The big news this week (unless aliens visit or Switzerland invades Vatican City) will be the long-awaited EPA proposal to curb vehicular emissions in order to dramatically reduce our contribution to a warming planet. It’ll reportedly be a big swing, meant to increase the adoption of electric cars almost tenfold in less than a decade. People will freak out, but I’m going to argue that it’s as important to pay attention to who is freaking out as to why they are doing so. While we’re doing that, let’s also look at Ford’s EV infrastructure plans, how China (who leads in EV adoption) is doing with their own policies, and a little bit about dealerships.
It’s Going To Get Harder To Sell Gas Cars In The U.S. Soon
First came the carrot. President Biden and Democrats in Congress managed to pass the Inflation Reduction Act, a massive cash injection to the automotive industry allowing for more money to build electric cars (via incentives, tax rebates, et cetera). Now comes the stick, in the form of a requirement for automakers to shift their production to primarily electrified vehicles by 2032.
The rules have not been officially announced, but people involved are clearly starting to strategically leak out pieces of the new Environmental Protection Agency rules in order to prep the market and stakeholders for what’s to come. Here’s what The New York Times has to say about it:
The requirements would be intended to ensure that electric cars represent between 54 and 60 percent of all new cars sold in the United States by 2030, with that figure rising to 64 to 67 percent of new car sales by 2032, according to the people familiar with the details, who spoke on condition of anonymity because the information had not been made public.
The proposed rule would not mandate that electric vehicles make up a certain number or percentage of sales. Instead, it would require that automakers make sure the total number of vehicles they sell each year did not exceed a certain emissions limit. That limit would be so strict that it would force carmakers to ensure that two thirds of the vehicles they sold were all-electric by 2032, according to the people familiar with the matter.
That last point is important. The European (and Californian) version of this law is for a fairly strict ban on the sale of gas-powered cars in 2035, albeit with a carveout for e-fuels in Europe. What the EPA ruling is likely to do is allow automakers to pursue their own idealized strategies, which could include hydrogen-powered cars (probably not, but maybe) and a heaping of plug-in hybrids with decent EV-only range.
This is just one source, of course, so let’s go with the Bloomberg report to see what their sources are saying. Here’s their report via The Detroit News:
The proposed standards on cars and light trucks, set to be announced Wednesday in Detroit, are expected to govern tailpipe emissions of carbon dioxide, smog-forming nitrogen oxide and other pollution from vehicles manufactured for model years 2027 through 2032. The plan was described by people briefed on elements of the proposal who spoke on the condition of anonymity because it isn’t yet public.
The EPA is poised to reject some environmentalists’ requests to set standards through 2035, however. Automakers pushed for a shorter timetable, cautioning White House officials in a Feb. 14 meeting that the trajectory for EVs and emission reductions depends on factors outside their control, including investments in charging infrastructure and critical mineral production.
These line up fairly well, and it’s possible that both Bloomberg and the NYT are talking to the same people. So let’s talk about who is going to get mad and what it means if/when they do:
The Automaker complaint is pretty obvious here. Automakers will always, generally, push for the least strict standards possible. Their arguments will likely be something along the lines of: We’re already making a lot of EV-powered cars and can only make so many simultaneous investments, charging infrastructure is lacking in many places, and finding mineral sources that comply with Inflation Reduction Act is not going to be easy.
In fact, the Alliance for Automotive Innovation (the industry’s main lobbying arm) gave both outlets basically the same quote that this is “[N]othing short of a complete transformation of the automotive industrial base and the automotive market.”
They’re not wrong! Market researchers at S&P Global have put out reports recently pointing out that we need way more chargers than we’re building and there are not enough minerals to make all the batteries required under various laws.
PURE EV AUTOMAKERS
Pure EV automakers like Tesla want a full ban on ICE cars for obvious reasons. It doesn’t sound like they’re going to get it.
There’s a lot of good news here if you’re an environmentalist or, frankly, if you just believe climate change is real (it is), and we need to act fast or bad things could happen (they already are). The big ask from EV advocates globally has been something along the lines of a 75% emissions reduction by 2030 relative to what we have now. They also want regulations that extend out to 2035 to match with laws elsewhere.
It’s unclear if they’re going to get the former, but they are almost certainly not going to get the latter. If the reporting is correct, the timetable for these regulations ends in 2032. Still, it’s a pretty big win for environmentalists either way. [Editor’s Note: It’s obvious, but worth saying: A passenger car-EV transition alone isn’t going to solve climate change. It should be a step forward long-term, especially as countries clean up their grids and figure out how to make batteries more cleanly (due in part to their efficiency, EVs end up being cleaner than ICE cars even given the current grid, but that delta expands with a cleaner grid), but let’s be honest about how small of a drop in the bucket this is, at least in the grand scheme of this incredibly complex issue. Also: The reduction of local emissions is also highly important, as this has health implications, especially for folks in cities. -DT].
This one is tricky. An early version of the Inflation Reduction Act called for cars to be built by union labor or they wouldn’t qualify for incentives. This requirement was dropped in the final bill. Ultimately, the bill had enough incentives to bring automakers to the United States that it could be a boon for labor in states like Michigan, which recently repealed its right-to-work law. The flipside is that electric vehicles, so far, seem less labor intensive than their gas-powered equivalents, meaning net fewer jobs. Again, from the NYT piece:
The transformation could also spell economic dislocation for American autoworkers, as electric vehicles require fewer than half as many laborers to build as gasoline-powered cars.
“We’ve dealt with the loss of jobs before through technology, but when you talk about the speed of this, it’s hard to fathom that we won’t lose jobs,” Mark DePaoli, a leader of United Auto Workers Local 600, said in a recent interview at the union headquarters near the Ford Rouge manufacturing plant in Dearborn, Mich.
Job losses in the auto industry could have political consequences for Mr. Biden, who will need voters in industrialized states like Michigan and Ohio if he chooses to run for a second term. As they have worked on the new regulation, administration officials have held weekly telephone calls with union leaders to try to reassure them.
Ultimately, everyone is going to likely complain, and it’ll tell us a lot about the law when we see who complains the most. These will just be proposals, so it’s likely there will be tweaks.
UPDATE: We now know a little more about what’s going to be in the bill. Read more here.
Ford’s Blue Oval City Will Be More Like A Tesla Gigafactory
Tesla, which wasn’t burdened by a lot of legacy constraints, designed its cars and factories simultaneously to massively simplify the process of making vehicles. It’s quite brilliant and, while journalists complained about Tesla’s four-hour filibuster presentation earlier this year, the substance of the presentation was largely about how the company continues to make cars people want more efficiently than anyone else.
Of course, Tesla has suffered from all sorts of quality control issues and EPA violations for polluting.
Ford’s new Blue Oval City massive plant in Tennessee will be the company’s first new plant in half a century, and its biggest ever at 4-million square feet. This is where Ford will build the vehicle codenamed Project T3, the EV truck that will out Cybertruck the Cybertruck. It sounds like the plant will be a big mix of Tesla ideas with some of the experience Ford’s had building cars for 100 years sprinkled into the mix.
There’s a big Automotive News piece on this that dropped over the weekend: “Ford’s BlueOval City radically changes how vehicles will be made.”
Here are some details:
“When you walk in, it will not feel like a plant that you’ve been in before,” Lisa Drake, Ford’s vice president of EV industrialization, told Automotive News. “Our target was to actually build this truck more efficiently than the best truck we build — and we build trucks pretty well.”
The plant will have fewer workstations, Drake said, and the vehicle built there, known internally as Project T3, will be offered to customers in significantly fewer configurations than today’s models.
“It’s a marvel of simplification,” CEO Jim Farley said at an event here in March.
Farley has stressed a need to reduce complexity and eliminate waste throughout Ford’s operations, saying the company must cut the number of fasteners in its vehicles by half and move to larger casting with fewer parts, like Tesla does, to achieve its goal of 8 percent margins on EVs.
This is essentially the only way to “beat” Tesla. The bit about reducing configurations is also key. Tesla made a point in its presentation earlier this year that it used customer data to find out that its customers didn’t use sunroofs, so they cut them and saved weight and complexity. A car isn’t one big thing. It’s a lot of little things. Still, those little things can add up to one big improvement.
Depending on what happens on Wednesday with the big EPA announcement, let’s see how Ford reacts.
Chinese Car Sales “Meh” Even After Price Cuts
It’s weird to say, but China is ahead of the U.S. car market in many ways, largely because they spent the last decade pumping money into electrified cars much in the same way we’re doing now. Those incentives disappeared in December of last year and the rapidly expanding market has started to contract.
Car sales in March were 1.61 million units, the China Passenger Car Association (CPCA) said. In the first three months, sales had fallen 13.4% to 4.33 million units, it added.
Sales of new energy vehicles (NEVs), which include pure battery electric cars and plug-in hybrids, rose 21.9% in March and accounted for 34% of the month’s sales, the data showed.
BYD led the segment with market share of 35.5%, while Tesla (TSLA.O) accounted for 14%.
Some of this is probably just an adjustment to consumers and automakers adjusting to the loss of subsidies. It’s worth noting that, even in a turn-down, BEVS and PHEVs are still kicking ass, making up 1-in-every-3 cars sold in the market.
Consumer Don’t Like Getting Price-Gouged By Dealers
This is going to come to a huge surprise to everyone: People don’t like being price-gouged. The lack of cars caused by supply constraints encouraged some dealers to massively increase the prices of the few cars they did have.
According to market research firm GfK, via Automotive News, this is not making those customers particularly happy with the places they bought their cars OR with the brands:
Twenty-seven percent of customers who paid more than sticker told GfK they would never buy that brand of vehicle again. Julie Kenar, GfK senior vice president of consulting, noted on a GfK webinar March 16 while automakers have no control over dealership pricing, “brands are still being negatively impacted.”
Thirty-one percent of buyers charged above sticker told GfK they’d advise other consumers to avoid that dealership, and 29 percent plan to never use that retailer for service.
With a huge glut of models coming in the next three years, it’ll be interesting to see how brand loyalty is impacted.
The Big Question
If you bought a car from a dealer and paid a high price would you:
- Avoid that brand in the future
- Avoid that dealership in the future
- Talk ish about that dealer to other people
Let us know.
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Photos: Ford, BYD, The White House
Great article! Even if politics was slipped in.
Are you prepared to pay the price? And I mean literally, are you prepared to pay for this financially?
It sounds good. We do need to keep going in this direction. Cars are going to cost more – possibly a lot more – because the industrial base doesn’t exist to do this yet. Just understand both the negative and positive consequences, please!
We live in the real world, which is not the ideal world. Please don’t have an article in 5 years lamenting the ‘unforeseen rise in car prices’. Many of us who would be called horrible names by those in favor of this push aren’t actually against progress – we just (try) to see the whole picture. I don’t have much hope for this, but since it isn’t out yet, let’s hope a balance was found to keep vehicles affordable and available while reducing pollution as much as possible within those constraints.
“Are you prepared to pay the price? “
“And I mean literally, are you prepared to pay for this financially?”
Plus all the people’s cars who can’t afford gas now?
On a side note, think of how these regs will drive up the prices of new cars…
Another way to keep people off the road…..
But beware regulations that force folk to give up their ICE cars….
Not to say that manufacturers would do so, but I’m pretty sure that if a company only made only Prius hybrid equivalents and no trucks, that would be able to meet a total emissions limit. This is based on playing with the numbers on fueleconomy.gov and seeing that a Prius hybrid is very close to a Tesla Model 3 and beats plenty of bigger EVs in my zip code (admittedly a dirtier electric zip code).
It’s wishful thinking, but ideally for the used car market, particularly those looking for good transportation in the sub-$10K area in the future, I’d like to see a mix of strategies from the new car manufacturers/carrots from the government to include building more small hybrids. Battery health concern in an old EV is probably not going to be solved. Few of us buying used cars can get a DT-like deal in an BMW i3. For the 10+ year old used cars, it’s much easier to afford the inevitable $2.5K Prius hybrid battery pack vs. a $10K Prius Prime PHEV battery pack.
Governments legislate first and believe their golden words on paper will make it come true. We’ll get to the EV level, but the transition is going to be very regionally dependent. And will take time. Cubic dollars printed by the fed won’t make up the technology and logistics needed.
If you bought from a dealer and paid a high price, the dealer is going to think that you are willing to do that again no matter what you say. After all, you just proved that you were willing to do it.
I just can’t wait to watch this shit show go down… All while I keep driving my 62 continental not giving a F
Re: Ford building electrucks… Fewer variations means ‘any color you want, so long as it’s black’.
Think of all the reduced chemical emissions by offering only one color.
Oh, and… they’re not saving the planet. That’s all bullshit.
Earth will still be hurtling through space long after the People are gone.
I would trade an all electric future for a complete rebuild of the dealership landscape. With the greatly reduced maintenance required by EVs the dealers are going to have to double down on vehicle sales to drive profits.
“Consumers Don’t Like Getting Price-Gouged By Dealers”
I don’t think this data means what you think it means. The percentages presented are a minority.
73% of customers who paid more than sticker might buy that brand again.
69% of buyers charged above sticker might still advise others to use that dealer.
71% of buyers might actually go to that retailer for service.
That’s crazy to me, but it tells me that most consumers don’t actually mind getting price-gouged by dealers.
All of the above in spades!
“Switzerland invades Vatican City”
Oh man, you spoiled the whole thing. Hundreds of years of Swiss commandos hiding in plain sight/clown suits waiting for just the right moment only for an automobile blog tipping everyone off.
Ah yes, let’s ignore math in favor of ideals. The “we have to start somewhere” crowd must not have any connection to the great unwashed masses they are trying to save. Cuz the math means a whole lot of pain for lower income folks, especially those not near charging and those with long haul commutes. If the 15-17% contributed by cars is right, even selling as many EVs as hoped will probably put “not much” of a dent in it. Incentives will be created to keep older ICE cars on the road longer (which will be dirtier because of technology and age) since a chunk of the population won’t be able to afford a new EV *or* can’t charge it *or* can’t use it because of their driving needs. Used EVs….yeah we’ll see.
As you point out, this all may be DOA if there aren’t enough raw materials to make the damn things.
You know who wins with this kind of stuff? Greasy a$$ politicians who can wave their teams’ flags (for and against) and lawyers who will fight/defend this nonsense in state and federal courts.
How about someone do some real world calculations and estimates…and preferably someone who doesn’t populate their studies with Homo Economicus and liberally say Ceteris Parabis.
I assume you were going for ceteris paribus [with other things being equal] but what you actually said was “you will prepare for the other things” which I suppose also mostly works for your point.
There are more than enough materials to make these things if we adjust our expectations. We need to replace SUVs/CUVs with midsized sedans that are still very roomy and comfortable, and offer affordable entry-level sports cars that have supercar performance in order to give something in return for the bloat/features that are sacrificed. Sub 150-wh/mile energy consumption figures, achievable through aerodynamic drag reduction and mass reduction, should be the gold standard for BEVs going forward, as well as ICE powered cars getting 80+ mpg.
But that doesn’t make as much money as the status quo, and that is why we weren’t seeing such things become reality 2+ decades ago when it was possible.
Automakers tried to make sedans taller and the seating positions higher in sedans in the 2000s and that didn’t work. Midsize sedans are already bigger and roomier than ever and even a Civic has more interior volume than an Accord or Camry did 30 years ago and people are still switching to crossovers.
The new car market is being driven by the wealthiest 20% of the population. That is a major part of the problem. Ordinary people cannot afford new cars anymore, and values exemplified in the purchases reflect that.
Those with the wealth to buy new want an imposing presence on the road and the ability to flex their wealth, even if they took out a loan to do so. This is why giant SUVs and foreign luxury cars sell so well. Fuel economy, operating cost, reliability, don’t matter much to this demographic.
The cars that retain their values on the used market reflect what people of average to below average financial means really want: efficiency, reliability, and low operating costs, and this is why base model Toyota/Honda/Nissan sedans and hatchbacks depreciate slowly compared to everything else. But even these more basic cars don’t reflect what is optimum for the demographic that buys them used, because the automakers built the cars to cater to the new buyer.
Part of solving this issue is evening out the distribution of wealth/income.
The Liberals in charge of the automakers chose to ax sedans in favor of profit. They’re investing in Green only because the government is forcing the market that direction. Digging for the motor and battery materials is done by slaves most of the time, and often children. The impact of these excavations is worse than drilling for oil. If we stopped driving ICE cars today, 10 years from now you would still bot see a noticeable difference in CO2 in the atmosphere. Humans make up .014% of the atmosphere that is CO2. By far most CO2 comes from volcanoes and forest fires. Climate change has been going on since the Earth began. Fires and volcanic activity have picked up in the last century, and it has caused a noticeable effect to CO2 levels. Going Green is great, but these ideas that BEV will solve anything is ridiculously laughable. They’re just forcing people to buy products that they invested in. Even if Covid was real, they forced us to buy Covid shots from companies they had already invested in. Only certain companies got the emergency rating to use. NovaVax, who had a good for everything vax, to include Covid, was pushed and silenced until the essential end of the chaos. They didn’t have an insider.
Ah yes, auto execs are well known for their liberal values.
As far as mining for lithium being worse than oil, uh.. gonna need a citation on that one, and not in the form of that old long-debunked photo comparing a really narrow specific angle of one oil field to a a copper mine labeled as a lithium mine.
Similarly, going to need a citation on that .014% number. Maybe you’re limiting it to just human exhalations and ignoring all the other human sources? We can and have measured the contributions from volcanos, and while they’re briefly major emitters during an actual eruption, they’re more like 0.01% of total CO2 emissions.
…and then the ridiculous anti-vax conspiracy theory tacked on to the end. Well, I guess that tells me all I need to know about your tenuous connection with reality.
“Cuz the math means a whole lot of pain for lower income folks,”
If we truly cared about low income folks, then we as a society would put far more emphasis on cheap public transit, better sidewalks and bike lanes would be part of the design of every road.
Poor people don’t drive cars because of a public transit or bike lane shortage. They do it because the mere existence of such things attracts wealthy, gentrifying urbanites who raise the cost of living and don’t appreciate having any of their five senses encounter the sausage-making side of actual industry, or the types of housing that low income earners can afford.
Another point that favors car ownership and use is having children in the family unit, and lower income families in the US continue to have more children, at earlier ages, compared to higher earners.
The problem is that this idea has been tried a thousand times over. These are high crime areas. Not all, but most of these people choose to not work or be humble to make more of themselves.
As far as the dealer, I would not pay more than sticker so it is a moot point. I know the value of the car via research, that is my limit.
Just because they paid too much for it or want to stick it to customer is not my problem. They have to sell it, I don’t have to buy it.
The Big Question: Yes to all. But I have only ever bought at a dealership once and it wasn’t too bad.