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Biden’s Electric Vehicle ‘Mandate’ Might Just Be A Surprise Gift To China

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The Biden administration has put in place regulations that would require many Americans to adopt electric vehicles (EV) in the coming years despite U.S. companies struggling to produce the products, leading some experts to wonder if vehicles from China will be needed to meet current goals.

The Environmental Protection Agency (EPA) finalized emission standards in late March for light-duty vehicles that would effectively require 67% of new models sold to be electric or hybrid by the end of 2032 in hopes of speeding up an EV transition to reduce carbon emissions. The regulations are in spite of sluggish American EV demand that has led to both concerning losses and slowdowns in production for automakers, with both Tesla and Rivian missing production expectations for the first quarter of 2024.

China’s EV industry could fill the gap left by the lagging U.S. market, experts told the Daily Caller News Foundation.

“China’s EV production would pose no risk to American consumers or U.S. geopolitical security if we had a free market allowing U.S. companies to concentrate on their comparative advantage in pickups, SUVs, and minivans, and allowing consumers to decide which types of vehicles best meet their needs,” Marlo Lewis, senior fellow at the Competitive Enterprise Institute, told the DCNF. “EV mandates, however, create a captive market for EV producers, and China is today the world’s top EV producer.”

BYD, China’s top EV maker, has experienced a meteoric rise in recent years, with yearly profits growing 80.72% year-over-year in 2023 amid global expansion, but has so far been priced out of the American market due to current restrictions. EVs and hybrids made up 30% of all Chinese car sales during the first 11 months of 2023.

China also has broad command over the current EV supply chain due to its control over minerals needed to build batteries required for electric vehicles. The country currently controls 87% of the world’s mineral refining capacity, with U.S. attempts to increase its own capacity not yet yielding sufficient results.

The Biden administration has sought to incentivize the purchase and manufacturing of certain American EV models with a $7,500 tax credit in an effort to drive down costs for consumers, conditioning the subsidy on manufacturers not using a certain level of components from foreign entities of concern, like China. Despite incentives and mandates, sales for new EVs in the U.S. grew only 2.7% in the first quarter, below the 5% that sales for all new vehicles grew, leading to a drop in auto market share to 7.1% for EVs.

Automakers, including Bentley, GM, Ford, Mercedes-Benz and Honda, have scaled back their previous EV goals as consumers decline to buy the product.

“So, if U.S. manufacturers are forced to keep making high-priced EVs, their market share could contract while BYD’s increases,” Lewis told the DCNF. “Global auto industry leadership would shift from the United States to China. California and EPA’s EV campaign could end up helping fulfill China’s ambition to be the world’s leading superpower.”

The Biden administration has also put forward restrictions on heavy-duty vehicles, like trucks, that effectively require at least 25% of new long-haul trucks and 40% of all new medium-sized trucks to be electric or zero-emission by 2032.

Several American auto manufacturers have posted huge losses due to EV development and sales, including Ford, which lost $4.7 billion on EVs in 2023, losing nearly $65,000 on each EV that it sold. General Motors lost $1.7 billion in just the fourth quarter of 2023, despite strong profits overall.

“Americans rely on too many critical goods and raw materials from China, which is why we need to ‘strategically decouple’ from CCP supply chains as soon as practicable,” Adam Savit, director of the China Policy Initiative at the American First Policy Institute, told the DCNF. “That goes most especially for critical high-tech and defense needs, such as semiconductors, AI, quantum computing, and rare earth elements. U.S. policymakers have made us increasingly dependent on EVs for transportation, so as long as such policies are in place, we must decouple from CCP EV supply chains as well.”

Savit pointed to the current tariffs on EVs as the reason Chinese EV makers have been unable to break into the U.S. market and are unlikely to if current trade restrictions were to remain the same. The Trump administration put in place a 25% import tax on EVs, which Biden has so far kept in place.

BYD has sought to infiltrate the American market through possibly building EV plants in Mexico, which, under current restrictions, could skirt around tariffs, delivering EVs that could compete with even gas-powered vehicles in terms of price to American buyers. Chinese EVs are also often of lesser quality, have access to cheaper materials and can utilize less expensive labor.

“Even American-made EVs are produced with a lot of Chinese inputs, including critical minerals,” Savit told the DCNF. “Many EV-related CCP supply chains are tied to human rights abuses and forced labor in Xinjiang.”

Former President Trump, in a campaign speech in mid-March, called for putting a 100% tariff on every single car manufactured outside the U.S., which would severely hamper China’s ability to sell in the country, while also reducing competition for domestic manufacturers, according to CNN.

Chinese EVs have already made large headwinds in the European market, with around 19.4% of EVs sold on the continent in 2023 being made in China, which is expected to rise to 25% by the end of 2024, according to an analysis from the European Federation for Transportation and Environment. The European Union announced in September 2023 that it had launched an investigation over whether to impose punitive tariffs on Chinese EVs due to artificially cheap prices from state subsidies, according to Reuters.

The White House did not respond to a request to comment from the Daily Caller News Foundation.

AUTHOR

WILL KESSLER

Contributor.

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All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

Would you buy a used Tesla from Elon Musk?

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More to the point, would you buy its used battery?

My father was a loan officer who specialized in auto loans. In that position, he had to be a good judge of character. I seem to remember one day he was talking about a fellow he knew and said something like the following: “He’s stayed out of jail, but I wouldn’t buy a used car from him.”

More and more used-car buyers are going to face something like the headline’s question as used electric vehicles (EVs), predominantly but not exclusively Teslas, hit the used-car market. A recent article by Jamie L. LaReau of the Detroit Free Press, and republished by papers in the USA Today network, describes the challenges consumers face in buying a used EV.

As you probably know, the single most expensive component in an EV is the battery. A complete replacement of the entire battery can cost about half the price of the car (e.g. US$15,000 for a $30,000 used car). The difficulty in buying a used EV is to figure out the condition of the battery—what its current range is and how long it will be before it has to be replaced. Currently, there is no good way to do this.

LaReau recommends taking the prospective purchase for a long test drive, preferably a couple of days, and running it on the kind of commuting route you expect to use it for. If the battery runs precariously low in such a situation, the car may not be for you. Some types of EVs allow the owner to replace individual faulty cells in the battery, thus avoiding an expensive replacement of the entire battery. I would imagine that the diagnostics for such a replacement might not be straightforward, and only dealers for that particular model could do such a check. Other types of EVs make their batteries as a unitary packaged structure that has to be replaced all at once. So when the battery’s performance falls below what is required, there’s really no other option but to replace the whole thing.

Dave Sargent, whose title is Vice President of Connected Vehicles at the consumer-analytics organization J. D. Power, is quoted as saying that mileage as reported by the odometer is not a good guide to battery condition. More important is the way the car was driven—highway versus city streets—what the average temperature of its surroundings were (Phoenix or Bangor is bad, Atlanta is good) and how it was charged. Fast charging, for example, is harder on batteries than the slower overnight charging that most consumers are able to do in their garages. Also, if the battery was frequently allowed to discharge lower than 20% capacity, that tends to age it faster than otherwise.

In principle, all this data could be (and maybe is) stored somewhere, either on the car’s computer or the manufacturer’s remotely gathered database on the vehicle. If somebody hasn’t done this already, it shouldn’t be hard to write software that can take such data and make an educated guess as to the overall condition of the battery at the time of sale. At this time, however, such software doesn’t seem to be generally available.

Some dealers will test the battery for a fee of about $150, but that only tells you what condition it is in now, not what it’s going to do in the future. A Federal government mandate to guarantee the battery in a new EV for eight years or 100,000 miles is worth something, but it is not clear if that warranty is always transferable to a used-car buyer. On the lender CapitalOne’s website, an article warns that some manufacturers won’t replace a battery under the federal warranty until it is totally non-functional. So even if the car would just get out of your driveway and then die, you’d be stuck with it until it wouldn’t even do that. And sometimes the warranty won’t transfer to subsequent owners.

All in all, anyone buying a used EV is taking a chance that the battery will not do what they want in a time sooner than they’d like. Of course, used cars in general are a somewhat risky purchase, but as a purchaser of used cars most of my life (I’m driving the first new car I ever bought, and that was only three years ago), there are ways to tell if you’re getting a lemon or not, and state-mandated “lemon laws” allow consumers to return vehicles that were sold under clearly fraudulent conditions.

But the lack of expertise on the ground who can make a reliable prediction as to when an EV’s battery will degrade below an acceptable level of performance is a novelty that most buyers would rather not deal with.

On the other hand, the reasons why people buy electric cars are not your usual reasons. Currently, none of the EVs available, used or new, sell for prices that would attract what you might call the typical buyer. LaReau cites statistics that say the current average price of a new EV is about $58,000 and for a used EV, you’ll pay an average of $41,000. So we are talking high-end if not luxury vehicles, and buyers for whom price is not the main consideration.

I think one of the main motivations for people who buy EVs is a politico-aesthetic one: they think they are helping to avert global warming. Whether buying and using an EV really does this, considering all the manufacturing steps, the mining of lithium and other metals under less-than-ideal circumstances, and the source of electric power used to charge the thing, is a question for another time. Whether or not one really does affect global warming with an EV purchase, lots of people feel like they do, and that’s what counts in marketing.

As with any used-car purchase, the old Latin motto caveat emptor (“let the buyer beware”) applies in spades to buying a used EV. If the car’s battery performance turns out to be a disappointment, maybe the purchaser can just look upon it as one more sacrifice made in the cause of fighting global warming. But your typical car buyer is likely to be unmoved by such sentiments, and so things will have to become a lot more transparent before used EVs become just as easy to sell as conventional gas guzzlers.

This article has been republished from the author’s blog, Engineering Ethics, with permission.

AUTHOR

Karl D. Stephan

Karl D. Stephan received the B. S. in Engineering from the California Institute of Technology in 1976. Following a year of graduate study at Cornell, he received the Master of Engineering degree in 1977… More by Karl D. Stephan.

EDITORS NOTE: This MercatorNet column is republished with permission. ©All rights reserved.

Elon Musk Meets With Speaker McCarthy And Minority Leader Jeffries. Here’s What They Discussed

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Twitter and Tesla CEO Elon Musk made a surprise visit to the U.S. Capitol on Thursday to meet with House Speaker Kevin McCarthy and House Minority Leader Hakeem Jeffries.

Musk said he met with the two House leaders to discuss ways in ensuring that Twitter is fair to both sides of the political aisle after taking over as the social media company’s CEO in October.

“Just met with @SpeakerMcCarthy & @RepJeffries to discuss ensuring that this platform is fair to both parties,” he tweeted.

McCarthy exited the meeting with Musk and declined to discuss what the meeting entailed. He told the reporters that the tech mogul wished the Speaker a happy birthday.

“He came to wish me a happy birthday,” he told reporters, who turned 58 Thursday.

McCarthy said he did not discuss the debt ceiling that recently exceeded $31.4 trillion, and ignored all other questions related to the matter, Bloomberg reported. The press did not witness Musk leave the meeting or the building after their appointment together on the second floor ended.

Musk is a longtime donor of McCarthy and expressed support for him stepping up as speaker during the tumultuous, days-long speaker vote among members of the House. The California Republican finally became speaker after 15 ballots.

The tech mogul has become a popular figure among the political right since urging people to vote Republican and voting for candidates of the party for the first time in the special election held in Texas’ 34th district. He publicly shared that he cast his ballot for Republican Texas Rep. Mayra Flores.

He further became a vocal proponent for free speech amid his $44 billion purchase and eventual takeover of Twitter. He later reinstated the account of former President Donald Trump following a public poll calling for his return.

AUTHOR

NICOLE SILVERIO

Media reporter. Follow Nicole Silverio on Twitter @NicoleMSilverio

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As Other Automakers Push EVs, This Luxury Brand Drove Laps Around Them In 2022

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While electric vehicle (EV) startups that once seemed promising saw their stock prices plummet far faster than the rest of the market, Ferrari managed to stay ahead of other automakers as the industry retracted, and is poised to post the smallest decline amongst major automakers in 2022, CNBC reported Wednesday.

The FactSet Automotive Index, a measure of the economic health of the auto industry, is down nearly 39% year-to-date at time of writing, whereas Ferrari’s stock is only down about 19% trading at roughly $210 per share, according to Google Finance. With just a few days left in the year, Ferrari was well ahead of traditional automakers such as General Motors and Ford, who were each down more than 45% this year, and left EV-focused startups in the dust, according to CNBC.

EV startups Rivian, Lucid and Canoo all posted losses of more than 80% year-to-date, while competitor Nikola saw shares fall nearly 78%, according to Google Finance. Other mainstream brands, such as Dodge-maker Stellantis, and Toyota saw declines of nearly 30% year-to-date, weathering 2022 without the production and liquidity issues that startups struggled with this year, according to CNBC.

Tesla, perhaps the most high-profile EV maker in the U.S., is down roughly 70% year-to-date, losing nearly 20% in the week ending Dec. 23 after CEO Elon Musk spooked investors by selling around $3.5 billion worth of shares. While some investors are concerned that Musk is spending too much time managing Twitter, the social media platform he acquired in October, Musk blames heightened interest rates set by the Federal Reserve to combat inflation for weakening the stock market.

Elevated interest rates have also made car loans more expensive, helping push demand for new vehicles down as 2023 approaches, S&P Global Mobility reported. To spur demand, companies may be forced to cut prices, hurting profits and further damaging their value in the eyes of shareholders.

Ferrari, meanwhile, expects demand will continue to be strong, including for its first-ever SUV, the Purosangue, which will be launched next year, CNBC reported. Although the car starts at $400,000 in the U.S. — well above Ferrari’s average selling price of $322,000 — the company was forced to pause new orders after it received orders for two years’ worth of production.

“[Ferrari’s] focus on the unique quality and performance of its vehicles is unwavering, and has driven a track record of resilient financial performance, as well as significant intangible brand value and a true luxury status,” wrote John Murphy, a Bank of America securities analyst in a Dec. 13 note to investors, according to CNBC. Murphy recommended that investors buy Ferrari, estimating that the stock would be fairly valued at $285 per share.

Ferrari is set to produce its first EV in 2025, and anticipates 40% of its cars will be fully electric by 2030, while 80% will be electrified in some capacity by the same time, according to Forbes. Despite this, Ferrari still intends to improve upon its combustion engine models.

“I believe that the internal combustion engine has a lot to give,” CEO Bendetto Vigna told investors in June, Forbes reported.

Ferrari did not immediately respond to a Daily Caller News Foundation request for comment.

AUTHOR

JOHN HUGH DEMASTRI

Contributor.

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved. All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.

Elon Musk Terminates Twitter Deal

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Tesla CEO Elon Musk canceled his bid to purchase Twitter Friday, according to a letter from his lawyers published in a Securities and Exchange Commission filing.

Twitter “appears to have made false and misleading representations” and “has not complied with its contractual obligations,” according to the letter. Mike Ringler, attorney for Skadden Arps, accused the company of refusing to provide information requested by Musk, including what percent of its monetizable users were fake or spam accounts.

Musk threatened to cancel his deal with Twitter June 6 after the company reportedly refused to hand over user data reports he had requested. The company has claimed that only 5% of its accounts are fake or spam, but Musk speculated that number could be four times higher.

“We are committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plan to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery,” the Twitter board said in a statement provided to the Daily Caller News Foundation.

“Twitter has not provided information that Mr. Musk has requested for nearly two months notwithstanding his repeated, detailed clarifications intended to simplify Twitter’s identification, collection, and disclosure of the most relevant information sought in Mr. Musk’s original requests,” the letter from Musk’s attorney read.

Musk agreed to buy Twitter for about $44 billion April 25 after the company attempted to thwart his buyout efforts.

This story is breaking and will be updated as the situation develops. Please check back for updates.

AUTHOR

LAUREL DUGGAN

Social and culture reporter.

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What Do the Tesla and the Model-T Have in Common? by George C. Leef

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Henry Ford did a lot for the automobile in America. What everyone knows is that he figured out how to improve manufacturing efficiency so much that the auto was transformed from a toy for the rich into an item that ordinary people could afford.

(Nothing really extraordinary in that, by the way. As Ludwig von Mises wrote in The Anti-Capitalist Mentality, “Under capitalism the common man enjoys amenities which in ages gone by were unknown and therefore inaccessible even to the richest people.”)

But very few people know that Ford had to fight against a cartel to be allowed to sell his vehicles. In this 2001 article published in The Freeman, “How Henry Ford Zapped a Licensing Monopoly,” Melvin Barger goes into the fascinating history of Ford’s legal battle against the Association of Licensed Automobile Manufacturers (ALAM).

In 1895, an inventor named George Selden had received a patent for a gasoline powered automobile. That patent was later acquired by ALAM, which then said to everyone who wanted to sell a gasoline powered car, “You must pay us royalties for the privilege of selling such vehicles and if you sell without our license, we’ll take you to court for patent infringement.”

Ford had developed his auto without any knowledge of Selden’s patent and saw no reason why he shouldn’t be free to make and sell cars without paying ALAM for the right to do so.

So Ford thumbed his nose at ALAM and sold his cars without paying royalties. ALAM naturally sued him in an effort to keep its cartel going. The legal battles lasted from 1903 to 1911, when a federal appeals court ruled that the Selden patent only applied to vehicles made to its exact specifications. (That had actually been tried, with dismal results.) Ford therefore did not owe ALAM anything. He was free to continue putting his capital into making cars the public wanted without diverting even a dollar to appeasing a group of rent-seekers.

Turn the clock ahead a century, and we find that an innovative car company faces similar obstacles.

Substitute Elon Musk for Henry Ford and Tesla for Model-T and state dealer regulation for an extortionate patent scheme, but the stories are largely the same. ALAM didn’t want competition that might break up its cartel and neither does the established auto dealer system want innovative marketing upsetting its business.

In their January 2015 Mercatus Center paper “State Franchise Law Carjacks Auto Buyers,” Jerry Ellig and Jesse Martinez discuss the way established dealers have used their lobbying clout to stifle competition.

This post first appeared on Forbes.com.

George C. Leef

George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.