From Watts Up With That?
Roger Caiazza
Irina Slav on energy Substack is described as “All things energy. Challenging the dominant narrative because facts matter”. Her latest article “Post Ridiculous” describes the possible last straw for EV adoption.
Slav introduces her post with an extraordinary quote admitting that all is not right for EVs:
“We can’t push EVs into the market against demand.” Thus spoke the head of Ford’s European operations this week, commenting on the company’s plans to start diverting ICE car deliveries from the UK to the continent. Why? Because the UK has EV sales goals and if carmakers don’t align their business with these goals, they face substantial penalties.
“We are not going to sell EVs at huge losses just to buy compliance. The only alternative is to take our shipments of [engine] vehicles to the UK down and sell these vehicles somewhere else,” the brave man, by the name of Martin Sander, said, speaking at the FT’s Future of the Car conference in London.
https://www.ft.com/content/ff0f3966-0565-434b-81a7-9b2bb3c20e21
The Climate Industry narrative is different of course. Despite that bit of reality in Great Britain it was reported that “Sales of electric vehicles have got off to a record start this year, the latest sign that British consumers are shifting their preferences towards greener modes of transport.”
Back in the real world, Slav writes that “Back in January, Bloomberg’s Javier Blas published a column, in which he sounded an alarm for governments willing to listen.” Slav posted an earlier article addressing the same problem: “what governments are going to do about fuel duty income replacement if their EV plans panned out.”
She describes the Blas column:
Blas detailed why governments needed to start thinking about a tax to replace their lost income from fuel duty collection because there was no time to waste — the EVs were coming and they were not paying any taxes while displacing a growing number of tax-generating internal combustion engine vehicles.
Blas was his usual helpful, too, unlike me. He offered realistic options such as road use charges based on number of miles travelled every year or GPS tracking, which was the worse option for obvious reasons. While both these options have certain shortcomings, notably a regressive streak, they are both better than other alternatives such as car ownership charges or additions to income taxes.
While those are realistic options, in my opinion it is yet another reason to avoid an EV. Slav goes on to explain that governments have caught on to the problem and have started to tax EV drivers. She writes:
“It is more like a penalty,” a gentleman by the name of Jeff Shoffner, a Tennessee EV owner, told the FT for a story that came out this week. “I’m not averse to paying the extra fee, but I think it’s too high.”
The comments were prompted by Tennessee’s decision to double the state registration fee for EV owners from $100 to $200. Quite a hike, you might say. Whatever may have made such a radical increase necessary, you might wonder. Well, it’s the same realisation that EVs have turned into cash-guzzlers and are giving nothing back — except the absence of tailpipe smoke. And that’s not good enough for a frugal government.
It turns out that most states are increasing registration fees to start to address this problem. Slav documents similar actions in the United Kingdom, New Zealand, and Germany. She points out that when the inevitable switch from incentives to taxes occurs then EV sales tank:
In case this sounds familiar, it’s because Germany also scrapped an EV incentive scheme because it ran out of money. Following this decision, EV sales in the country plummeted and that’s not an overstatement. Sales of electric cars in January 2024 dropped by 55% and kept falling.https://irinaslav.substack.com/
There is one positive. The virtue-signaling early EV adopters will be asked to pick up the slack. Slav writes:
I leave you with the heartfelt words of one victim of governments’ offensive against EV adopters. I would have paraphrased but tears choked me and made my hands shake, so a quote it is, from the FT.
““It’s discouraging. We were glad to be at the forefront with incentives and adoption rates . . . This particular thing with the registration fees seems to go against that,” said Patrick McDevitt, a Tesla driver in New Jersey.”
I would admit that the above burst of sarcasm is too crude, even for me. But you see, we told them this would happen. We told them repeatedly. They didn’t listen. So now they’ll be joining the tax-paying drivers’ club. Life’s cruel.
Conclusion
This is a fundamental issue for EVs. The only way to get people to buy electric vehicles is to subsidize them but subsidizing them leads to tax losses elsewhere. Slav concludes:
For the umpteenth time, then, we have our dear Western governments try to have their transition cake and eat it, too, and not gain a single ounce of extra weight. They wanted combustion engine cars out but forgot that these cars bring in billions in tax income. They wanted a fully electrified transport but forgot it wouldn’t bring in money unless they make it more expensive. They wanted a revolution but forgot rule #1 for revolutions: the successful ones never start from the top. They start from the bottom.
In my opinion that characterizes just about all the net-zero energy transition initiatives.
Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York. This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.
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