I don’t think 2030 is going to happen for Joe Biden.
And, no, I’m not talking about any election. He’s having a tough enough time with the current one (that’s a topic for another day).
I’m talking about his administration’s ambitious electric vehicle (EV) goals by 2030.
The plan to have EVs make up 50% of all U.S. car sales by the dawn of the next decade was always ambitious. Some even said it was unrealistic.
I’ll put it another way: It ain’t going to happen.
Yes, I know that Tesla (TSLA) is back in investors’ good graces. At last check, its stock was even up for the year after suffering an unimpressive first half.
I’m also aware competitor Lucid announced better-than-expected production and delivery figures. So now might seem like an odd time to take a non-bullish stance on the industry.
However, I have to call them how I see them. And I’m not seeing sustainability anywhere I look, no matter how much hype and hope exists.
The EV appeal is clear, including in how disruptive technology of any kind can be exciting. Even without Elon Musk’s initial entrepreneurial enthusiasm and brand-name appeal, this market is a fascinating take on the age-old need for transportation.
Speaking of Musk, I see a decent amount of Teslas around me when I’m on the road wherever I travel. So good for him for succeeding where he has.
Good for him and his competitors too for wanting to make a positive difference in the world. I respect and support the desire for cleaner air and a healthier planet. We’re supposed to be good stewards of our environment, after all.
But we’re also supposed to accept reality in that pursuit. Otherwise, we’re never going to get anywhere good or lasting.
So, let’s look at what reality really looks like these days.
Of Metals and Mining
Electric vehicles are heavily dependent on certain minerals and metals.
According to Statista, each one requires an average of “66.3 kilograms of graphite and nearly 40 kilograms of nickel.” Not to mention “varying quantities of lithium, cobalt… graphite, and rare earths.”
All of these need to be mined, of course – often in energy-intensive ways that put a major damper on EV’s promise of being eco-friendly. I’ll set that point aside, however, since most consumers don’t know that information, making it immaterial to their decision to buy or not.
Much more pertinent is the availability of that mining. Rare earth metals, for instance, are actually quite common in the earth’s crust but not easily accessible.
The U.S. has the capability to mine it, but we shut down much of our production decades ago. Instead, we decided to let China supply a whopping 63% of global output. And while efforts were made more recently to resurrect U.S. assets, they were less than successful.
In fact, they failed.
There’s always the future, of course. But bringing a new rare earth mine online takes time, money, concerted effort… and getting through a whole of bureaucratic red tape. In which case, we’re stuck with our Chinese suppliers for years to come.
And they’re only making so much per year. Moreover, they have very good incentives to keep what they’ve got to themselves in their quest to become the world’s main EV supplier.
The copper situation is equally precarious. Bridge Michigan, a state-focused news source, noted mid-May that, “in the race to go all-electric, Michigan automakers” could easily find themselves struggling with a copper shortage.
EVs, it turns out, require 3-5 times more of the highly conductive metal than gas-powered vehicles. Moreover, copper is extremely important to numerous other important projects and even greater necessities, from machinery to construction.
So, as the article concludes:
Unless the [automotive] industry can find a way to make EVs with less copper, meeting EV demand would require an average of 1.7 new mines every year until 2050, according to the [recent International Energy Forum] report. Achieving a full net-zero economy could require as many as six new mines per year.
Essentially, commodities are a chokepoint for making these vehicles cost-effective. And they’re only set to get more expensive going forward due to rising demand and lack of ready supply.
Government Subsidies Can Only Do So Much
The only reason EVs are as affordable as they are – for now – is because of government subsidies. Car shoppers can qualify for up to $7,500 in government rebates if they buy new, qualified models.
That took the average price down from $56,648 in May to a best-case scenario price of $49,148. Which, for the record, is still notably higher than the average $45,000 a new gas-powered car cost in the same month.
But let’s say enough consumers have the money and desire to go for it anyway. In that case, they might be in for a rude awakening if they’re ever in colder temperatures.
AAA found that EVs lose 41% of their range on average when operating with the heat in weather that is 20 degrees Fahrenheit. That means more time, money, and literal energy spent on charging them.
It also means a lot more chances of getting stranded on the side of the road mid-trip, giving rise to so-called “range anxiety.” The fear of limited mileage capability is very real thanks to EV limitations.
Those limitations extend into the summer too, for the record. There aren’t nearly enough operable charging stations to go around.
Don’t take my word for it. I’ll go right to the EV-friendly AP. It wrote in March that Joe Biden’s $5 billion National Electric Vehicle Infrastructure program just isn’t delivering the way it should be.
Despite being a nationwide pledge, only Ohio, New York, Pennsylvania, and Hawaii “have opened stations funded by the program.” That’s despite it being signed into law in November 2021 with the intent to create 500,000 chargers by 2030.
The story goes on to note that even that ambitious and so-far unrealized number:
… won’t be enough to meet Biden’s ambitious climate goals. The Department of Energy’s National Renewable Energy Laboratory estimated last year that the U.S. will need 1.2 million public chargers by 2030, a huge jump from the 175,000 public charging ports now available, as measured by the Alternative Fuels Data Center, a division of the Energy Department.
If consumers want affordable and reliable transportation, they have to think twice about buying an electric vehicle. As well-meaning as the concept might be, when you get past the hype and narrative to the facts…
The EV revolution seems like it’s headed nowhere for now, sorry to say.
Regards,
Brad Thomas
Editor, Intelligent Income Daily