Why don’t Wall Street and the press talk about how the EV business really works?

Here is a summary by Ken Haapala of an August 4 article in the Wall Street Journal.  Ken is president of Science and Environment Policy Project.  He writes a free electronic newsletter and a website TWTW (The Week That Was) online free at SEPP.org or in your email if you subscribe.)

I preface with a comment: This past week lifetime tree hugger environmentalist Michael Shellenberger was “slimed” by every Democrat who spoke during his hearings in Congress.  A few weeks back Michael recanted and apologized. Here is Michael’s post after his sliming in Congress.   https://quillette.com/2020/07/29/why-democrats-are-trying-to-shut-me-up-about-climate-change-and-renewables/?v=322b26af01d5

We can anticipate that Michael Shellenberger’s next real article will be a doozy.  He is only beginning to feel the ad hominem attacks, slander and libel that about 10,000 of us have endured for more than 30 years.  Expecting that the fraudsters will cease is unrealistic.  The depth of the corruption reaches every agency of the federal government and most state, county and city governments and permeates Wall Street and mainstream media. 



TWTW Summary: The journalist writes: “Wall Street is narrowly focused on Tesla’s stock price, the press on a brainless debate about whether electric cars are good or very, very good. But try listening to Elon Musk.

Last quarter the company lost $100 million on electric cars and reported a profit thanks to $400 million in mandated government gifts from other car makers who get their profits from trucks and SUVs. Mr. Musk has stridently complained about regulators encouraging others to build their own electric cars rather than buy fuel-economy credits from Tesla. He urged Detroit to farm out its production of compliance vehicles to Tesla. He renewed the proposal again this week. Essentially, he wants Tesla to help itself to a big share of the profits these companies are obliged, under green mandates, to shift to EVs.”

After recognizing many readers may not wish details, Jenkins continues:

“Let’s understand: If a market opportunity exists for electric vehicles, it hardly requires an existing car maker to exploit it—Tesla has proved that.

“If a public good is served by promoting electric cars, GM or other existing auto companies hardly need to make them, any more than Exxon needs to make windmills and solar panels. This is just a dumb category error, like saying a maker of arms for chairs must make arms for the military.

“Unfortunately policy salesmanship often operates on such dumb errors. You need a story that can be told to an idiot (the public) as well as a bunch of special interests eager to be greased. And we live in a time of emboldened, self-confident stupidity. The press swooned at President Obama’s vaporware target of 54.5 miles a gallon. The fairy tale was treated as the real thing while ignored as too wonky to report was the actual practical, calculated effect: freeing Detroit to make big pickups and SUVs under fuel-economy rules in return for producing token numbers of money-losing EVs to be exploited for presidential photo-ops.

“Until the media starts doing its job, this slide toward policy idiocy will only accelerate. Such government interventions always tend to cartelize the industry they take aim at. That’s the drift here. Mandates that result in electric vehicles being dumped on the market are a deterrent to new EV entrants. Tesla wants to shelter behind these barriers too, though you would never get Mr. Musk to admit it.

“Not that these arrangements are ever likely to prove stable. In Europe, the scheme already is unraveling as the previous diesel fetish did. Governments are pumping out desperate amounts ofmoney to make electric vehicles free to some buyers in hopes of relieving their auto companies of enormous fines they will soon face for missing government-imposed EV targets.

“This silliness has nothing to with climate gains and everything to do with politicians trying to stop their deranged artifices from blowing up on their companies and auto workers. Only two developments in history have made a discretely detectable impact on global emissions: the invention of fracking and the collapse of Soviet heavy industry. Both imparted a one-time boost to the steady, consistent decline in global GDP energy intensity as manufacturing has given way to service-based and then digitally based economies.

“Even greens now admit as much: These trends, unless interrupted by terrible policy mistakes, virtually guarantee that emissions over the next century will fall far short of the worst-case scenario (known as RCP 8.5).

“In the meantime, we lie to ourselves histrionically that electric cars will have any impact at all. Take the big electric SUVs now flooding the market because, with their high price points, manufacturers hope to recoup more of their losses. These vehicles are actually worse for the environment, so energy-intensive is production of their large batteries.

“So what about Tesla’s stock price? The company is plainly valued as if tomorrow’s expected profits won’t be coming from the car business but from some Musk magic yet to be revealed. And that’s fine. Investors are entitled to bet, God bless them, that Mr.Musk is creating the next Apple, not the next GM.

“This column supported Mr. Musk in his battle with the SEC. It urged him to raise capital in the middle of the fight to show he still had investor support. Let technology and consumer tastes, rather than regulatory actions, determine the outcome.

“But a bizarre sidelight is that Tesla’s market capitalization is now greater than GM, Ford, Daimler, VW and Fiat Chrysler’s combined. Tesla is worth more than most of the industry that it relies on for the subsidies that are the only reason it was able to report three consecutive quarters of profit.”

The Tesla Secret:  Why don’t Wall Street and the press talk about how the EV business really works?

By Holman Jenkins, WSJ, Aug 4, 2020


About budbromley

Bud is a retired life sciences executive. Bud's entrepreneurial leadership exceeded three decades. He was the senior business development, marketing and sales executive at four public corporations, each company a supplier of analytical and life sciences instrumentation, software, consumables and service. Prior to those positions, his 19 year career in Hewlett-Packard Company's Analytical Products Group included worldwide sales and marketing responsibility for Bioscience Products, Global Accounts and the International Olympic Committee, as well as international management assignments based in Japan and Latin America. Bud has visited and worked in more than 65 countries and lived and worked in 3 countries.
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