Let’s agree that an electric car is a passenger automobile using at least one electric motor that runs on rechargeable batteries. Basically, they are golf carts on steroids with all the comfort accessories.
Electric cars have been around for a long time. I remember seeing an electric car in a museum when I was a kid.
There was a tax case I defended along with another colleague (a brilliant tax litigator with the lead role) back in the 1970s involving research and development deductions for an electric car.
The inventor-engineer built two prototype cars. He dreamed that his electric car would succeed. The problem with bringing his dream to reality was there was no market for cars that ran only on rechargeable batteries.
This memory led me to wonder, why now is there such global coercion by the U.S. and European governments to force electric cars on what is purported to be a free-market?
The answer is simple: Climate change as a political issue.
The United States and European governments appeased the powerful political interests of the environmental lobby, the financial industry, manufacturers, and the left-wing political movement.
These are people who saw global warming, and climate change as the gateway to virtue and public approval, or the road to great wealth, or the means to redistribute wealth from the rich to others around the world more deserving.
To do that, the political-scientific community was incentivized with massive amounts of funding to create computer models. The algorithms used showed that CO2 from fossil fuels leads to a climate disaster — variously in 100 years, or 20 years, or 12 years, or right this minute.
The anti-fossil-fuel computer models supported campaign contributions flowing in from lobbyists, with promises of substantial votes from environmental and left-wing interest groups. It took little else for U.S. and Western European politicians and bureaucrats dutifully responding.
Fossil-fuel cars had to go.
But how? There was no existing market demand for electric cars, except as a novelty accessory for some and a near religious experience for others.
Typical of government, they forced the creation of a market for electric cars whether the public wanted it or not.
Government did this by legislation and regulation. It included changing fuel standards, providing financial grants, subsidies, tax credits, abatements, deductions, exemptions, exclusions, and many other financial and regulatory goodies.
The left-wing media, think-tanks, and bureaucrats obediently created a gigantic propaganda campaign to convince the public that they or some future generation would die if they did not get an electric car.
China, like the U.S, and Western Europe, got into the game. China sees this as an opportunity for entirely different reasons than Western industrial-political interests.
As part of its economic modernization, China is building out a vast new transportation system and electric generation plants. Unlike Western industrial powers, the Chinese need not replace a huge infrastructure and entire industries — and related employment — based on fossil fuel driven transportation.
In China, the government, being communist, dictates the market.
Other than the United States, Western Europe, and China the demand for electric vehicles is barely discernible. It would not be unreasonable to say it is effectively non-existent.
In the United States, the infrastructure of support electric systems needed to create even a semi-realistic expectation of market-place acceptance of electric cars does not exist.
And into the foreseeable future, say to 2030 or 2040, neither the federal nor state governments can fund a massive electric vehicle support system.
Without that new system in place, people will not abandon cars already working, convenient, and cost effective.
Germany is much further along in imposing anti-fossil-fuel policies. The consequences are readily apparent. Germany is experiencing an unfolding dramatic economic and political energy crisis. France and the U.K are on their way down this road.
What about private industry?
Yes, the major automobile manufacturers are all planning on producing electric cars. Most have introduced electric cars with the pledge to introduce a lot more models. None of the manufacturers has yet figured out how to make a profit. Like Tesla, every electric car they sell is sold at a loss.
The automobile manufacturers sell their cars because there is discernible product differentiation to justify a buyer picking one car instead of another.
However, the likelihood is there will be even less than there is today to distinguish one electric car from another.
It’s possible that the United States and Western European industrial powers will find the means to fund both the economic dislocation costs in changing from a fossil-fuel-based economy and the massive outlays in building out the electric grid infrastructure necessary.
It may be possible someday for automobile manufacturers to figure out how to produce an electric car accepted in the marketplace and make a profit.
Automobile manufacturers might avoid consolidation as the production of an electric car becomes standardized.
As it stands now, the United States and the rest of the world depends on fossil-fuel-powered vehicles.
With the sustainability of electric cars in the free market in doubt, I would not be betting against the short sellers.
Denis Kleinfeld is known as a strategic tax and wealth protection lawyer, widely published author and creative teacher.
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