The Biden administration can’t force you to buy an electric car, although by capping tailpipe emissions and other coercive measures, it can compel producers to severely curtail the manufacturing of internal combustion engine (ICE) vehicles and drive up the cost of gasoline-powered cars.
The Biden administration’s auto industrial policy features a combination of ever-tightening emissions regulations, subsidies to electric vehicle (EV) manufacturers, and government payments to EV consumers. The Infrastructure Investment and Jobs Act, enacted in 2021, featured $25 billion for things such as charging stations, EV production, and mining. The 2022 Inflation Reduction Act doled out billions more in subsidies, and several European countries and U.S. states have banned or plan to ban the sale of new ICE vehicles over the next several years.
However, some analysts say those numbers don’t add up. They predict that Biden’s EV industrial policy will fail about as badly, and prove about as costly, as most other government schemes to direct and micromanage private-sector industries.
Claim No. 1: EVs Are Good for the Environment
The push for EVs, Biden claims, is necessary to cut global greenhouse gas emissions. But the EPA regulations focus solely on vehicle tailpipe emissions, where EVs have a clear advantage. When the manufacturing and charging of EVs is taken into account, EVs become dramatically less “green” and can actually increase CO2 emissions.EVs are portrayed as a nonpolluting alternative to dirty, gasoline-fueled vehicles. Looking at the whole picture, it’s more accurate to say that EVs exchange high-density liquid fuel for low-density mineral-based energy in the form of batteries, which are extracted and mined using fossil fuels, then charged with electricity generated at least in part by fossil fuels.
Whether an EV emits less CO2 than an internal combustion engine over its lifetime depends greatly on how its component minerals are produced, and how, where, and when the EV is driven and charged. Predictions that EVs will be cleaner than ICE vehicles appear to be based on best-case scenarios across the board.
One basic issue with EVs is that batteries are significantly less dense energy sources than liquid fossil fuels. In order to get the same driving range as 60 pounds of gasoline, an EV battery would have to weigh about 1,000 pounds, according to a report by energy economist Mike Mills. In order to mine enough materials for an average EV battery, 250 tons of rock and earth must be moved, and 50 tons of extracted minerals must then be transported, in most cases to China, to be refined using what is usually a coal-powered process.
According to the IEA, “a typical electric car requires six times the mineral inputs of a conventional car.” To meet the expected production of EVs, wind turbines, and solar panels, the IEA projects that the demand for lithium will grow by 40 times by 2040; the demand for graphite, cobalt, and nickel will grow by 20 to 25 times; the demand for rare-earth elements will grow 3–7 times; and the demand for copper will double.
Electric vehicles thus enter the world with what is called a “carbon debt,” and some believe that carbon debt will be on the high end of estimates. As EVs become more ubiquitous, the number of driven miles required for an EV to repay its carbon debt will likely get higher and higher, and the cost of manufacturing them will likely rise.
“Trends show that energy-use-per pound mined has been rising because of long-standing declines in ore grades,” Mills states. “If mineral demands accelerate, miners will necessarily chase ever lower-grade ores and increasingly in remote locations. The IEA sees, for example, a 300 percent to 600 percent increase in emissions to produce each pound of lithium and nickel, respectively.”
Claim No. 2: US Electric Grid Can Power EVs
John Moura, director of reliability assessment at the North American Electricity Reliability Corp. (NERC), told The Epoch Times that the U.S. electricity grid is designed to handle peak demand in summer, when Americans run air-conditioning units, but that “one electric vehicle charger is equivalent to about two-and-a-half normal-sized air conditioners.”“Today, we don’t have the generating capacity that would be needed to serve any percentage of the total EV cars in a given area,” Moura said. “No area has the capacity to handle it today. We have a lot of things that are electrifying as well—manufacturing processes, crypto mining, population growth.”
Lawmakers in places such as Massachusetts and California are working to push home and office heating onto the electric grid, as well.
“You need quite a tremendous increase in electricity transmission capacity,” Peter Hartley, an energy economist at Rice University, told The Epoch Times. “To put all these charging stations along interstates and so forth is a pretty expensive proposition.”
The cost will largely be paid by taxpayers and electricity consumers, creating another subsidy for EV owners.
Claim No. 3: EVs Are Affordable, Superior Products
According to the EPA, despite all the necessary incentives to compel people to buy EVs, there are many benefits to owning them, if consumers only knew.“Battery electric vehicles offer consumers significant pocketbook savings compared to gasoline and diesel vehicles, from reduced fuel costs as well as reduced costs for maintenance and repair,” an EPA representative told The Epoch Times.
“A battery electric vehicle owner of a model year 2032 sedan, wagon, crossover utility vehicle, or SUV would save about $9,000 on average on fuel, maintenance, and repair costs over an eight-year period (the average period of first ownership) compared to a gasoline vehicle. A battery electric vehicle pickup truck owner would save even more—about $13,000.”
These estimates don’t include the additional cost of buying an EV, but the Inflation Reduction Act includes subsidies of $7,500 for eligible new EVs and $4,000 for used ones.
To date, EVs have been a niche product, and although sales have increased dramatically in recent years, they still make up only about 6 percent of all cars currently sold in the United States.
According to Hartley, EVs have been popular, often as a second vehicle, for people who live near cities, drive short distances, and can charge them at home or at work and don’t have to rely on public charging stations.
“To use them to transport over long distances doesn’t make a whole lot of sense,” he said.
Less expensive models, such as the Nissan Leaf or the Chevrolet Bolt, start between $26,500 and $28,000, although smaller batteries in these cars mean they have less range, and manufacturers’ profit margins are much lower on these models. The Bolt’s range is 250 miles on a full charge.
EV owners currently avoid gas taxes, which fund road construction and maintenance. But EV owners will at some point have to also begin paying for their usage of roads; electricity prices also are likely to rise to pay for additions to the grid, further increasing the cost of ownership.
But where EVs fall short is the most basic reason why people buy cars: They provide freedom to go where you want, whenever you want. They can be refueled in minutes at ubiquitous filling stations, and oil is a commodity that the United States has in abundance. Electric vehicles, by contrast, are tied to the electric grid, which increasingly is struggling to meet demand even at current levels.
Claim No. 4: EVs Are a Good Bet for US Automakers
The U.S. Energy Information Association (EIA) foresees a bright future for EV manufacturers as the market share for EVs has been increasing rapidly. It predicts in its 2023 Annual Energy Outlook that zero-emission vehicles could achieve a market share of 14 to 24 percent by 2050, depending on how high the price of gasoline goes, from the current 6.4 percent.The EPA is more optimistic, stating that its new regulations, combined with federal subsidies, will boost the market share of zero-emission vehicles to 67 percent.
“Most had never sold a single car at their public debut,” the report states. “Fueled by cheap credit and political subsidies, their stocks surged, only to crash.”
The EIA states that “projected declines in EV vehicle component costs, along with federal and state policies that provide incentives for EV purchases or require minimum sales, drive EV sales growth in [the agency’s] model projection.” The bet is that the cost of making EVs will come down and that, of course, most consumers will want them.
But increasing demand for component materials to manufacture EVs indicates that costs will likely go up rather than down, leaving carmakers the choice of raising EV prices or, for those who are still making ICE vehicles, subsidizing EV losses by raising prices on gas-fueled cars.
“The inherent costs of electric vehicles are tied to the mineral inputs that are needed to make the vehicles,” Mills said. “They’re inherently heavier than conventional vehicles, and they inherently require a radical increase in the consumption of basic metals, not just unusual metals, not just lithium or cobalt, but common metals like copper and aluminum.
“The consumption per vehicle is roughly 200–300 percent more than for conventional vehicles, so the world is going to have to supply the automakers enough copper and aluminum without raising the cost of the vehicle, and none of the data show that that’s happening. In effect, the world’s automakers are making this bet, betting the world’s miners will provide them with the materials they need to build vehicles.
“There’s no evidence that’s happening or that it’s going to happen, and by evidence, I mean actual spending and investments in sufficient mining capacity.”
Experts within the mining industry concur with this assessment.
Steve Hanson, CEO of ACME Lithium, for example, told The Epoch Times that, regarding essential minerals for batteries, “every forecast suggests we’re going to be in perpetual deficit.” About 95 percent of all lithium produced today, he said, comes from four countries: Australia, China, Argentina, and Chile.
“It’s all fine to build battery factories, to build the infrastructure, to forecast thousands of vehicles to be on the road, but the supply chain needs to be put in place,” Hanson said. “It is an absolute concern by the auto manufacturers, by technology companies, by all areas of the supply chain, that we will have enough.”
Hanson said he believes there are significant supplies of lithium in North America, but companies struggle to get permits from government agencies to mine them. Mining companies have received stiff resistance not only from the EPA but also from local environmental groups.
Central Planning’s Troubled History
Some carmakers are stepping out of line to criticize the EV movement. In January 2022, Carlos Tavares, CEO of Stellantis—which formed the world’s fifth-largest carmaker through a merger of Fiat, Chrysler, and Peugeot—said EVs were “a technology chosen by politicians” and “imposed” on the auto sector.The pitfalls of industrial policy and central planning are that state plans are based on political calculations, are expensive and wasteful, tend toward cronyism and enrich insiders, inevitably choose outdated or inferior technologies, and are slow to change course when plans fail or when innovations could be implemented.
“Any environmental economist will tell you that trying to solve environmental problems with central-planning solutions invariably gives you much less environmental bang for your buck, or much, much higher costs for the given amount of environmental good that you do,” Hartley said.
“Every business has a hard time resisting massive government policies and funding,” Mills said. “[Auto manufacturers] have to hope the government will keep subsidizing to convince consumers to behave, or they have to hope that governments will require consumers to buy products.”
Indeed, when conservative states attempted to thwart the EPA’s new emissions rules in 2022, automakers came out in support of the EPA.
“I had a former colleague who said that there’s always a problem when you sleep with elephants, and that is, you might get squashed,” Hartley said. “Getting in bed with governments is like sleeping with elephants, and the problem with this [EV transition] is that it’s all driven by government policy more than consumer demand.”
The risks to U.S. carmakers are that consumer demand for EVs isn’t there, that they can’t source critical materials at an economic price, that the electric grid can’t power EVs at scale, and that they lose their competitive advantage to low-cost manufacturers in countries such as China. If the auto industry’s EV bet fails to pay off for any of these reasons, the result will likely be that a number of carmakers will go bankrupt and require government bailouts. At that point, the U.S. automotive industry will look less like an independent private industry and more like a ward of the state, with another round of taxpayer subsidies for EVs.
It likely will become an industry that depends on government and is oriented toward the state rather than toward consumers. And for Americans, our cherished ability to go where we want, when we want, could be at the state’s whim.