Electric Vehicles: The EPA’s Fast Track to Fiasco

National Review Online, March 25 2024

Helmuth von Moltke (1800-91), the greatest of Prussia’s nineteenth century generals, so the old (unreliable but enjoyable) story goes, laughed only twice in his life. Once when told that a certain French fortress was impregnable and once when told that his mother-in-law had died.

He would surely have at least permitted himself a smile at the over-confidence with which the EPA is attempting to reorder the American automobile industry. “No plan of operations,” he warned, “extends with certainty beyond the first encounter with the enemy’s main strength,” a wordy formulation often condensed into the pithier, but overly simplistic, “no plan survives contact with the enemy.”  Von Moltke did not believe that planning should be dispensed with, but he insisted that its limitations should be recognized: He understood the trap that “certainty” could be. He thought it was far better to think through the various contingencies that might emerge once a battle or campaign was underway, and how to handle them.

The EPA’s plan for the auto sector, which we discussed (unenthusiastically) on the home page on Friday, reflects a different approach. It has imposed a (declining) CO2 quota on the auto sector, and then passed the buck. Carmakers will just have to find a way to sell the EVs they don’t want to make to consumers that don’t want to buy them (in sufficient quantities). No problem!

Surprise, surprise, that target is not realistic. Central planners are like that.

Let’s start with materials. Conventional cars are mainly made up of iron and steel, simple stuff, but EVs have a wider range of ingredients. The necessary metals are there but we don’t yet have the mines to get at them.

Mark Mills, writing for the Manhattan Institute in an article published in January:

All the world’s mines, both currently operating and planned, can supply only a small fraction of the 700 percent to 4,000 percent increase in various minerals that will be needed to meet the wildly ambitious EV goals. The IEA [International Energy Agency] estimates that we’ll need hundreds of new mega-mines to feed factories across the “transition” landscape, and that it takes 10 to 16 years to find, plan, and open a new mine.

What is supposed to happen in the interim?

And even when (if?) the mines open, their costs won’t only be financial.

Diana Furchtgott-Roth in the Daily Signal:

Mining battery ingredients causes environmental damage. EV batteries weigh about 1,000 pounds and can reach 2,000 pounds. About 100,000 pounds of ore are needed to get the lithium, cobalt, nickel, graphite, and copper to make the batteries function. To get the 100,000 pounds of ore, it’s necessary to move 500,000 pounds of earth.

Cobalt mining in the Democratic Republic of the Congo is partly performed by children who are sent into the mines to retrieve the minerals…

Part of the propaganda effort to persuade gullible Westerners to buy EVs includes renaming them “clean cars,” a deceptive label if ever there was one. Promising cobalt-free batteries are on the way, but those who argue that EVs are “clean” will not, I am sure, want to wait for that happy day.

Furchtgott-Roth looks at what happens to EV batteries after they have reached the end of their lifespan:

When the battery is worn out, it must be disposed of. Some materials such as plastics, copper, aluminum, nickel, and cobalt are worth recycling. The remainder is disposed of in landfills, using a method to ensure that the lithium-ion batteries do not catch fire.

These environmental concerns are one reason why some environmentalists will inevitably oppose the mines being opened to address other environmental concerns (fundamentalist environmentalists typically don’t think too much of trade-offs).

For his part, Mills observes that 50 to 90 percent of the critical materials required to make EVs are now produced in China “and will be for years yet, no matter how lawmakers rewrite the sourcing regulations,” yet another reminder that the geopolitical costs of the switch to EVs are likely to prove very heavy.

And:

It bears noting that buying basic materials accounts for more than half the cost of building an EV battery. That means the future price of EVs will be dominated by the future costs of those basic materials, which, in turn, depends on guesses about the future of foreign mining and minerals industries. Consider just copper, the pillar of electrification. EVs use 300 percent to 400 percent more copper than conventional cars. Industry data show that the world will need twice as much copper as it will be producing well before aspirational EV goals are reached. Unsurprisingly, one major mining CEO observed that the coming chasm between demand and supply could trigger a ten-fold copper price hike. That alone would add about $15,000 to the cost of building an EV.

That CEO was looking at the overall increase in the demand for copper coming from the electrification of, well, everything. Apart from anything else, this will take a lot of copper wire, primarily for use in undersea and underground cables (overhead uses aluminum, although that can be used underground too). Overall, the analysts at Rystad Energy reckon that the pursuit of something close to net zero greenhouse gases by 2050 will require an additional 18 million kilometers of wiring by 2030. Overall, Rystad reckons that there would have to be $3.1 trillion in investments in grid infrastructure, again by 2030. Where will that come from?

One of the reasons that American consumers are proving more resistant to EVs than anticipated is their higher cost. One solution to that could be to turn to China. Beijing’s planners have grasped the opportunity that was being created for them by the West’s coerced switch to EVs. They had patience, a potentially large (almost) literally captive domestic market, a cheap labor force, the money to lavish on a new sector, and no need to respect capital discipline. The result was that they learned to build EVs cheap enough to overcome the doubts of some potential EV buyers.

In Europe (where the relevant import tariffs are 10 percent, rather than the 27.5 percent levied in the U.S., and where the incentives to buy domestic EVs are lower), Chinese manufacturers are beginning to make inroads, taking advantage of the coerced transition to EVs underway over there. This threatens disaster for the continent’s automakers, now largely deprived of the advantages of incumbency that came with the internal combustion engine.

Meanwhile, BYD, China’s leading EV manufacturer, is looking to start production in Mexico (supposedly for the Mexican market only). Such production would be within the free trade zone governed by USMCA, the successor to NAFTA. This has triggered fears of a wave of tariff-free Chinese imports into the U.S. Those have been overstated (for now). Restrictions would limit the extent to which “made-in-Mexico” Chinese-brand EVs could take advantage of USMCA, because so many of their components would be sourced in China. Additionally, the administration has introduced rules that would make it difficult for buyers of EVs even loosely connected to China to be eligible for the IRA’s $7,500 tax credit.

Then again, via Robinson Meyer in the New York Times:

Geely [a Chinese company which owns Volvo Cars] is preparing to sell the small, all-electric Volvo EX30 S.U.V. in the United States for $35,000. That price — which seemingly includes the cost of a 25 percent tariff, first imposed by the Trump administration — rivals what American automakers are capable of doing today, even with the Inflation Reduction Act’s subsidies.

There’s no need to parse Donald Trump’s remark about the “bloodbath” in the U.S. auto sector, look instead at (slightly) less colorful comments made by others. For example, in January Elon Musk maintained that Chinese auto manufacturers would “demolish” international competitors unless the latter benefited from tariff protection. The  Alliance for American Manufacturing has called for additional trade barriers against Chinese EVs to head off to prevent an “extinction-level event.”

The alliance, interestingly, is “a non-profit, non-partisan partnership formed in 2007 by some of America’s leading manufacturers and the United Steelworkers.” The growing awareness of labor unions of the threat posed, one way or another, by EVs is another element in the melee that, sooner or later, will develop over the electrification of the auto, but, looking at the Left alone, autoworkers will not have things all their own way.  A recent report on Bloomberg, a reliable mouthpiece for climate fundamentalism, came with the headline that “China’s Super-Cheap EVs Offer Hope for Average American Buyers.”  That’s one way of looking at it, but autoworkers will not feel the same way. It presages a future conflict within the Left, much of which will revolve around tariffs, a topic for another day.

The Beijing regime has been handed this economic and political opportunity by the speed and the scale of the transition to EVs that climate policymakers are trying to engineer — and their willingness to force it through. If instead they had allowed the EV sector to evolve organically beyond the niche created by Tesla, the chances that EVs would have developed into a mass market product any time soon (at least outside China and parts, maybe, of the developing world) would have been low. But to the extent that EVs did find a wider market in the West, the pace and the rules would have been set by the marketplace. This would have saved billions in taxpayer money and avoided the social, economic, and political disruption that now lies ahead. Moreover, under this scenario, EVs would have had to compete indefinitely with conventional cars, a contest that would have improved the quality of both.

Climate policymakers claim there is no time for such dilly-dallying: The planet is “boiling.” Well, leaving aside the fact that rough consensus estimates of an increase of a little short of 3 degrees Celsius between pre-industrial times and 2100 fall far short of an existential threat, the switch to EVs in the West is not going to make much difference any time soon.

In 2019, U.S. cars and light trucks accounted for approximately 2 percent of global greenhouse gas emissions, the EU for a little less than that. And the switch to an EV from a conventional car does not reduce emissions to zero. To be sure, an EV gives off no tailpipe greenhouse gasses, but then there are the emissions produced to generate the electricity that powers it, a calculation that becomes even trickier when, say, that electricity is powering a car in China. On top of that, there are the emissions generated in manufacturing and processing an EV and its components (much more material goes into EVs than conventional cars). After taking that into account, over its lifetime, an EV will, the EV-boosting IEA estimates, be responsible for a little less than half of the GHG emissions of a conventional car.

That may be too generous to EVs: Calculating the CO2 emissions saved by the switch to EVs is not, as Mills demonstrates, to put it mildly, a precise science:

The CO2 emissions arising from building an EV before it gets driven revolve around a simple fact: a typical EV battery weighs about 1,000 pounds. That half-ton battery is made from a wide range of minerals, including copper, nickel, aluminum, graphite, and lithium. Accessing those minerals requires digging up and processing some 250 tons of earth per vehicle. All that mining, processing, and refining uses hydrocarbons and emits CO2. The critical fact found in the technical literature is that those upstream emissions vary by 300 percent or more, depending on where and when materials are mined and processed. At the higher end of known ranges, upstream battery emissions can wipe out emissions avoided by not driving a gasoline car.

Every claim made about EVs reducing emissions, whether from automakers or governments, is a rough estimate at best—and sometimes an outright guess based on averages and assumptions. In every study, one finds that authors have cherry-picked a value, typically a low one.

Under the circumstances, the speed and the rigor with which the administration is pursuing its EV agenda is hard to defend (and that’s before considering the extra twists added by states such as California, another topic for another occasion).

That said, the EPA’s new regulations are slightly more flexible than had originally been proposed, both with regard to timing and (supposedly) vehicle choice. When it comes to timing, there has been some easing. The rules put a CO2 cap on a manufacturer’s sales, which still begins in 2027, but at a higher level than originally envisaged. The rate at which that cap is reduced will be weighted more to the later years as it approaches the same final (for now) target date of 2032, and the final (for now) CO2 allowance, but that allowance will be a bit higher than first proposed.

Depending on which, uh, “compliance pathway” auto manufacturers took, EVs would, under the original proposals, have had to account for as much as 67 percent of new light vehicle sales in the U.S. by 2032. To give an idea of the change which that would represent, in 2023, EVs accounted for 7.6 percent of new car sales in the U.S.

In the rules’ finished form, however, one acceptable “pathway” would (according to the EPA) lead to a 2032 mix made up of 56 percent EVs, 13 percent hybrids, and 29 percent traditional cars. That may be less of a concession than it purports to be, however. Capping the amount of new conventional cars that can be sold will, if they continue to be popular, push up their prices. Used conventional cars will still be able to be bought freely (for now). But if those looking for new conventional cars are priced out, many of them will turn, not to EVs, but to used conventional cars, raising prices in that market too.

The position of hybrids, a more pragmatic route to electrification, and one that is attracting increasing interest, is worth watching. As CEI’s Marlo Lewis explains:

Toyota’s most fuel-efficient Prius hybrid, which is also the world’s top-selling hybrid, gets 57 miles to the gallon and emits 155 grams of carbon dioxide per mile (CO2/mi), according to fueleconomy.gov. Toyota also sells several other hybrids and non-hybrids with lower mileage and higher CO2 emission rates. But even if Toyota scrapped all those models, and just sold Priuses, the company’s fleet-average CO2 emissions per mile would still be more than double the standard that the EPA has set for model year 2032 passenger cars—73 grams of CO2/mile.

Clearly, automakers cannot comply with the EPA’s allegedly “technology-neutral” and performance-based GHG program without rapidly phasing out sales of gasoline- and diesel-powered vehicles, including fuel-efficient hybrids, and rapidly ramping up sales of EVs.

Even if the “concessions” contained in the final rules were less than they appeared, the fact that the administration felt obliged to make them was significant. It reflected an awareness of the potential political costs that may come with this assault on Americans’ freedom to choose a car that works for them. They also represent a scrap thrown to automakers and the UAW, both of which had expressed concern about the pace and the extent of the proposed change. The White House may also have hoped that a slightly more modest approach might increase the chances of these regulations passing legal muster. For a regulatory agency to attempt to reshape the U.S. auto sector implies a very generous view of its own powers (the lawsuits will fly), as well as a disregard for democratic process all too typical of climate rulemaking.

But in one respect, these rules were an admission of failure. For all the hype surrounding EVs, the administration has had to concede that manufacturers will have to be forced to make them and drivers will (ultimately) be forced to buy them.

And for what?

The president of the Alliance for Automotive Innovation, a grouping representing companies responsible for nearly all U.S. new car sales, and which had strongly criticized the EPA’s earlier proposal, gave a cautious welcome to the final version, saying that “moderating the pace of EV adoption in 2027, 2028, 2029 and 2030 was the right call…These adjusted EV targets — still a stretch goal — should give the market and supply chains a chance to catch up.” Given how intertwined carmakers have become with the government, that statement was less surprising than the alliance’s earlier criticism.

As is surely well known by now, another factor contributing to consumer resistance to EVs is “range anxiety,” something that contributed to the failure of EVs in the early twentieth century. The two keys to resolving it are technological (better batteries) — and improvement in that area continues — and something more basic: the availability of public chargers that permit refueling at a pace roughly equivalent to that available in the gas station, something that “fast chargers,” another misnomer, do not do, especially when it is cold. Or too hot.

When it comes to the availability of charging stations, well, over to Mills:

A roadside fuel station puts an electric power load (again, not energy) on the grid equal to just one 7-Eleven store. A typical EV fueling station will have the power demand of a stadium. Highways need tens of thousands of fuel stations. Making on-road refueling as convenient, simple, and cheap as the gasoline network isn’t possible with current technology.

Tesla, seeing an obvious opportunity, has been opening up its network (which is pretty good) to third parties, but Tesla cannot do it all. Other auto companies are trying to follow suit, but that may take a while. The U.S. government (I’m not sure what other governments are doing elsewhere) is ready to help (a promise that should terrify anyone who remembers a certain comment by Ronald Reagan). The 2021 Bipartisan Infrastructure Law allocated $7.5 billion in funding for EV chargers. As Dominic Pino noted in Capital Matters in November none (0) had installed at that time. I gather that a handful have been put up since then.

Overall, 167,000 public charging ports have now been installed in the U.S., only 40,000 of which are “fast” (which the Department of Transportation defines as meaning that they can charge an EV to 80 percent in “just” 20 minutes to 1 hour).

“Just.”

And that’s if it’s not too cold. Or too hot.

The rest of that 167,000 are Level 2 chargers. According to the DOT, they can charge an EV from empty to 80 percent in a blistering 4-10 hours, although in a public space they would, I imagine, be used for a top-up rather than a full refill.

In January last year, S&P calculated that if by 2030 there were 28.3 million EVs on US roads, an estimated 2.13 million Level 2 and 172,000 “fast” chargers will be required on top of chargers installed in people’s homes.

Most of today’s EV owners have their own parking garage (as do around a third of U.S. households), where they can charge their EV overnight (and keep it out of the cold/heat). It’s also possible to install charging facilities in private driveways. But what about those Americans who do not have either, perhaps because they live in a more densely populated urban environment? Organizing overnight charging will either be difficult or impossible, reducing them to dependence on commercial charging stations. “Enthusiasts,” explains Mills:

[A]ssert that charging points can be added at parking lots and roadsides. All of it will require staggering neighborhood-grid upgrades that have neither been funded nor included in the Inflation Reduction Act’s lollapalooza of spending.

There are those — madmen, of course — who suspect that the planners regard the difficulty of reconciling urban life with the practicalities of charging as a feature, not a bug. It would “encourage” walking, cycling, or taking public transport.

Crazy talk, as I said.

Extracted from the Capital Letter for the week beginning March 18, 2024