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It’s a familiar battleground with familiar foes. The U.S. Environmental Protection Agency (EPA) has proposed ambitious regulations for greenhouse-gas (GHG) emissions, and as has often — hell, always — been the case, the automakers are saying hold your horses, you’re getting way ahead of yourself. Even their plaints seem identical to protestations past: the consumer doesn’t want the changes the EPA is proposing, they’ll price cars beyond reach for the average consumer, and besides, even if the consumer was on board, this is all technologically impossible in the timeframe suggested.
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And yet something feels different this time, namely that the stakes seem higher — much higher. Environmentalists, on one hand, say that a crisis is not just imminent, but already upon us; on the other, the changes everyone is pointing to — electrification — might well play into the hands of America’s mortal enemy, China. Either way, there’s so much misinformation being bandied by both sides that it is extremely difficult — especially since such a seismic shift is so definitionally complicated — that it’s difficult to pick sides in this battle royale. For that reason, Motor Mouth will (try to) explain what’s at stake, who’s at fault, and most importantly, the likely outcome.
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The EPA’s proposal and the automakers’ rejection
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Whatever the exact number required to meet that 56 per cent reduction, the Alliance says it’s too fast — their objections, as I mentioned, the same ol’: too costly, nobody wants it, the technology isn’t ready. Their counter proposal is that regulations be re-written so that plug-ins — including BEVs, PHEVs, and FCEVs — represent as little as 40 per cent or, at most, 50 per cent of the American fleet in 2030. Perhaps most interesting from a Canadian point of view is that there seems no ideological consistency in the automakers’ positions. Or as Daniel Breton, president and CEO of Electric Mobility Canada says, “OEMs have the gall to say that, instead of having its own ZEV mandate, the Canadian Government should simply align itself with the US EPA regulation…while at the same time asking the US Government to ease up on their regulation.”
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The case for adopting the EPA’s speedy CO2 reduction plan
Besides the obvious climate-change impetus, perhaps the biggest reason to hold automakers’ feet to the fire is that we’ve been down this road many times before. Automakers have dug in their heels pretty much every time any government agency passes emissions- or safety-related policy that forces them to get off their collective butts. More importantly, automakers are also kings of finding loopholes and workarounds, such that whatever might have been the regulations’ intent, their ambitions are seldom met. To wit, despite the vast improvement in internal-combustion efficiency and emissions reduction technology:
- In 2021, automakers only cut carbon emissions by two grams per mile or 0.6 per cent, a far cry from the five per cent promised back in 2012.
- Since model-year 2004, CO2 emissions have decreased only 25 per cent or an annual rate of just 1.2 per cent.
- Detroit’s Big Three — Stellantis, General Motors and Ford — are the most egregious offenders, delivering the worst fleet fuel efficiency and spewing more overall pollution than other car makers.
- Only six companies — Tesla, Honda, Ford, Subaru, Toyota, and Volvo — met emissions standards without resorting to loopholes, i.e. either buying credits or installing solar panels on corporate rooftops.
- Five companies — Hyundai, Mazda, Volkswagen, GM and Stellantis — delivered worse fleet-wide gas mileage and emissions than they did five years ago.
- Even among those that have improved, the numbers are not inspiring. For instance, the fuel economy of Toyota’s Corolla improved only a touch over 10 per cent in the 18 years between 2005 and 2023.
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Now, I don’t think it takes the economic nous of Milton Friedman or Edward W. Younkin’s insight into the philosophy of capitalism to understand that if the government is paying for your entire plant — and a quarter of their entire running costs for the next decade — that they might have the right to impose some conditions on their largesse. Indeed, as Motor Mouth has been repeating since last year — when the IRA was passed — if these incredible monies can’t speed up our transition to ZEVs, nothing will.
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Why we should slow down
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EVs, save for deeply discounted Teslas, have become a hard sell. Or more accurately — as those reluctant automakers have been saying — we’ve gotten ahead of ourselves. Ford says it is sitting on no less than 83 days’ supply of Mustang Mach-Es and 58 days’ worth of F-150 Lightnings. Volkswagen’s cheaper, but decidedly not more cheerful, ID.4 is faring even worse; Cox Automotive says that the German auto giant has an incredible 131 days of inventory sitting in lots around the country. This is the stuff that scares the pants off automakers since, unlike for ICE-powered slow-sellers which they could move with private incentives, there is precious little margin — Carscoops says that Ford is already losing some US$58,333 per EV it produces — for discounting its EVs.
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The wildcard in this battle
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What is making the transition to electric so problematic, though, is that those same consumers have been convinced that solving the automotive climate change issue is as simple as popping the 5.0-litre V8 — or turbocharged 3.5L V6 — out of their pickup’s engine bay and replacing it with a lithium-ion battery. As The Wall Street Journal’s James Freeman explains in a recent article, nothing could be further from the truth.
Where this might all end up
In his WSJ piece, Freeman details the expected consequence of the consumers’ determination to stick with their current preferences. Citing a new report — “The Impossible Dream” — he starts by pointing out that, as everyone already knows, electric vehicles emit much more CO2 in their production than do ICE-powered vehicles. And, of course, there’s the problem of mining the material needed to produce all these batteries. Both issues are, of course, exacerbated by the size of the batteries needed for the electrified versions of the SUVs and pickups consumers so covet.
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The same study, authored by the Manhattan Institute’s Mark Mills, also puts paid to the impression — hell, blind hope — that future generations will embrace “bicycles, scooters, and mass transit.” According to a recent MIT analysis, Millennials “exhibit little difference in preferences for vehicle ownership” compared with Boomers. In other words, the young, despite much acclaim for their environmental activism, are unwilling to change their car-buying habits. Even Gen Zers have bought five times as many cars as they did just five years ago. And with “de-urbanization,” the biggest demographic change post-pandemic, the hope that city-slickers will in and reduce the national average miles driven per annum of their own volition is also fading.
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More dramatically, to meet American climate change strategies, the report says that “consumers will need to adopt EVs at a scale and velocity 10 times greater and faster than the introduction of any new model of car in history.” Indeed, I suspect that this lies at the heart of the automakers’ skepticism with the EPA plan. It’s one thing to brag about 50 per cent year-over year increases when you only have two per cent of the market — or you’re Tesla — but maintaining that same pace when you’ve run through all the early adopters is much more difficult.
All these issues result in the International Energy Agency estimating that “the number of global households without a car needs to rise from 45 per cent today to 70 per cent by 2050.” Yes, even after all cars are supposed to be emissions free. In fact, says the report, “California regulators are ahead of the proverbial curve in admitting that the state’s emissions goals will require citizens of the state — on top of being forced into EVs — to drive 25 per cent fewer miles than they did 30 years ago.” No wonder then that The Journal titles Freeman’s piece “They’re coming for your cars.”
Whichever side of the argument you are on — pro- or anti-EV, whether you agree with the GM, Toyota et al, or the EPA — the blame for whatever restrictions the future of motoring might hold does not rest solely on the shoulders of recalcitrant automakers or overzealous regulators. If you want to see the real roadblock to an emissions-reduced future, take a look in the mirror.
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