National Post (National Edition)
Musk needs gas ban to make profit
EV hopes depend upon draconian rules
Elon Musk does not plan on making an actual profit. Or, to be more specific, he doesn’t seem to have a plan to generate profits as long as Tesla has to compete with traditional gasoline-fuelled vehicles. Over and over again — a dozen times or more — Mr. Musk has looked to the marketplace to bail out the massive shortfalls in Tesla earnings. Each time he claims these are “investments” in future models or a “giga” factory expansion, all the time masking the fact that Tesla doesn’t make money on the cars he does manage to sell.
Instead, I would contend Mr. Musk is playing a well-planned waiting game, namely to sell his vehicles at a loss until he can finally convince governments — or they “come to their senses” — to ban those stinky internal combustion engines.
“We fought the good fight, but they (that would be you, the consumer) wouldn’t do the right thing, so the only solution if we want to save the planet is to ban internal combustion outright.”
Only then will he start selling his precious wares for what they really cost to manufacture. And, to be fair to Mr. Musk, it’s not just Tesla that may be counting on nanny states moving from incentives to outright bans. Volkswagen’s recent promise that 25 per cent of its fleet will be electric by 2025 is almost certainly predicated on direct government intervention in the marketplace.
A little too much NRA/ right-wing militia/Donald Trump paranoia, you’re thinking?
Well, as Cosmin Laslau so succinctly sums up in Lux Research’s latest newsletter, it’s already happening. Diesels have already been banned from Paris — albeit temporarily, but Mayor Anne Hidalgo is looking to make it permanent — and London is looking to institute an ultralow-emissions zone in its core by 2020.
But that’s just the tip of the iceberg. The Netherland’s labour party, PvdA, recently proposed banning the sale of all internal combustion-powered passenger cars starting in 2025. That’s not just the traditional gasonly car; even hybrids and plug-in PHEVs would be included. If it has a piston, no matter how efficiently used, you would not be allowed to buy it in Holland.
Likewise, Germany’s legislature recently called for a complete ban on internal combustion engines (ICEs), the Fatherland (Germany, after all, invented what we know as the four-cycle internal combustion engine) hoping to end production of gasoline-fuelled cars by 2030. Even India has called for a 100-per-cent conversion of its fleet to electric by 2030.
Though there is some stepping back from these seemingly draconian measures — Germany’s transport minister called the time frame “unrealistic” and the Bundesrat’s resolution is non-binding — the game, as they say, is afoot. And never mind that Norway’s muchpublicized promotion of EVs is the absolute height of hypocrisy (it funds massive EV incentives by selling oil) it nonetheless shows that some governments aren’t fooling when it comes to banning internal combustion vehicles from their roads.
So what, you might ask, if a whole bunch of foreign governments are pushing for a ban on piston power? What’s that got to do with us?
Well, as Laslau points out, the United States may not be looking at the outright banning of gasolinefuelled cars, “but subtly, that is exactly what California is doing,” each new iteration of its EV-supporting mandates, “ratcheting up the percentage of fleet sales that must be zero-emission.”
True, that’s not the same as a ban. But, according to Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, it might as well be. You might have heard that the Quebec government recently passed its California-like Bill 104, calling for 3.5 per cent of all vehicles sold in La Belle Province in 2018 to be zeroemitting, progressing to 15.5 per cent of its entire marketplace being electrically powered by 2025.
Never mind there is no shortage of EVs for sale (ostensibly the government’s reason for pushing the law through). Never mind California has had to dilute its zero-emissions vehicle (ZEV) mandate no fewer than six times over the past two and a half decades. You can even ignore the fact 15.5-per-cent market share is a pipe dream even by enviro-weenies’ standards. No, the truly debilitating effect of this legislation, as Mr. Nantais so succinctly stated in a submission to the Committee on Transportation and the Environment, is that “between 100,000 and 200,000 consumers (in Quebec) a year may not be able to buy the vehicles they need to meet their family or business needs” because the sales of conventional cars are shackled as a result of non-compliance with Bill 104’s proposed EV mandate. The wording may not say ban, but there is a very real possibility of sales being restricted.
Would automakers really restrict sales to avoid fines? It’s not as far-fetched as Nantais’ critics might imagine. Quebecers buy a disproportionate number of small hatchbacks and CUVs — vehicles that are minimally profitable. Why would an automaker sell a whole bunch of econocars that generate little profit if each sale just increases the fines for electric vehicles it can’t sell?
So, what will be the grand result of these draconian measures? Well, besides probably opening up yet another market for Tesla to make a killing on green credits — and further delaying the company’s need to make an actual profit on car manufacturing — there will no doubt be fines to be paid. Sales of EVs will not meet the Quebec government’s lofty projections. Consumers, not automakers, control sales and, while there’s been an uptick in EV sales recently, there’s still little evidence of a seismic shift in purchase patterns, even in electricityrich Quebec.
This is what happens when environmental elitists — and my God, I can’t stand the fact that this has me mouthing anything remotely Trumpian — determine they know what’s good for us better than we do. The market (that would be you, the consumer) has stated very clearly it doesn’t want to buy electric cars, so I guess the only solution is to force you to buy them.
I think the extremists in America’s right wing have it all wrong. It’s not your guns those autocrats are after, it’s your pistons they want. Or as my cohort, Brian Harper, recently said, “I will give up my Miata when they pry the shifter from my cold, dead fingers.”