%, as of Thursday’s closing price, as a widely anticipated update on the company’s battery technology failed to wow investors. The decline is worse than Tesla’s 21% drop in March, when the entire market was plummeting because of the coronavirus.”

Even Goethe had his critics.

Now, the market isn’t infallible. Some of the higher share price may have been in response to salesmanship by Musk that now looks over-optimistic.  It’s also likely that research and innovation will develop a lighter and more efficient battery and thus a cheaper EV in time, if not necessarily in line with a politically driven target like 2030.

That said, public policy should not be based on optimistic forecasting of specific innovations in technology. Which means that the U.K. government should not bring forward its ban on selling petrol-fueled cars—ICE cars in the jargon—to 2030 and should even push it forward to beyond 2035. That would give us the time needed to consider a better mix of public policies on carbon emissions and much else.

As it happens there are very solid reasons for doing so, as Professor Gautam Kalghatgi, a fellow of the Royal Academy of Engineering, the Institute of Mechanical Engineers and the Society of Automotive Engineers, who is currently a visiting professor at Oxford University, argues in his monograph, The Battery Car Delusion:

The first sentence of his summary introduction alone is a stark questioning of current orthodoxy in Whitehall: “Battery electric vehicles (BEVs) do not represent a significant improvement over internal combustion engine vehicles (ICEVs) in terms of their carbon dioxide footprint unless all the energy for their manufacture and use is CO2 -free.”

There’s a huge cost -- as in Pounds and Dollars -- in carbon emissions as well, from building a larger and more robust system of electrification to accommodate BEVs. It’s paid not only by government but also by EV owners who would have to install battery-charging pillars in their garages and driveways in order to avoid long lines and waiting times to refuel their vehicles.

And what are the benefits to set against these extraordinarily heavy costs? Still in his summary, Professor Kalghatgi points out that “Even with a 100-fold increase in the number of BEVs to 10 million, around 85% of transport energy will still be delivered by ICEs. And this large increase will at best save about 4% of the GHGs [Greenhouse Gas Emissions] associated with transport in the UK. ”

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In short the switch to electric vehicles, even if we could be confident that they will be cheaper and more efficient for EV drivers (which we can’t be) would offer an extraordinarily modest benefit to set against heavy costs. It’s a public policy that makes no sense.

Unfortunately, if you want to get a policy changed, it’s not enough to persuade governments that it will have a net negative impact on the country. You also have to convince that them there is a policy that will also meet their aims—here it’s reducing carbon emissions—to compensate them for having to abandon their destructive approach.

In this case there is an alternative policy. It  is to improve the efficiency of the internal combustion engine so that it releases fewer carbon emissions into the atmosphere. It’s a very simple and practical approach to solving a difficult problem. It does not require the building of any infrastructure, let alone a massive one, in order to work effectively. For that and other reasons, it doesn’t constitute a heavy increase in expenditures by governments and consumers.  It’s already being accomplished by the research departments of automobile companies which have transformed conventional cars to an astounding extent since the 1960s.

How effective might this approach be in reducing carbon emissions? Professor Kalghatgi estimates that a 5 percent reduction in fuel consumption by ICE vehicles would obtain a larger reduction in carbon emissions than the massive switch to electric cars with all its attendant infrastructure costs. That alone would be a massive prize. But he also believes that a reduction much larger than 5 percent in fuel consumption by ICEVs could be obtained through such methods as “better combustion, control and after-treatment systems along with partial electrification and reductions in weight.”

The snag is that though these innovations are being pursued now, how long is that likely to continue if the U.K. government instructs car manufacturers that they must stop selling their product in ten years? What incentive is there for companies to maintain large R&D expenditures when they are officially told that these innovations, even if successful, will reduce  carbon emissions and make other improvements in their automobiles for only a short period before production is halted altogether?

Let's relax and think this through.

Indeed, how long will automobile companies continue to invest at all in products other than those which, unless Musk gets that elusive breakthrough, will be too expensive for most consumers to buy unless the government steps in with subsidies to help them?

It’s policy fueled by the moral vanity that Britain should lead to the world in combatting climate change by destroying a major industry, making a huge dent in the Exchequer, and contributing a reduction in world carbon emission so small that it would not register on any meter.

Against stupidity the Gods themselves struggle in vain.

Gavin Newsom's Hotel California

The song “Hotel California” warns: “We are programmed to receive/ You can check out any time you like/ But you can never leave...”

Residents of California have a different, view. They are not only checking out, but they are leaving for elsewhere in significant numbers. In 2019 California was the “fourth-ranked top out bound state”  (691,000 left last year, and the exodus shows no sign of abating. You can check out—and people and businesses increasingly  are-- but moving out of the state is getting more and more expensive because so many people are doing it .

One indication of this is the U-Haul truck rates. U- Haul moving truck rental rates from San Francisco to Austin, Texas  have more than doubled and are five times the difference from a trip in the opposite direction. A similar pattern from Los Angeles to Austin is reflected in the moving truck rental fees.

Ignoring his state’s shortage of electric capacity and rolling blackouts, the massive wildfires caused by his mismanagement and the economic devastation caused by his Covid-19 lockdowns this week, governor Gavin Newson ordered that by 2035 it would be phasing out all gasoline-powered cars.

Like all the political figures in this one-party state, he’s under the thumb of an aggressive environmental lobby, which has seemingly persuaded him that such a move would mean a job boom for the 34 companies in California, which produce electric vehicles.

Plenty of room at the Hotel California?

Demand for such vehicles is very low, and they cost a great deal more to purchase. “Zero-emission vehicles in 2019 made up only about 2% of the cars on California’s roads, 560,000 out of more than 28.4 million.”

Given the present housing patterns and transportation systems in California, and the fact that people are already having difficulty during blackouts to charge these cars, the mandate for more of them seems preposterous.

Since California is such a big market, many of its more onerous regulations, based on the fantasy of anthropogenic climate change tend to be voluntarily accepted by manufacturers, throughout the country, something the President has been fighting by refusing to grant waivers for standards that exceed those set nationwide:

California has already pledged to not buy cars for government fleets from automakers that spurned its clean car deal, including General Motors, Fiat Chrysler and Toyota. And at a meeting with the California Transportation Commission last year, Nichols spoke vaguely of “potentially looking at things like fees, taxes and bans on certain types of vehicles and products.”

But Nichols’ prewritten remarks, obtained by Bloomberg, were starker, saying that federal clean car rollbacks could prompt the air board to look for other ways to curb pollution, including “an outright ban on internal combustion engines.”

At the time, Meredith Hankins, then a Shapiro fellow in Environmental Law and Policy at the UCLA School of Law, told CalMatters that such a ban would be difficult to get past the federal Environmental Protection Agency.

“It may be sort of dead on arrival under this current administration,” Hankins said last year. And going around the EPA is “an untested legal question.”

Under the Clean Air Act, California must receive permission from the US EPA in the form of a waiver to implement clean car rules that differ from the federal government’s. And this would be no exception, said Ann Carlson, an environmental law professor at the University of California Los Angeles.

“So the policy is highly dependent on who is elected President,” Carlson said. Trump’s  EPA already has revoked the waiver for California’s tailpipe greenhouse gas standards, which California is fighting in court. “There’s no chance he’d grant an even stronger one,” Carlson said.”

California greenies are fighting for more than one kind of climate change, it seems, one that would subject us all to the dictates of an ever more aggressive green movement in that state. As for the direction California’s rules are designed to head, it looks to me quite obvious: a state free of that troublesome middle class and those small businesses —a  depopulated state with a smaller much richer population and bigger businesses served by those too poor to be able to leave.

California’s most productive residents and companies are changing in ever larger number for a different climate than Newsom’s and the state’s legislators mandate, places free of such fantastical thinking.