I’ve always maintained electric vehicles were, in large part, a response to Barack Obama. They have been a necessary part of meeting arbitrary, unrealistic and essentially impossible CAFÉ standards set by the Obama Administration, and the EPA’s official estimates of their range/mileage have been massaged accordingly. The Chevy volt, for example, has never made a penny for GM. In fact, GM has lost an enormous amount of money on each and every one. One suspects the loss margin is also substantial for every other manufacturer producing electric vehicles. The SMM electric vehicle archive is available here.
Now, in the age of Trump, sanity is returning. When a rational CAFE standard is set, will manufacturers drop EV models that have always been more than unprofitable? As I’ve previously written, they’ve dropped many models that have sold far more units than EVs. If they take their fiduciary responsibilities seriously, vehicles like the Volt and Leaf will soon go the way of the Dodo. Fox News reports:
President Donald Trump visited Detroit Wednesday to announce a re-evaluation of the Obama administration’s aggressive fuel-economy rules, a move that may slow investment in electric cars.
The president met with automotive executives Wednesday [03-14-17] at the American Center for Mobility in Ypsilanti, Michigan. The meeting included the CEOs of General Motors, Ford and Fiat Chrysler, as well as top executives from Toyota, Honda and others.
In a speech to industry workers, Trump said he will review fuel-economy rules and other regulations to ‘protect and defend your jobs [and] your factories.’ Trump also said another ‘very big announcement’ related to the auto industry will come next week.
Industry executives argue that the Obama-era CAFE targets are too stringent, and they had urged the Environmental Protection Agency under the previous administration to consider easing its rules amid lower gas prices and surging demand for SUVs and pickup trucks—trends which the automakers said made meeting the miles-per-gallon targets even more difficult.
There are three primary ways to attain greater mileage in motor vehicles: aerodynamics, weight savings, and engine and transmission efficiency. Manufacturers have made considerable advances in all of these areas. Ford, in the 2016 model year, switched to aluminum for its F150 truck bodies, saving hundreds of pounds of weight, but increasing overall mileage only a few MPG. In the 2018 model year, Ford will introduce a 10 speed transmission, and every manufacturer, due to increasingly refined computer controls and manufacturing methods, have significantly increased the mileage potential of their engines. However, advances in all of these areas are incremental. One can only improve the aerodynamics of pickup trucks so much before they cease to be effective as pickup trucks, and the same is true for other vehicles. Contemporary sedans have made leaps and bounds over sedans from the 70s in each of these categories, but from now on, barring technological advances no one can foresee, gains will be small, a mile per gallon or two at a time. Such advances will also eventually hit the technological wall. Advancement is not unlimited; the laws of physics matter.
The rules set for governing vehicles from the 2022 to 2025 model years were due to undergo a midterm review in 2017, with a final determination expected in April 2018. But the Obama administration quickly moved to lock in CAFE standards about a week before Trump took office. Automakers hit back at the EPA over its decision and wrote a letter to Trump asking for a full review.
Which is precisely what Mr. Trump is doing, in partial fulfillment of his promise to do away with unnecessary, job and economy killing, regulations.
The Association of Global Automakers, which represents international car companies, said it looks forward to a review that ‘accounts for the needs of American consumers without locking in a prejudged outcome.
As do all rational Americans.
In order to comply with the increasingly strict federal emissions standards, automakers invested in developing electric vehicles, despite limited consumer demand. If the Trump administration ultimately agrees to adjust CAFE standards, manufacturers will be faced with a choice: Do they focus as much energy and money on electric cars?
Under current CAFE standards, vehicles from model-year 2016 won’t meet the fleetwide fuel-economy targets, based on industry projections released by the National Highway Traffic Safety Administration. That’s the first time new cars, trucks and SUVs will fall short.
They’ll fall short not because they’re not trying, but because the standards are completely unrealistic, and focused on solving farcical global warming, rather than serving the genuine needs of the American public.
Meanwhile, hybrid and plug-in electric vehicles continue to account for a small portion of U.S. sales. Hybrids were 2.14% of February auto sales, according to data compiled by HybridCars.com. Plug-in electric cars earned a market share of less than 1%.
Absent the Obamite mandates, what manufacturer can possibly afford to produce a vehicle with such miniscule market share?
I think what’s going on with fuel prices has made it very difficult for car companies to sell highly fuel-efficient vehicles. So no matter what they do with vehicle development, it’s like leading a horse to water. [Electric cars] are not what’s popular now,’ [Kelly’s Blue Book Editorial Director Jack] Nerad told FOX Business. [skip]
‘We remain absolutely committed to our electrification strategy,’ a Ford spokesperson wrote in an email.
Which does not mean marketing EV’s virtually nobody buys. Ford can certainly continue a “strategy” of related research. Should Mr. Trump do away with raiding the treasury to subsidize EV buyers, it’s almost impossible to imagine any manufacturer would continue to build EVs, with the possible exception of Tesla, but those vehicles are so expensive it’s possible their buyers would continue to buy them as status symbols and for greenie street cred.
While electric vehicles and fuel-efficient small cars have struggled to generate demand, SUVs and crossovers are surging. Utilities now dominate the market, comprising about 63% of U.S. sales. Also, automakers have improved fuel-economy numbers for larger vehicles like crossovers, making the segment even more enticing over other models.
Should gasoline prices drop much below $2.00 per gallon, SUV and trucks will be even more popular, essentially eliminating any rationale for electric vehicles. But that’s not the only bad news for EVs:
The costs associated with electric-vehicle technology are another challenge for manufacturers. Fiat Chrysler CEO Sergio Marchionne once said car shoppers should not to buy Fiat’s electric model because the company lost money on every sale.
‘[Manufacturers] want nothing more than to make vehicles that people actually want to buy,’ Nerad said. ‘The vexing problem for manufacturers is they would have to sell a certain percentage of highly efficient vehicles in order to sell the cars that they make money on.’
Gas prices, at their current levels, ‘give people the feeling that they can be comfortable buying a large SUV or a pickup truck,’ he added.
The current CAFE standards call for a fleetwide average of 54.5 miles per gallon by 2025, reflecting a 56% bump from the 2017 target of 35 mpg.
Nerad hits on the ultimate problem. In a free market economy, as opposed to an Obamite, socialist economy, manufacturers build cars people actually want. No taxpayer-funded subsidies are necessary. No not-so-subtle governmental pressure is required. To reach a ludicrous CAFE average of 54.5 MPG, manufacturers would have to potentially abandon SUVs, trucks, and similar vehicles, the very vehicles that people want, and that make them profitable, building tiny, featherweight econoboxes that don’t meet people’s needs instead. Of course, there are some remnants of the glory days of Obamite control of the economy:
Consumers Union, a policy arm of Consumer Reports magazine, criticized the Trump administration’s decision to reopen the CAFE rulebook.
‘The EPA finalized the standards after a thorough study of costs and benefits,’ said Shannon Baker-Branstetter, policy counsel for Consumers Union. ‘The standards already take the cost into account, and the record shows that they are a reasonable, cost-effective approach to improving fuel efficiency and lowering consumers’ expenses.
You’ve now heard, gentle readers, from one of the last bastions of Obamite propaganda. Not only did the EPA not follow it’s own public notice and input protocols, the standard was one of Mr. Obama’s “midnight,” last-minute land mines for the Trump Administration. If there was a “thorough study of costs and benefits,” why, when Obama had eight years, did he push this through at the last moment? The truth is, for Obamites, the point was wealth redistribution through the global warming scam, not any concern about the welfare of American industry, the economy, or the people. The idea that the Obamite CAFE standard is cost effective merely shows how blindly partisan and out of touch with reality Baken-Branstetter and Consumers Union are. Even if attaining that standard were possible, it would dramatically increase the price of vehicles to meet it. So much for “lowering consumers’ expenses.”
We may soon see the swan song of the Volt and similar vehicles. What’s that you say? GM would never just throw away all that technology? They did it before, with the EV-1, and the damage to their bottom line wasn’t a fraction of that wrought by the Volt. Interestingly enough, the EV-1’s range, charging times, performance, and other metrics were virtually identical to the Volt and Leaf, even though every EV-1’s lease was terminated and virtually every vehicle was destroyed in 2003. It’s that incremental thing again. EV’s continue to run up against the wall of the laws of physics. With Donald Trump in the White House, they may also, finally, run up against the wall of economics.