Welcome back to The Morning Dump. I hope you celebrated the 4th of July by hanging out with friends, grilling food, and blowing up a small part of the country. It seems like every municipality, yacht club, and restaurant along the Long Island Sound had their own fireworks show, so by the time we left our party on Friday night, the air was thick with smoke. Was this preparation for next year’s 250th celebration or a preview of the future?
I skipped the politics on Thursday as I wanted to take a few days to consider what the passage of Trump’s big tax/budget bill and the formation of a new political party from Elon Musk all meant. I hoped that lounging by the pool, eating my body weight in smoked meats, and engaging in a luxuriously extended game of Ultimate would lead to some sort of illumination. Unfortunately, my initial instinct has held. This feels very much like giving up, so now it’s on automakers not to cede more control of the future to China. I guess this is where I should mention that we have a day left in 90 days/90 deals, and so far, two deals have been made.
While I’m doing this, I should address the other elephant in the room. Or the anti-elephant? Elon Musk is forming a rival political party, and even longtime Tesla supporters are rolling their eyes. This might be an opportunity for GM, which has quietly picked up a lot of the trust that Tesla has shed.
The Repeal Of The Tax Credit Makes Most New EV And Battery Projects Unnecessary
My goal in doing this today is to cover the news and give you, dear readers, a place to talk constructively about what it all means. I might be wrong! It has been known to happen. As I’ve said many times before, there’s no removing politics from cars. Any major industry is as much a victim of politics as whatever pet social issue you might have (for me, it’s outlawing the Designated Hitter in baseball).
Some of our peers have been critical of this website for being apolitical, but I’d argue that we’re one of the most politically active car websites there is. Specifically, The Autopian has been active in encouraging the repeal of nonsensical anti-import kei laws, up to and including talking to legislators and helping state groups organize. What The Autopian is not, specifically, is partisan. Cars are an enormously powerful way to bring people of different experiences and political viewpoints together, which is something this country needs more of, not less. Can car culture save America? I think it could. If you disagree with me about the politics of the moment, but agree with me about the greatness of Škoda, you are welcome here. Or vice-versa. Honestly, just having an opinion about Škoda means this is probably a place for you.
Enough preamble. I’ve been thinking a lot about post-WWII America. Specifically, how America won the post-war period of rapid technologicalization and industrialization. The first big advantage the United States had, of course, was that most of the country hadn’t been destroyed by war. The huge investments the government made in waging the war went towards the creation of more industrial might, which, after the war, turned back into commercial endeavors. Sensing a need for an educated workforce, the “G.I. Bill” was used by roughly half of the 16 million WWII veterans for some kind of education, including the millions who went to universities.
American cars of the ’50s and early ’60s were feature-laden, big, and many times more powerful than the pre-war cars anyone was building. A lot of this is owed to another piece of legislation, which is historically probably the biggest subsidy for carmakers of all time: The National Interstate and Defense Highways Act of 1956, put forward by President Eisenhower. There are no cars without roads and, specifically, without the broad and (mostly) straight freeways the country built. I don’t want to get too much into geographic determinism, but there’s an alternative version of this where America built more trains instead of highways. Cars were the more obvious option at the time and quickly helped link cities in a way that was beneficial for industry, but it wasn’t a 100% lock that this was what the future would bring.
We got the roads, and then we got the massive land yachts to fill those roads. Having used those interstates in the last month to cross the country, it makes a sort of sense. As much as I love a 1960s Alfa, that’s not the right car for the job.
Unfortunately, this was literally not sustainable. These thirsty cars could not be a future in any country that was dependent on anyone else for cheap fuel. Nor could these vehicles be a future for any country that didn’t want its children choking on smog. The 1-2 punch of OPEC oil embargoes and environmental regulation to combat pollution led to the Malaise Era of cars. American automakers didn’t have a good plan for this particular future, and the government had to intervene. Japanese companies like Toyota and Honda were the ones who benefited, having created cars that were both smaller and more efficient.
A lot has happened between the Malaise Era and today, with American car companies yet again building bigger and thirstier vehicles, only to retreat to cars that were still big, but also a lot more efficient. Somewhere in there, a combination of the California Air Resources Board and a few government programs led, in fits and starts, to a genuine attempt at making an electric car. The company that took a big chunk of that money and was successful was, of course, Tesla. While a lot of what Tesla was able to accomplish is due to the genius of the various people involved in the project, it didn’t hurt that the government helped fund the project both through direct loans from the Department of Energy and climate credits. Whatever your politics, it’s hard to deny that Tesla’s creation is an example of what happens when American ingenuity is supported.
At the same time, China has, in its own way, pushed towards electrification. It’s been messy, and China’s massive overcapacity is a problem, but the country now controls the battery manufacturing, technology, and resources necessary to build electric cars.
President Biden, with the Inflation Reduction Act and other actions, pushed forward the idea that America should be the place where this kind of innovation and vehicle production happens. There was a mix of carrots (the IRA $7,500 tax credit, massive loans for new battery plants) and sticks (CARB climate credits, stricter emissions standards). Could it have worked? We’ll probably never really know.
With the passage of the combined budget/tax bill, many of those credits are going away. As CBS News reports:
The massive tax and spending cut bill that Congress passed Thursday ends federal tax incentives for electric vehicles.
Buyers have until Sept. 30 to qualify for the federal tax credits on EVs before they are terminated. But experts say there are still strong financial reasons to consider buying the vehicles even without those incentives.
Before the bill passed, new electric vehicles came with a $7,500 federal tax credit, and used EVs included up to $4,000. Those incentives were originally designed to help make the vehicles more affordable.
The counterargument to this is that America shouldn’t be picking one technology over the other. That automakers used this incentive to build expensive EV crossovers instead of smaller, more affordable cars. My response to this is, again, to look at Tesla. The company probably only exists because of these initial programs, and much of its profits have come from climate credits. Building an entirely new industry takes time, especially when so much of what you need to make these cars relies on a government we’re not always the friendliest with right now. As Patrick George wrote in his big piece on this over at InsideEVs:
The lithium-ion battery was born here. But outsourcing them, and all kinds of other consumer goods, has led China to become less of the world’s on-demand contract factory and more of a giant science lab that’s run away with this technology. And it’s not just batteries themselves but the entire supply chain of materials to make them; as the Financial Times reported in April, the U.S. relies on China for 70% of the rare earth compounds and metals it imports, and then companies like Apple and others source directly from there.
Besides the risks of getting a key piece of consumer tech from only one place—a lesson Americans learned the hard way during the semiconductor shortage of the pandemic—there’s the obvious problem of leaving the power source of the future in the hands of a country with which the U.S. has difficult relations on a good day. (Not many people in America would seriously suggest that this country import all of its petroleum from Venezuela, Iran, and Russia.)
I’m not one of those people who believe that, even if the credit stayed in place, consumers would all immediately run out and grab a new EV. That was a belief that led to too much hype and, combined with low interest rates and SPACs, probably set the industry back. I do believe, though, that most cars will be electrified in the future, with a mix of hybrids and EREVs, as well as pure BEVs.
Whether you like it or not, batteries are the future of automobiles. Consumers like the performance and efficiency of electric cars, even if they don’t currently like the price. If it is the future, then ceding that future to anyone else isn’t good for the country. President Trump’s own stated goal is to improve American manufacturing, but this is the opposite of what’s likely to happen. While more carmaking is probably coming (thanks in part to tariffs), less of it is going to be the advanced kind of manufacturing that a switchover to electric cars was likely to bring, at least according to a study from Princeton University’s REPEAT Project:
If clean vehicle tax credits are repealed, as much as 100% of planned construction and expansion of US EV assembly and half of existing capacity could be at risk of cancellation or closure. If the share of EVs manufactured in the US remains at 2024 levels, nearly three-quarters of planned projects would be unnecessary.
Currently planned construction of US battery cell manufacturing demand already exceeds requirements to supply electric vehicles assembled in the United States under a continuation of current policies.
I assume there will be a big boom in electric car purchases this quarter as companies do all they can to shove the EVs they’ve built, or are planning to build, out to market while the cars are this much cheaper. After that, I’m guessing the curve is going to flatten a lot, meaning that all these planned facilities are, as the study above points out, kind of pointless.
My feeling is that this is America’s government giving up on the future, or assuming the future will all be ICE-powered cars and a few hybrids. It’s possible that’s true, but I don’t think so. If this all feels like a major setback to you, all is not lost. There’s still hope, but it’s going to be up to American industry and American automakers to counter it.
What does that look like? There’s Slate Auto, which looked like a great alternative to traditional manufacturing, but that took a giant hit with the passage of this legislation. Hopefully, Rivian can hold on long enough to build its smaller and more affordable vehicles. General Motors has reached a sort of profitability with its electric vehicles, though how that holds up without the tax credit isn’t clear. I’m excited about Ford’s skunkworks EV project, which hopefully exists outside of the need for the $7,500 tax credit.
The fact is that the federal government has taken a step backward both in requiring more efficient vehicles and in funding the creation of them. This means that companies will have to decide how much it’s worth it to do it with fewer carrots and fewer sticks.
’90 Deals In 90 Days’ Has One Day To Make 88 Deals
By my math, President Trump’s promise to do 90 deals in 90 days has about a day left, and only two deals have been done. The first was the United Kingdom trade deal, and the second is one with Vietnam. This is a big one, as the United States has long favored the country as a friendlier alternative to China, although Chinese manufacturers have used Vietnam’s special status to try to pass goods through to the United States at a lower cost.
The way it works is that there’s now a 20% tariff on goods from Vietnam and a 40% tariff on any trans-shipments that pass through the country. What does the United States get?
Vietnam would also provide the United States with more market access, with US exports to the country facing no tariffs, Trump said. That agreement appears to include US exporters of large-engine cars, according to Trump and Vietnamese state media.
“It is my Great Honor to announce that I have just made a Trade Deal with the Socialist Republic of Vietnam,” Trump said on Truth Social.
“It is my opinion that the SUV or, as it is sometimes referred to, Large Engine Vehicle, which does so well in the United States, will be a wonderful addition to the various product lines within Vietnam,” Trump said.
No one in this country refers to SUVs as “Large Engine Vehicles,” but I have a sense of where that’s coming from. There’s been an ongoing threat from China against European automakers focused on vehicles with large engines, so perhaps that’s what he’s talking about?
Elon Musk Starts A Third Party, Making Trump And Tesla Investors Unhappy
The once glowing partnership between President Trump and Tesla CEO Elon Musk spectacularly blew up last month, and now it’s again in the news as President Trump took to his social media platform to blast Musk’s creation of a third party (the American Party), and Musk responded on his own social media platform by mocking the President via retweet.
Like a landmine covered in armadillo crap, I ain’t touching that. My advice to you is simply: Walk away.
That’s not possible for Tesla investors, however, as Tesla investors have been begging Musk to get back to work and, to some of them, this does not feel like getting back to work. As one investor told Bloomberg:
Devoting resources and attention to a new political party runs counter to what Musk told Tesla investors during the company’s last earnings, in April — that he’d allocate “far more” of his time to the company after his work for the Trump administration ended.
“The board is going to have to get involved,” Dan Ives, an equity analyst at Wedbush Securities, told Bloomberg Television, saying he was frustrated as a supporter of Tesla. “There’s a line in the sand that he’s now starting to cross.”
Um, this is the line in the sand? How big is this freakin’ beach?
GM Is Ready To Pick Up Tesla Customers
I assume there will be a large run on Tesla products in the coming months as consumers, at least the ones disinterested in politics, recognize that the Model Y is still an enormous bargain for what you get. Could some of those consumers maybe be looking to buy a General Motors product? Maybe!
GM has been building market share in electric cars while Tesla has been shedding it, as the Detroit Free Press points out:
The Detroit automaker accelerated electric vehicle sales and market share in the first half of the year thanks to expanded electric offerings across three of its four brands. Meanwhile, consumer sentiment for Texas-based rival Tesla cratered this spring due to criticism over Musk’s hands-on involvement in Washington politics.
“GM is quietly building trust while Elon burns it,” said Paul Waatti, director of industry analysis for AutoPacific. “Consumers are responding to consistency, not volatility, and GM’s steady hand is starting to pay dividends.”
Now is a great time to buy a base Equinox EV is all I’m saying.
What I’m Listening To While Writing TMD
I’ll probably end up doing every song from this album, but “Good Feelings” from Violent Femmes is a chill Monday vibe that I need.
The Big Question
Am I wrong? This is a long post. I might be wrong a lot! What do you think?
Top photo: Leffler, Warren K. / Library of Congress Prints and Photographs Division
If I had keys to the helm, I would do a War Time Industrial Mobilization effort to fight the impending global catastrophe of global warming. This would be in the form of:
Carrots:
Fast pace electric utility upgrades, new centralized power plants (nuclear) and low maintenance decentralized power generation (solar), heavy investment in grid balancing, electrifying a home with heat pumps, electric stoves. Tax credits to update to >100A service.Transportation infrastructure spend on the same levels as the highway system in 1956 to improve rail, autonomous rail, intercity and inter urban rail, to be electric powered (battery powered if needed), high speed, reliable and frequent. Give a tax credit to e-bikes and e-scootersUrban densification efforts to increase density around the proposed stations built in the proposal above, increase housing development, reduce housing costs, incentivize living near workGive business tax credits for companies who’s populations are >60% work from home (if you don’t need to drive, you don’t need to buy an EV), give additional tax credits if they are located in high population centers or near public transit zonesProvide a income based stipend for super commuters and rural drivers who have no choice but to operate a vehicle to commute (reduced/no taxes based on weight and mileage, possibly even a tax credit of $~0.15/mile)
Sticks:
End coal subsidies, natural gas subsidiesTax private power generation (mobile or stationary turbine) based on utility usage (eg. gas meter inlet)Removal of gasoline subsidiesDe-prioritize interstate highway funding, road funding. No more additional lanesFederal Tax on all vehicles based on weight and miles driven, this is fuel agnostic (anonymize data so that insurance companies won’t find out how much you drive)tax the shit out of private equity and corps that own >10 dwelling units.Tax corporations that require >60% of workers drive personal vehicles to workTax private parking lots based on land value, not property value
Key reasons this would be bipartisan:
Economic benefits are bipartisan – as long as people are paid, people are fat and happyFixes the “loneliness” epidemic by getting people out in the worldRepublicans hate foreigners, and preventing global warming prevents climate migrants.Everyone pays their sticks equally. No free lunches.
Lemme know what you think.
Definitely not too long a post. I’m hoping Elmo spends at least a billion dollars on his party. Maybe then Tesla stock will be valued appropriately.
How does senile old man trump think there is an EV mandate, that “everyone would be forced to buy an electric car in a short amount of time”? He’s either senile or lying, both are really bad. We can do better than this, so much better.
Porque no los dos?
The resistance to EVs have four main reasons:
The market manipulation via regulations, subsidies, and tax breaks combined to make it feel like certain groups had the ear of the previous administrations and were manipulating the market. Many people want the unimpeded free-market to determine the size of the EV market.
The smug, “holier than thou” attitude of owners of a certain EV (who worshipped the ground a certain CEO walked on until he started cooperating with the wrong politician even though his views have stayed the same). They assumed their use case was the same as the use case of everyone else, and anyone who explained why EVs wouldn’t work for them were excoriated as EV haters and troglodytes.
For many people, EV charging is a hassle. Either they have on-street parking and don’t want to run an extension cord to the curb, live in an apartment where a charging spot isn’t available (although many complexes are addressing this), or want charging while away from home to be just as fast as fueling at a traditional gas station.
There are some people whose range, size, price requirements cannot be met by EVs.
Hate to say it buy the US president is probably right about Musk. Anyone writing on Autopian old enough to remember Ross Perot?
He was a Texas IT billionaire who founded his own far right party and being born in the US, actually ran for President himself and got 18.9% of the vote in 1992, probably easing the way for Bill Clinton.
He also was never filmed giving Nazi salutes.
And hardly anyone knows who or what he was.
Pepperidge Farm remembers….
I remember Perot and his charts, John B Anderson running as an independent, etc. Finding good presidential candidates is hard.
I remember Perot, but he was not far-right. His main policy platform was protecting American jobs, and none of his other policy statements were blatantly controversial. In fact, my personal theory is that his entire campaign was a stunt meant to raise awareness of his chosen issues. I don’t think he ever wanted or intended to be President, but when polling started to show that he might end up splitting the vote with Clinton, thereby resulting in Bush’s re-election, Perot pulled out of the race to preclude that from happening.
The actual far-right candidate of the 1992 race (or at least one of them) was Pat Buchanan. One of his policy platforms was eliminating Federal disaster assistance. He was almost laughed out of the room for that one, because what kind of politician would be crazy enough to alienate all of his constituents at once?! (The difference being that Pat Buchanan was an honorable man who respected his colleagues and opponents, however extreme his policy positions may have been.)
Who is saying you are not political enough, fucking jalopnik? You beat out every other website by a mile otherwise. Love to see the receipts on that from others.
My dad played Blister in the Sun so many times on the road I can practically smell the inside of his truck whenever I hear the song.
I’m sorry you had to go through that, my wife loves that song… uugghhhh.
It’s one of those songs whose popularity has never made sense to me. Do people just “like” it ironically, like Tiny Tim in the 60s? Is it one of those “So bad it’s good” things, like that movie The Room? Because it is definitely not good by any standard of measure or taste.
(And I say this as a die-hard Alternative radio listener from the 80s to 2000s.)
Have any of the writers for Autopian had a chance to drive a BYD?
If not please at least get down to Mexico to drive one.
For anyone that’s been out of this country and had the opportunity to drive/ rent a BYD know what I’m writing is true.
They are fantastic.
The other car makers may catch up to them in the future but right now they are the leader in fit finish and if you want it ,technology.
We can keep our heads in the sand but the rest of the world is moving on without us.
keep your slave cars.
Just wait till you find out about who made your Nikes and your Samsung phone…
If you’re motorsport enthusiast and want a 400+ hp ICE car because you go full throttle all the time when you can and don’t mind to pay a premium for the fuel, then go for it.
For the other 95% people in the country ; EVs are cheaper to run, cheaper to maintain and makes events like the Oil Crisis not possible.
If you keep running ICE cars then one day the Middle East is going to fk the US again and unlike back in the 70s this time it could hit much harder. At BEST gas prices would just go up, at WORST pumps in certain parts of the country will be empty.
Depending on the gravity of the event this could be a matter of days or weeks or month.
Meanwhile anyone with an EV with even the most anemic range will happily scoot along and go to work or do their business or haul cargo from A to B.
The propaganda of Big Oil has worked very well in the US. While the rest of the world is enjoying less pollution, less noise, lower costs per mile, the US has been brainwashed in thinking that we need an ICE car so we can drive in one day 1000 miles by stopping just 5 minutes to add gas. Because… Freedom!
Meanwhile that guy with that EV who just used a super charger, took a dump, bought a coffee and ‘a croissant’ will happily do the same, but at a fraction of the fuel costs…
The US is net exporter of crude oil these days. We aren’t in the same position we were in the 70s.
What the US really needs to do is get our shit together when it comes to charging stations. Every time I go to a non-Super Charger station there’s a wait. Sometimes up to an hour. That’s in addition to the charge of about 45 minutes so we typically leave the EV at home if we’re going to be on longer trips. In Europe there were plenty of chargers at every rest area. We didn’t need to wait for one even once.
Our EV is what we put 90% of our households miles on. We can charge at home and even with a range of 200 miles, it’s more than enough for just about everything we do. But until either the public charging situation improves or we get a car that can go much further on a charge the EV will stay on daily duty.
You’re not wrong: “Good Feeling” is a fine tune, and that is an excellent album.
No more EV’s being shoved down our throats?
I must have missed the forced-feeding tube when visiting the Tesla website.
I largely agree; there really is no topic or area of interest that isn’t in some way largely affected by politics. The Autopian does a great job of acknowledging these currents without getting swept into them. I enjoy this site because it provides escape. I know some things about motorcycles and very little about cars (and trucks and RVs), though I enjoy science and engineering, including as applies to cars. Here is a place were the writers engage us with the strangest corners of their hobby, and do so with complete and gleeful self-awareness of their fetishism. I find this to be most welcoming.
I also agree with the proposition that the automotive hobby can bridge divides. It, and any other passion, absolutely can. It opens the door to finding a kindred soul who shares a passion, but maybe votes differently. This in turn (hopefully) creates the context for an honest but respectful exchange of views. There’s no avoiding politics, but there is avoiding a closed mind.
I grew up in a conservative household (meaning 1980’s “conservative”, which is vastly different from now). I was told that with age and worldly experience, I too would be more conservative. That didn’t happen, or necessarily NOT happen. My hobbies and professional life have brought me into contact with many smart and well informed people to influence in any direction on any topic.
Unfortunately EVs are as divisive as a topic as any, so I can only assume the global market place will declare the victor at some point. In the meantime, I appreciate The Autopian exactly as it is.
Okay I’m done. Facts show EVs are poor vehicles and poor replacements. Facts show China is using slave labor and putting devices to steal everything. The media is identifying Chinese junk as perfectly built vehicles outperforming ICE vehicles in every way despite EVs sucking and China not providing any test EVs. A close to Bankrupt Ford CEO acting like an influencer claiming a vehicle great from a country that never made a decent vehicle but after so many recalls and probably in need of cash I am sure Ford isn’t needing a lifeline from China so fake reviews. Hey Autopian where is your test car that made you think China EVs are cheap and great despite never driving one?
Uh, EVs don’t suck, especially if you can charge them at home. We use our ID4 for almost everything but long road trips but that’s because of its 200mile range. When I was in Europe last month we drove a Mercedes EQE 350 with a 300mile range from Stuttgart to Mayerhoven in Austria. It was great.
There certainly are situations when they aren’t the best, like towing or if you can only use public chargers. But that’s what my Grand Cherokee is for.
U trolling?
Donald – Is that you?
Ok Grandpa, time for bed.
Oh it’s not you, it’s more of a Shelbyville idea.
This all comes down to forcing energy to be “on tap”. Electric vehicles, solar, wind, and water do not need resources that are “on tap” as much as an ICE does. It is the reason they have gotten rid of all of those things.
You can charge a per gallon fee to power your personal power plants. It’s much more difficult if you are filling up at home over night, or getting power from the sun for free, or wind for free, or water for free. (I know, nothing is free, one must make this stuff)
This is the primary reason we are where we are.
Yup. I believe this is what is referred to as ‘rent seeking’.
Over the last century, control of the oil industry (and thus modern life) has been consolidated by a small handful of powerful organizations, and they would prefer it stayed that way. Fossil fuel extraction is a tricky, messy business, and you need massive economies of scale to compete- Not everyone can set up a gas plant in their backyard (literally and figuratively) and achieve energy independence.
Battery tech throws that out the window. There are hundreds of ways to generate electricity from the landscape, renewable and otherwise- the hard part has always been storing it to make use of later, or in practical mobile packages. Batteries solve that problem, and despite their complexity, can be manufactured almost anywhere by anyone. Countries like China may lead the charge, but the technological cat is out of the bag, anyone’s game if they want to play it. Mineral extraction and refinement are still icky, but distributed much more evenly around the globe. Unlike fossil fuels, the compounds in a battery can be reused thousands of times, and they’re recyclable! There may be more energy in a gallon of gas(for now…) but once it’s gone, it’s gone.
This isn’t even about climate change. Durable, energy dense batteries simply mean that any energy source- Nuclear, coal, biomass, solar, hydro, methane capture- It’s all on the table, and can be used for manufacturing, transport and warfare. We are currently witnessing an asymmetric conflict where cheap electric FPV drones allow a smaller country to defend themselves against an oil-rich former-superpower of far greater numbers. This is the ultimate democratization.
At an individual scale, power companies can try to jack your rates, but they now have to compete with the fact that you are only (speaking generously) a $50k investment away from your own home solar setup and energy independence.
Ultimately the world is heading towards batteries, like it or not. I don’t support Trump or any government that discourages local innovation in these areas, but I don’t think it will matter long term. The economies and societal leap forward enabled by reusable vs combusted resources are staggering and simply too powerful to ignore.
The problem is the automakers are unable or unwilling to make a stripped-down EV with enough range to overcome (non-car person) anxiety and sells for the price of a Mitsubishi Mirage.
It’ll be up to the states to push the car industry. If 40% of the car market, the “CARB” states, keeps things tied up in court and refuses to allow more polluting new cars to be sold, car makers will have a decent market based incentive to keep pushing electrified vehicles. Keeping state level incentives will help too.
The coastal states have had big air quality problems that a cleaner fleet of vehicles has definitely helped. Keeping the car makers moving forward will help everyone.
No if the market doesn’t want EVs stop trying to force it.