Over at the Wall Street Journal, Allysia Finley has a piece about the oddities of the Electric Vehicle market, which is driven almost entirely by government mandate. In practice this has meant that "a parade of electric-vehicle startups" found themselves with multibillion dollar stock valuations despite the fact that "most had never sold a single car." "Fueled by cheap credit and political subsidies," -- after all, our governing elite are convinced that E.V.s are the way of the future -- "their stocks surged, only to crash."
China, "the world leader in electric-vehicle production and exports," is seeing similar problems:
Beijing has set aggressive production quotas for car makers and provided generous subsidies for buyers. China’s annual electric-vehicle production capacity has ballooned to 5.7 million vehicles... and is expected to hit 15 million in a couple of years. Yet concerns are mounting in China about oversupply of what the country calls new energy vehicles. “Reckless investments and disorderly efforts can be seen in the country’s NEV industry,” Lin Nianxiu, vice chairman of the National Development and Reform Commission, warned in March. “We have too many EV firms,” Xiao Yaqing, minister of industry and information technology, said in September. Some 200 Chinese EV startups have launched in the chase for government subsidies. Many have struggled to scale up production, and some have gone bankrupt.
Both cases illustrate something instructive about the Electric Vehicle market, which is that, overall, it is built upon a desire to circumvent that basic organizing principle of economics, demand. This is a struggle even in China's "state capitalism" economic model, which is much more comfortable dictating to consumers, rather than responding to them, than America's ostensibly free market system is.
In America, E.V. companies like those mentioned above sprung up in response to Democrat-enacted policies whose object was to create an industry more or less ex nihilo, while also smothering the traditional, gas-and-diesel driven automotive industry. But with inflation soaring, and the cost of minerals like cobalt, lithium, and nickel (which are necessary for the production of E.V. batteries) rising, even government subsidies can't cover the cost of doing business. Finley quotes representatives for the E.V. company Canoo (which, she mentions, is currently able to produce only 12 cars per week) as saying that “substantial doubt exists about the Company’s ability to continue as a going concern” in the next year.
A kid could grow old and die...
Oddly, the only companies who seem able to take advantage of the regulatory preference for E.V.s (apart from Tesla, which consciously sells itself as a boutique status symbol for wealthy virtue signalers) are the established automobile manufacturers, who are essentially supporting their electric lines by means of government subsidies on the one hand, and gas-powered cars on the other.
But even they are struggling with our new economic realities. Finley mentions that Ford's new electric pickup truck, the F-150 Lightning, is currently selling for only $10,000 more than the traditional model, and they hope that scaling up production will allow them to further bridge that gap. But, once again, the cost of E.V. manufacturing is going up, not down. The great hope of Ford and the other major automakers is that the government will keep throwing money at them (they've been "lobbying hard" for Biden's "Build Back Better" bill) until a major breakthrough in battery technology makes E.V.s financially self-sustaining. Unfortunately for them, that's not how innovation works.
So how will they -- green politicians and automakers on the take -- keep their electric dreams alive? Finley suggests that it will be through a combination of carbon taxation, emissions mandates, and other forms of government intervention, which will have the effect of making traditional cars more expensive rather than bringing the cost of E.V.s down. Unsurprisingly, letting consumer preference -- demand -- sort out these problems seems never to have occurred to them.
We're becoming more like China every day.