The Patriot Post® · The Slow-Charging Market for EVs

Last week, we told you about the UAW finally winning a union organizing election in the South, succeeding in its third attempt at the Volkswagen plant in Tennessee. One observation by our Thomas Gallatin rings true for this story, too:

The Chattanooga VW plant happens to manufacture the company’s electric SUV, known as the ID.4. VW will get big bucks from the government for pumping out these EVs, which of course means job security for workers at the plant. The vote to unionize was, in many ways, a vote to keep their jobs. Indeed, unlike the previous two organization votes, VW did not seek to initiate any real campaign against unionization. VW likely wanted this outcome because of its own bottom line.

Remember that Biden administration incentives for the purchase of EVs apply most lucratively to unionized plants, a membership VW will now join.

Ford is also part of that club, and recent financial guidance from the company suggests it is losing an astonishing $130,000 for each EV sold. But Ford will make it up on volume! In fairness, the company says some of the losses come from the money being spent on research and development of future models. But isn’t the auto industry already planning and designing its fleet for 2025 and beyond, regardless?

While GM has crowed about its profitability so far this year, the internal combustion engine is subsidizing the EV portion of the business. GM CFO Paul Jacobson echoed a forecast that Ford made, claiming the EV portion of its business will start making a profit in the second half of the year. Don’t hold your breath on that one.

The issue is just how long automakers can hemorrhage EV money. Even with plentiful government support and incentives to consumers, the EV industry has seen its workforce decline over the last several months. Tesla was the latest to take a hit, announcing in a federally required notice that 6,000 workers in California and Texas will be furloughed in the next few months. While its EVs were once considered unique and cutting-edge, the influx of new competition is forcing Tesla into new markets, including light trucks and a lower-cost model that could debut later this year.

In its quarterly earnings call, Tesla also announced its vision beyond the EV: The company is confident that autonomous operation is still in its future, including a fleet of robo-taxis and a ride-hailing network. “If somebody doesn’t believe Tesla is going to solve autonomy, I think they should not be an investor in the company,” said CEO Elon Musk. On that front, it’s worth adding that Musk made a “surprise” visit to China, which Bloomberg frames as him “seeking approval for driver-assistance software that could help arrest the carmaker’s revenue decline.”

Speaking of China, our domestic EV industry will soon be forced to make room for a new competitor approaching these shores. With Mexico being more open to Chinese investment thanks to its leftist leadership, nearly a dozen Chinese-made brands have already conquered almost 20% of Mexico’s new car market, and plans are afoot for these Chinese companies — including BYD, which markets an EV called the Dolphin Mini that sells for less than half the price of the least expensive Tesla — to build plants there. Building a plant in Mexico would allow China to take advantage of the UMSCA trade deal and sell EVs here.

And China, which is now an EV exporter, is also trying to incentivize domestic demand through its own version of cash for clunkers. “The sweeping program aims to upgrade China’s stock of industrial and household equipment — taking older machines that use more energy or emit more pollution out of service, and giving a lift to consumer spending and business investment along the way,” according to Bloomberg. “It covers everything from heavy industries like petrochemicals and steel, to installing new elevators in apartment buildings, to incentives for consumers to scrap their old washing machines and buy new ones that use less water.” Even though we tried and failed to get out of a recession with this approach 15 years ago, let’s not give the Biden regime any more ideas.

EVs are already less than popular here, but Uncle Sam is trying to ram-rod a market for them nonetheless. Meanwhile, a portion of that extra production of durable goods from China will likely be coming this way to undercut those already in those industries. It’s good to have free trade for a freer market, but trade has to be fair first — hence Donald Trump’s tariffs on China. Then, if we can get the government’s thumb off the scale, scrapping the federal incentives, we’ll see just what level of interest is actually there for EVs. Chances are, they’ll be a virtue signal and nothing more.