Howes: Government drives electrifying autos, not market
A new government mantra is looming over the global auto industry: if consumers won’t buy what you think they should, limit their choices.
Hybrid and electric-vehicle sales account for less than 3 percent of the U.S. market. Tesla Inc., for all the hype powering its shares mostly higher, doesn’t make a profit selling pure electric cars. And electrics represent a tiny fraction of sales in car-savvy Europe — which apparently is no barrier to France under its new president, Emmanuel Macron.
In a bid to bend the market, automakers and their product development to its will, Macron’s ecology minister said Thursday that France would ban sales of all gas- and diesel-powered vehicles in the country by 2040.
The move comes one day after Volvo Cars Ltd., the Swedish automaker owned by China’s Geely, said it would phase out gasoline and diesel engines in favor of electrified powertrains — without saying it’s mostly to meet greenhouse gas mandates in China and Europe.
And France’s pronouncement comes in the same month that Elon Musk’s Tesla confirmed it would be delivering its first compact Model 3 electric cars this month to a market decidedly ambivalent about the shift from gasoline to electric, even if Tesla devotees are anything but.
The vast majority of consumers are content to watch from the sidelines, sales figures suggest, if they’re watching at all. What gall, sticking with what they know considering the ubiquity of gasoline, its comparatively low cost and the expectation (implicit in the product development and production strategies of major automakers) that gas will stay closer to $2 a gallon than $4.
Despite a proliferation of electric and hybrid offerings by automakers, and continually dire predictions of climate change, alternative powertrains represent a tiny fraction of sales. Pure electric vehicles accounted for a scant 0.6 percent of new car registrations in the European Union, The Guardian reported Thursday, and 1.1 percent in France.
Volvo offers one battery-powered vehicle in its lineup, the XC90 plug-in. It sold just 807 units so far this year, or 7 percent of total XC90 sales, the automaker’s top-selling vehicle. An advanced hybrid version of Acura’s MDX crossover claims just 2 percent of MDX sales. Overall U.S. sales of hybrid and electric vehicles totaled 2.4 percent in June.
Not that the backward-looking reality of sales figures and market behavior are materially influencing forward policy-making in European capitals. Or the preferred political outcomes implicit in Obama-era fuel-economy regulations that the Trump administration has agreed to reconsider.
France is not alone. Norway plans to allow only the sale of electrics or plug-in hybrids by 2025, The Guardian reported. The Netherlands is eyeing a ban on gas- and diesel-powered cars by 2025. Some of Germany’s federal states — as well as India — are looking to ban sales of internal-combustion powertrains by 2030.
And China, the world’s largest market, is using regulations to sharply increase penetration of clean electric vehicles because its air quality is so atrocious. That’s much less of a problem in the United States, where penetration of diesel-powered cars is comparatively minimal and energy production is cleaner than anytime in the post-war period.
On existing evidence, the future of the global auto industry is trending electric because a growing number of governments is decreeing that it will, not because consumers from Boise to Beijing are clamoring for it. And smart people are betting the trend is irreversible, irrespective of what consumers want or how the change will affect real people living and working in the industrial heartland.
Most of those elites probably don’t care. Automakers here get American taxpayers to subsidize the sale of electric vehicles. Investors get governments from Paris and Berlin to Washington and Beijing to use rule-making fiat (see Macron) to limit consumer choice and enrich their investments. Urban elites force their transportation lifestyle choices on the poor slobs in the hinterlands.
Consider a new study by the RethinkX Project, a self-described independent think tank. It predicts the United States is “on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history.
“By 2030, within 10 years of regulatory approval of” electric-powered “autonomous vehicles, 95 percent of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call ‘transport-as-a-service.’”
It “will have enormous implications across the transportation and oil industries, decimating entire portions of their value chains, causing oil demand and prices to plummet, and destroying trillions of dollars in investor value — but also creating trillions of dollars in new business opportunities, consumer surplus and GDP growth.”
Put another way: this Great Disruption is coming, whatever consumers or the traditional auto industry types want. Because investors and, especially, governments have decided it must.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.
Auto critic Henry Payne contributed.