EV MISSION POSSIBLE?

Porsche is the last bastion of petrolheads. So when they start making electric vehicles, you know the world has changed. ~ Chris Harris 

The world has changed.[1] President Joe Biden has mandated that at least one-half of all new passenger vehicles sold in America after 2030 will be electric vehicles (EVs). Governor Gavin Newsom has ordered that only zero-emission new passenger vehicles – aka, EVs – will be sold in California after 2035. None of the Californians who own the 14.3 million cars now registered in CA will be allowed to trade them in for another internal combustion engine (ICE) vehicle. Car consumers will only be allowed to buy an EV.

Let me guess how popular, let alone equitable, that will be in a few years. New climate policies like Joe and Gavin have established will fundamentally change the transportation sector, among others. Analogous policies are already facing popular backlash in Europe. The Netherlands and Germany already have been forced to backtrack on several of their green climate policies’ implementation.

US EV sales have continued to increase notably. By some accounts, they now represent about 5% of all registered vehicles in the US. And yet Joe’s and Gavin’s beyond-optimistic EV goals are not going to be realized for a host of reasons. Gavin’s official duties will be long past; Joe’s hopefully not, depending on Nov. 5, 2024. No matter, they each wouldn’t be much affected by such slippage. But we will be. 

The most prominent challenges are daunting supply-side constraints for continued growth in the EV market. In order to meet these fantastic objectives many millions of US-produced batteries and EVs will be required very soon, along with installation of many more EV charging stations that will reliably provide needed kWh “fuel” across much of the nation’s landscape. A key domestic issue remains how American utilities can dependably supply all the additional electricity needed to charge evermore EVs. 

China remains the foremost producer of battery metals, battery cells and components, as well as finished EV batteries and EVs. China produces nearly 7 times the number of EVs as the US does. It controls 82% of world EV battery production and key battery production technologies as well as dominant access to crucial battery materials like copper, nickel, lithium and other rare earth metals. 

Beyond moral suasion and expensive financial offerings like the federal incentive to buy a qualified EV, Joe and Gavin have no real inducements to offer ICE vehicle owners to trade in their vehicles. As of April, the average EV price remains a sizeable 24.1% higher than an average ICE vehicle (over $11,000 more). That’s considerably more than the federal $7,500 tax credit/rebate for buying a new EV. This matter of EV pricing is where inevitable equity-related concerns about EVs and Gavin’s 2035 proclamation will certainly arise. After all, in California the price of electricity will soon depend on each customer’s income level. Postponements in the 2030 and 2035 calendar dates is practically preordained.

Rebates appear necessary at this point, but probably not sufficient for more typical car-buying folks to trade up to a more-expensive EV. Especially when the federal EV incentives have already become ever-changing and hopelessly complex. The revised, convoluted federal EV inducements are more focused on incentivizing EV component producers to locate in the US rather than clearly providing purchasers with money to buy an EV.

The president and the governor need help to ensure needed EV components are available and induce ordinary Americans – like Jim and Mary Van with their 2 mini-Vans – to actually buy EVs . Current EV policy objectives seem like a mission impossible because of such formidable challenges.

What can be done? Hire Tom Cruise. Significantly expanding EV sales and EV infrastructure may be vanquished unless Joe and Gavin convince Tom to engage in another special mission impossible. Tom will need to turn EV sales into something loftier and improve the befuddled EV system. They should give Tom a shot against adversity in an unexpected 8th Mission Impossible (M.I.) adventure to re-craft the governments’ EV policies and convince consumers to purchase them.

With his proven talents I’m confident Tom can turn the EV market into Mission Possible (M.P.). Without him, it will remain impossible.

Tom cruising during M.I. Rogue Nation 

 Tom, aka Ethan Mathew Hunt in his M.I. escapades, has the skills and chutzpah to create EV success with the vehicle-buying public. After all he’s retrieved deadly viruses (M.I.#2), rescued the Rabbit’s Foot (#3), battled the evil Syndicate (#5) and saved Luther from the vile Apostles (#6). Fortunately, he takes shit from exactly no one and isn’t burdened by excessive EV industry knowledge. In his latest M.I. movie, Dead Reckoning Part Uno, he’s after the malicious Entity and incongruently seems to prefer driving a petite Fiat 500 very fast through a European city’s very narrow, medieval streets. Impressivo, as always.

There’s much for Tom to do in EV world. Most recently, the US accounts for only 6% of global EV battery production. No US firms are in our planet's top 10 EV battery producers. They are either Chinese or South Korean companies. There is only one active lithium mine now operating in the US that accounts for just 1% of global production. Others are planned, but creating a productive lithium mine can take up to 10 years. The US market share of EVs is roughly one 12th of Norway’s share.

The 2022 Inflation Reduction Act is offering $394 billion in energy and climate funding to qualified firms and consumers. By necessity, many US firms – including major US vehicle manufacturers – are now planning to produce more EVs and their key components like batteries. Massive EV battery production facilities can take 5 years to build, quixotically assuming that none of the usually-lengthy regulatory and operational lags appear. They already have.

Multi-billion dollar US battery-production facilities – gigafactories – on average cost 46% more to construct in the US than in China. Current information indicates that existing US based gigafactories employ about 8,500 employees. Significantly more will be needed to ensure that half of all American passenger vehicle sales will be EVs in just 7 years, and be consistent with the president’s goals that strongly emphasize domestic production.

Should Tom choose to accept it, this M.P. adventure will be unlike any of his previous M.I. ones. It won’t involve many of the physically-astounding feats he’s deservedly famous for. Nope, this adventure will instead require him to creatively gnash together the heads and hearts of an ensemble of quintessentially important EV people in our public and private spheres. Tom will also need to talk with current EV owners and potential EV purchasers to understand their important demand-side perspectives.

These people often have conflicting visions of EV-dom. If anyone can clear up the problematic EV goals, increase EV battery production and EV sales inside the good ol’ USofA as well as fashioning an immaculate decrease in EV prices, it’s Tom Cruise. He can fuel up consumer demand for EVs among the masses of US car buyers (not just richer folks who’ve generally bought EVs so far) and modify pollyannish government goals to realize success. If Tom can spark the broad opportunities and benefits associated with transforming US vehicle transportation, he’ll command our enduring gratitude. If he’s triumphant, I’ll be in a front row seat for Dead Reckoning Part Due, Tre and Quatro. We’re all counting on you Tom.

 

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[1] Porsche does indeed make an EV, the Taycan. A Bay Area Porsche dealer offers the Taycan Turbo S for $230,090. That’s a bit more expensive than the Chevy Bolt LT’s MSRP of $28,795. 

 

LAGS AND LIVES

It’s not easy to recover from jet lag. ~ Gael Monfils  

I’ve been getting older ever since my first breath, like every other human.[1] Except for Benjamin Button. Our aging hopefully has involved numerous jovial, opportune and exultant times.

Nevertheless, living often includes a fair amount of lagging, even beyond jet lag. You know, waiting for buses, trains and airplanes to arrive, waiting for the server to realize you’ve been seated at one of her/his tables for more than 10 minutes, waiting for the server to actually communicate with your computer, waiting to know if you got that job you want. As ever-speedier technologies allow us to receive and use information more swiftly, we still repeatedly wait for stuff. Even if lags aren’t announced or you’re not flying on a jet, we live with them all the time.

Instantaneousness is a very rare occurrence. Lags – intervals of time – happen all too frequently between what we expect or hope for and what actually occurs. Some of these lags may cause losses of lives as well. I’ll first talk about lags, and follow with how lives can be affected.

Lags.  Some lags are so pervasive that I don’t really think about them as delays. For example, a sidereal day, the length of time it takes our Earth to complete one rotation on its axis is 23 hours, 56 minutes, and 4.09 seconds of solar time. It takes Earth 365 days, 5 hours, 59 minutes and 16 seconds to revolve around the sun, our yearly orbital period. These lags are simply immutable parts of our lives. Do I wish I lived on Mercury whose “year” is a speedy 87.97 Earth days? Heaven forbid, no.

Yet the length of lags that some actions require to start and be completed usually goes unmentioned, perhaps purposefully. Here are several examples of variously lengthy lags that can affect many of us.

11 Month lag.  The Dems deservedly touted the passage of their Inflation Reduction Act (IRA) recently. For once, they cleverly named this legislation as a solution for one of the public’s largest current worries: mammoth inflationary price increases for fuel, food and other goods that people regularly buy. President Biden signed the IRA into law on Aug. 16. That’s 11 months after it was first introduced in the House. That may be quick for Congressional clocks, but it’s not for most folks.

Like much proposed legislation, during these months the IRA had a long, roller-coaster ride through various Congressional committees as well as innumerable transmutations after interactions with the White House and affected parties like energy producers and consumers (for the bill’s climate change regulations) and health care patients and the drug industry (the IRA is also introducing a Drug Price Inflation Cap as well as limiting prices on a few prescription drug 4 years from now).

Will the IRA soon reduce inflation? No, the Congressional Budget Office and others have stated this Act will not significantly affect inflation, despite its title and $777 billion (B) overall price tag. Like all new legislation the IRA will take a fair amount of time to actually have any effect on the citizenry. Bureaucracy’s wheels turn very slowly when creating rules and regulations as I’ll now illustrate.

4 Years.  The Federal Aviation Administration (FAA) issued new rules on Sep. 6 that are designed to guarantee the independence of aviation engineers tasked with performing safety oversight on the government’s behalf. Congress called for the FAA take on this additional responsibility in 2018, when the first of the 737 Max crashes occurred.

These safety engineers are employed by Boeing and other aviation firms because the FAA does not have the resources to place its own staff at airframe manufacturers like Boeing. Such lengthy rules-setting lags, although never focused on, are always present for Federal, State as well as local government operations.

10 Years.  Another major focus of the IRA is providing $380B in subsidies to change the nation’s energy investment and infrastructure to help mitigate climate change. Infrastructure, like building new, much-needed EV charging stations across the US is essential if EVs are ever to be bought and operated by hordes of drivers.

Over the next decade, the IRA will provide $1.7B of tax credits for building EV chargers or other equipment perhaps in lower-income areas. New infrastructure like this never happens quickly. Let’s hope the IRA is a bridge to a better place.

Such incentives will be needed; the average price of an EV sold in the US in July was $66,000. But domestically building more EVs and its key components (like batteries) to satisfy the IRA requirements will take considerable time.

It’s not yet clear how many more EVs can actually be produced using the IRA’s incentives that begin next January because EV demand currently outstrips production capacity. If you’re ordering a Tesla, its order backlog in July was 504,000 vehicles. Hurray Elon! Tesla has already abandoned its past practice of estimating specific delivery months for its EVs. It also increased the price of its cars by up to $10,000 in March. Nasty Elon! 

In a big jump, last year 5.6% of new cars sold in the US were electric. This EV share of new car sales has never been higher. Yet despite EVs’ notable sales growth, they still represent less than 1% of the 250 million cars, SUVs and light-duty trucks on US roadways.

Because of this new demand, the average price of an EV in the US now is 37.4% higher than that of an internal combustion engine (ICE) car and the wait time for actually receiving your EV is measured in multiple months.

Efforts to ramp up domestic EV production in record-quick time to save the environment will need to account for challenging lags and realities. There are several causes for concern regarding production lags for EVs due to potential constraints. First, as a sop to unions’ wishes, the IRA stipulates that federal subsidies will only be provided for EVs and their components that are made in North America, only if the EV is priced below specified caps (e.g., sedans’ cap is $55,000) and only if the individual buyer’s taxable income is less than $150k.

These requirements will reduce the EV subsidies’ applicability and the number of buyers who can qualify. The buyers’ income ceiling is probably less of an issue but the domestic manufacturing restrictions are significant, and troublesome. Such restrictions aim to promote domestic EV production and more equitable EV ownership, at the cost of higher EV MSRPs and fewer sales.

An industry spokesperson said no vehicles will qualify for IRA’s $7,500 EV incentive over the next few years because of the production restrictions. This statement may be exaggerated, but these restrictions will certainly reduce EV sales over the next several years. It’s another case of politics trumping consumer and environmental interests.

Why? Because inconveniently China currently controls over 70% of the world’s component supply chain for EVs, including production of lithium-ion batteries. There is only one lithium mine operating currently in the US. It produced 1,000 tons of lithium content last year, representing an inadequate 1% of world production.

New American mines are being discussed, but it can take over 16 years to initiate actual mine production. These mines require huge amounts of water and space to operate. Water is already a very scarce commodity, especially in the Western US. Indigenous peoples, where several of these potential US lithium mines may be located, are understandably opposed to such development.

In addition, mineral experts say there may not be enough lithium, a vital ingredient for making EV and other batteries, to satisfy the increased consumer EV demand, let alone the expected orders of magnitude surge involved with satisfying California’s new mandate to sell no ICE cars after 2035. Another 14 states and Washington, DC may also adopt California’s EV mandate that requires a specified minimum percentage of ZEVs (zero-emission vehicles) for certain future years that will increase EV demand big time.

EV battery demand is forecast to increase at least 25% per year that will require more than 100 additional giga-sized battery and vehicle factories to be built to keep up with demand during the next 8 years. This will be a giant challenge. EV battery factories can be erected in 5 to 7 years, with consistent support and little litigation. Because a lack of litigation mostly never materializes, construction lags will almost certainly lengthen.

The IRA’s more than $200B of consumer subsidies will hopefully benefit the US and its residents in becoming more productive, greener and thus eventually may check inflation. These federal EV subsidies, like virtually all others, are expected to be periodically renewed and will need to last for more than the IRA’s decade of funding, assuming the Dems are in control. Nevertheless, due to inherent lags for dramatically increasing EV production, and for consumers to step up and buy them, it will take many years for them to be broadly provided.

2 months.  The second coming of (Charlie) Crist may not take nearly as long as producing more EV-bound lithium. In Florida’s primary, Crist recently defeated a progressive Florida Democratic rival. He’ll now be engaged through November 8 in yet another quest to become Florida’s governor by surmounting substantial challenges to de-throne Trumpian Gov. Ron DeSantis. Goooo Charlie.

One week.  Gasoline prices change rapidly. Fuel prices escalated 47.9% during this past year, which is a big deal except for you EV drivers. 

The US nominal retail gasoline price in July was $5.032/gal., the highest since 2008 when it was “only” $4.114/gal. In the SF Bay Area, we can’t count that low. The Bay Area gas price was $6.056/gal. on July 1st, partially due to California’s recently-increased $0.539/gal. gas tax, the nation’s highest.

Overall, the US local prices of gasoline are closely tied to the West Texas Intermediate (WTI) crude price which varies daily, as well as the costs of production and distribution. During the last month the price of WTI crude dropped 11.5%.  

Neighborhood gas stations usually buy their wholesale gasoline once every 3 to 5 days. Many consumers of gasoline are quite aware of local price differences between stations, helped by the giant signs displaying the station’s prices, shown below, and by apps like GasBuddy that has more than 60 million users.

    When gas prices are rising, local stations quickly raise their pump prices, usually within one week. But when crude prices drop, as they have since early summer, pump prices fall slowly. Station operators quickly increase pump prices because after several days of rising crude/wholesale prices, the stations’ profits are evermore slender and losses loom. It takes less than a week for retail pump prices to shoot up. When crude prices fall, operators can attempt to make up for those lower profits by waiting to reduce their pump prices. From June to July retail gas prices have dropped 12.4%.

Gasoline pricing thus is relatively efficient – local retailers quickly modify their prices based on everchanging wholesale crude petroleum prices. But it’s not symmetric. Falling WTI prices offer local stations more business profit possibilities than when the WTI is rising.

Lives.  The Ukrainian War started on Feb. 20, 2022. This war has been turning into a war of attrition for a while.

The US has provided more than $13.5B in security assistance to Ukraine for fighting against Putin’s unprovoked, insidious attack. In addition to this giant financial support, a key element for ensuring Ukraine’s hopeful victory is finding and training available Ukrainians into combat-ready troops.

Military losses have been heavy for both Ukraine and Russia. Rough guestimates for combat deaths are about 9,000 Ukrainians and as many as 25,000 Russians. These deaths require new replacement troops. Training raw recruits to become capable troops takes time.

Dealing with troop training lags is thus an essential component for winning wars and saving fighter’s lives. Winning requires at least adequate basic training as well as additional tactical support. For Ukrainian solders, they need know how to use new, sophisticated military equipment provided by the US and allies. Ukrainian soldiers’ training is being conducted in England and other locations inside and outside Ukraine.

US Army basic training takes about 10 weeks. The Army’s subsequent Advanced Individual Training (AIT) courses can last an additional 4 weeks to 7 months. AIT courses provide skills needed to perform a specific Army job, such as field artillery, engineering or medical proficiencies. US Army Special Forces training for Green Berets and Rangers, its most elite and capable special operations units, can take up to 63 weeks.

Several weeks.  Unsurprisingly, Ukraine and Russia have both shortened their new troop training time. Conscript standards for both nations have also eased considerably. New Ukrainian recruits are on average in their 20s and getting only several weeks of basic training. According to one observer, Russian recruits are “old, broke and out of shape.” Having only a few weeks of training before combat is far shorter than US standards mentioned above. Will such obligatory reductions cause added lost lives for Ukraine’s troops? Here's hoping they keep on breathing through the thick and thin of this war. 

 

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[1] Folks at Dartmouth College estimate that an average human at rest takes slightly more than 8.4 million breaths each year. 

 

WATER and WHEELS

You can lead a horse to water, but a pencil must be lead. ~ Stan Laurel 

There’s now next to no water available in much of the western US, especially California. Little water is sluicing down rivers to help salmon spawn and produce dams’ clean hydroelectricity, or sloshing along irrigation canals that create a bounty of produce, or providing liquid sustenance to millions of parched customers throughout the region. We again face a serious lack of water.

The supply of electric vehicles (EVs) has shrunk because of supply-side snafus. More folks are thinking of purchasing an EV, largely due to huge increases in gasoline prices – in Berkeley, gas prices well above $6/gal. are common. But far more substantial EV purchases are needed, along with greater numbers of public charging stations.

Thus, water and EV wheels each have problematic challenges at this point. Water wheels are barely turning despite politicians’ grandiose pledges.

 

Let’s first look at water before shifting to wheels.  California’s 39 million inhabitants depend on sufficient, clean water for their daily livelihoods, just like everyone does no matter where they live. But as Marc Reisner presciently stated 36 years ago in his landmark Cadillac Desert, much of California is a semidesert. Climatologists have shown that periodic droughts in California and the West are a long-time, recurring feature. Residents of the Golden State (perhaps better labelled now the burnt brown state) are in the midst of a multi-year regional drought that may be the worst in 1200 years. Other notable droughts include the 5-year event in 2012-2016, as well as in 2007-09, 1987-92 and 1976-77. “Dust bowl” dry conditions have periodically harmed Californians, just like they did for more than a decade in the 1920s and 1930s for folks in Oklahoma. Despite all these droughts and history, we haven’t yet fully understood that fresh water in the Western US is a finite resource that’s traditionally been priced way below its value, especially for non-residential customers.

The bulk of the state’s precipitation falls in the Sierra Nevada as winter snow and rain hundreds of miles from the nearest population centers. Seventy-five percent (75%) of California’s supply of water is in the northern third of the state roughly north of Sacramento, but 80% of urban and agricultural (ag) demands are in the southern two-thirds of the state.

Because of this geographic misalignment of water supply and demand, during the past 90 years the federal government and the state of California have constructed a huge system of water infrastructure including dams and aqueducts/canals to bring water from distant mountains and rivers to farm acreage and masses of urban end-users, businesses and individuals like you and me.

How is our state’s precious water used? Nine million acres of California farmland is irrigated, which represents about 77% of the state’s total end-user water demand. Agriculture is by far the single largest user of California water. In the proverbial average year, agriculture uses 4x as much water as urban end-users.

The abundance of California’s ag production is the most valuable of any state, everything from artichokes and almonds to garlic and walnuts. However, our enormous ag harvests paradoxically account only for a slender 1.5% of California’s gross state product. A gallon of water doesn’t offer much fiscal bang per bushel of California produce.

Unlike most previous droughts, both state and federal water authorities – the California State Water Board and the Bureau of Reclamation, respectively – already have significantly curtailed their water allocations to ag and other end-users. In March, the State Water Board slashed its water allocation from the State Water Project (SWP) to just 5% of normal for the SWP’s ag and urban customers.

In April, the federal California Water Project cut its water allocation to irrigation contractors to 0% of normal. For the second consecutive year ag irrigators supplied by the CWP will receive no federal water. Farmers will need to turn to groundwater or storage, if they have it, or else forgo planting and production entirely. The Central Valley’s land subsidence will intensify. If this drought continues as expected, California growers and our land will suffer greatly, and the prices of their food products will swell.

The East Bay Municipal Utility District (EBMUD) supplies our home’s water, along with another 1.4 million customers. Last month, EBMUD reported its Mokelumne River storage reservoir was 71% full which is less than normal for this time of the water-year, but fortunately much fuller than either the California state or federal systems’ reservoirs that are now hovering around being 25-30% full.

Like many other water distributors, EBMUD has recently mandated an immediate usage reduction by its customers: a district-wide 10% water use decrease together with an 8% price “surcharge” beginning on July 1. In addition, EBMUD instituted restrictions on outdoor water use and a sizable “excessive use penalty” for households who use more than 1,636 gpd (gallons per day). No worries there; our usage is less than 13% of that large threshold. We’ve cut back on our landscape watering. Landscape watering accounts for roughly 50% of homeowners’ typical usage, so that’s a fine place to start despite gardeners’ understandable lamentations.

“Nonfunctional” grass lawns are becoming so yesterday. Significant sod is being removed in desert-dry Las Vegas where such lawns have been outlawed and made illegal to water. Here’s hoping such water conservation efforts by a so far reluctant public water-users can soon make a sizeable difference. Otherwise, every Californian will learn how they must use even less water than they have been.

Let’s now turn to electrically-powered wheels.  A substantial part of US environmental improvement policy rests on significantly increased sales of EVs. In 2021, EVs accounted for 3.3% of total US car sales. Meaning there’s lots of room in the vehicle market for EVs to capture, if people decide to buy them and shed their generations-old routine of purchasing fossil-fueled vehicles.

As you have already noticed, inflation has spread its ugly, non-transitory budget-sapping cloak across many markets. As a result, macroeconomists have been uttering a word, that hasn’t been spoken in 40 years, stagflation. Stagflation is the nasty, simultaneous combination of economic stagnation (diminished macro growth) together with inflation (elevated general price increases). Stagflation may be in our future; inflation is here already.

Giant upsurges in the price of gasoline – 43.6% over the past year – have spurred more people to consider EVs. But EVs’ availability has been constrained by the lack of key components needed by manufacturers. The increased interest in EVs together with their limited supply has driven too many dealers to add substantial markups on their EV prices that were already higher than gas-fueled cars. Customers have complained these markups can sometimes add thousands of dollars to an EV’s MSRP. One industry publication states that some EVs’ prices have jumped 25% in the last year, and wait-times have lengthened. If they persist, such grumbles will confound attainment of the ambitiously-set EV market advancement.

President Biden has addressed several federal efforts to increase EVs. First, he signed his Infrastructure bill into action last November. This $1.2 trillion legislation will eventually provide $7.5 billion over 10 years to expand the nation’s meager EV charging station network. In addition, Mr. Biden signed an Executive Order last August calling for the federal government to ensure that 50% of all vehicles sold in the US will be electric by 2030. This Order was a political statement, not an actual plan because it included no funding to accomplish the aggressive objective. The Build Back Better (BBB) plan would have provided needed funding. But he and the Dems struck out with his vaunted, much larger BBB that remains a fading disappointment. It never was voted on in the Senate after passing the House. Among other efforts, it would have nearly doubled the federal EV purchase subsidy to $12,500 if the vehicle was made in a factory that has a unionized work force.

Forty-five states plus Washington DC have implemented policies and procedures that support EVs’ advancement. Only Kentucky, Kansas and North Dakota apparently don’t have any EV policies in place according to the National Conference of State Legislatures.

California is the single state that has set a specified goal mandating a stipulated percentage of EV sales to be purchased by a specific year, in addition to other EV incentives. Gov. Gavin Newsom signed the enabling Executive Order in September 2020.

California’s specific EV goals were formalized last month. The goals require 35% of new passenger vehicles sold in the state by 2026 to be zero-emission vehicles (ZEVs), powered by batteries or hydrogen. Less than a decade later in 2035, the state mandates that 100% of all new car sales will be free of the fossil fuel emissions. To portray these goals as aggressive is to notably understate the challenges that must be met for success. In a mere 4 years from now California EVs sales will need to almost triple. Total US vehicle sales increased 3.4% in 2021.

The state’s EV goals will be administered by its principal environmental organization, the California Air Resources Board (CARB) within the California EPA. The CARB has disproportionately large influence on US environmental policy because 15 other states and the District of Columbia have adopted California's stringent emissions and vehicle mileage standards as their own. The CARB set its first auto fuel efficiency standards in 1990, others followed. They were and remain very strict, have never been actualized on schedule and thus have been postponed many times. I expect the 2026 EV market goals likely will be postponed, as well. The CARB EV standard states what type of vehicles can be sold and operated in the state.

Assuming that annual California vehicle sales increase at 3.24%[1] between 2022 and 2026, over 759,000 EVs will need to be purchased in 2026 to satisfy Gov. Newsom’s EV mandate. Admittedly, this growth rate is much lower annual vehicle sales growth rate than recent history, due to Covid and supply constraints. But 759,000 EV sales in 2026 would represent a colossal 3 times as many as EV sales than happened in 2020.

Simply creating an official ukase that 35% of 2026 vehicle sales will be EVs is as naïve as it is insufficient for making it actually happen. Politicians cannot mandate that private individuals must buy a lot more EVs by 2026, only that EVs will be available. How is Governor Newsom along with Liane Randolph, the Chair of the CARB, going to convince California consumers to buy more EVs. To save our environment, someone will need to motivate most Californians to stop buying fossil-fueled vehicles like they have been for over a century. Changing our car-buying habits will take a lot of motivating that so far is utterly lacking. Federal and state incentives are solely financial – rebates for EV purchases – which is necessary now but wholly insufficient to quickly modify long-term public behavior.

Recent history provides little solace for the Governor’s, Ms. Randolph’s or others’ potential EV marketing efforts. The majority of California’s car buyers have consistently refused to consider the CARB’s previous EV vehicle mandates and incentives when contemplating a new car purchase.

Most EVs remain expensive despite offered incentives. Potential EV buyers still contend with range anxiety issues. The state’s public EV infrastructure, aka charging stations, remains spotty, insufficient and unmaintained. California now has one of the country’s worst availability records of charging stations for EV drivers, just one station for every 31.2 ZEVs. This  ratio is almost ten times inferior than North Dakota’s (3.18 ZEVs). Who would have guessed the Peace Garden state is the nation’s leader? A survey of 181 Bay Area charging stations revealed that 23% had either non-operable screens, payment system failures or broken connector cables. Non-functioning charging stations will not ameliorate range anxiety.

If politicians want cleaner air via EVs, they better do several things: start building multitudes of additional, fully-maintained EV charging stations before more EVs are sold, and mandate standardized construction of far quicker charging level-3 public stations. California is planning to increase the number of public charging stations. It’s unknown if they will include standardized level-3 charging ports or how well they will be maintained.

California deserves praise for leading the US in its quest towards a cleaner, healthier future for transportation and the environment. The likelihood of significantly higher federal investment in EV incentives and infrastructure is low, given the BBB’s demise. California and other states will need to up their ante if EV sales are to substantially increase. This will entail sustained public investments that will effect colossal changes in the public’s vehicle purchase behavior. Such investments should include persuasive marketing campaigns that focus on the general car-buying public, not wealthy purchasers of Porsche Taycans or Tesla Model Xs.

Improved public management of an expanding EV system is essential. Hopefully, challenges will be addressed and quickly surmounted. Otherwise EV sales will remain far below policy-makers’ aggressive goals.

 

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[1] California vehicle sales will increase 3.24% between 2021 and 2022, according to California Auto Outlook. 

 

ELECTRIC VEHICLES CHARGING AHEAD

 Electricity is really just organized lightning. ~ George Carlin  

Watt have we been waiting for? Will the era of electrified transportation finally arrive, after being promoted assiduously for years without much to show for it on roadways? Electric vehicles (EVs), nevertheless, have contributed to Elon Musk becoming the world’s wealthiest person.

It seems from recent events that EVs will at some point get much more numerous. Alas, the EV boulevard to nirvana still has several potholes. EV market-makers need to organize their lightning, so it’s not just a “storm” in the San Francisco Bay Area, but everywhere in America.

San Francisco amid a lightning storm, August 2020.

First, the encouraging news. Mary Barra, chief executive of General Motors (GM), announced on January 28 that GM will eliminate production of gasoline- and diesel-fueled light-duty cars, vans and SUVs by 2035 and become carbon-neutral by 2040. Her statement represents a fundamental U-turn and shift for GM, who upset environmentalists when it agreed with #45s reductions of auto fuel-efficiency rules in 2019.

GM is now “all in” and charging ahead with EVs. It expects to invest $27 billion in EVs and associated products through 2025 and will eventually sell about 30 kinds of EVs. The media has characterized GM’s announcement as game-changing. It may be, although the event’s timing leads some to believe it’s as much a political message as a corporate one, coming a week after President Biden’s inauguration.

GM is not alone. Volkswagen, our planet’s largest vehicle manufacturer, is expecting to introduce nearly 70 new EVs in the next decade. Other manufacturers like Toyota, Ford and Volvo also have made big EV investments. The EV market champion remains Tesla Motors, which produces nothing but EVs. Tesla has dominated the market ever since it began selling cars in 2008. Its EV market share hovers around 80%. Nice work, Elon.

Taking a macro view of the US vehicle market, GM along with its traditional competitors like Ford, Fiat Chrysler, Toyota and Volkswagen have been facing a much-changed market for some time. The recent public voltage about how EVs will reshape transportation has been asserted for years without much actual confirmation.

The real upheaval in the auto business has not been EVs slender gains. It’s been customers’ lane-shifting away from wanting traditional cars to buying light trucks, which include not only pickups but SUVs and minivans.

Very, very few car purchasers have been buying Buick sedans, like my grandfather actually did way back in the day. US and Canadian customers’ overwhelming preference is for 4-wheels that are not connected to a traditional sedan. This big shift has progressed since the mid-1990s.

Customers have strongly favored SUVs and pickups, as shown below. Last year, at least 90% of every major domestic car manufacturer’s sales were light trucks, which include SUVs and minivans.

Light Truck* Share of US Vehicles by Manufacturer, 2020 

Light Truck Sales /  Manufacturer	GM	Ford	Fiat Chrysler	Total US
By vehicles sold	90%	91%	91%	76%
By retail value	92%	94%	91%	81%

 Source: Bloomberg Businessweek. *Includes SUVs & Minivans   

SouFor this reason, the sun has already set for sedans’ production at GM and mostly at Ford. Say goodbye to GM’s Chevy Impala and Ford’s Fusion, along with 24 other sedans these two firms made. Chrysler-Dodge will continue making its two sedan types. Not to worry sports fans, thankfully the Mustang, Corvette and Rolls Royce Dawn (starting at $356,500) will still be available.

The 12-year-old US market for EVs remains a thin one. EV sales represent just 1.2% of 2020 US new vehicle sales. GM and other veteran car manufacturers who are placing large gambles on EVs clearly want to change that, as does Tesla.

Throughout EV market history, massive optimism about future growth has far outweighed actual EVs sales. A recent forecast stated that EV annual sales in 2030 will exceed 3.5 million vehicles, which is more than 20 times as many EVs sold last year.

This might happen, but such giant changes in customers’ car purchasing seems founded in fantasyland. What’s very clear is it won’t occur at all without an enormous push via federal, state and local government intervention and a revolution in consumers’ predilections for EVs.

Large increases in EV sales have already been promoted by Dems in the form of significant subsidies that began for the 2010 model year. Subsidies remain vital because EVs cost more for customers to buy than comparable gas-powered vehicles. Many potential purchasers are sensitive to the level of such EV subsidies. When the State of Georgia and Hong Kong eliminated their EV subsidies, sales crashed.

Purchasers of eligible EVs may now receive an IRS tax credit from $2,500 to $7,000. These federal tax credits are available if the manufacturer has not yet sold 200,000 of the EV model. Currently both new Tesla and GM’s EVs cannot qualify because they’ve sold more than the maximum allowed. Such subsidy phase-out is a good idea, that also has been used for solar panels, so they don’t become eternal.

States also offer subsidies, including California, which has been on the forefront of the EV market. By itself, California accounts for 48% of all EVs sold nationwide. The SF Bay Area has surged to having the highest market share of EVs in the nation.

The California Air Resources Board (CARB), offers up to $7,000 in EV rebates for the purchase or lease of new, eligible EV vehicles. The CARB also has mandated that zero-emission vehicles (ZEVs) like EVs achieve specified minimum market shares in the state’s light-vehicle sales.

These mandates began in 1990, none of which were met nor could have been attained by manufacturers at that point. At best, the mandates  were aspirational and took no account of existing customers’ preferences. They did push needed EV technology development, meaning battery performance. For a long time, the CARB did nothing to enhance EV “infrastructure” in the state.

The CARB’s current ZEV mandate, stated in 2003, is for ZEVs to attain a 10% market share. Most recently, the EV share of cars sold in California is 7.9%. It’s the largest of any state and still below the required CARB mandate, 17 years later. EVs remain a big policy priority for California, but not for Californians.

Eight years ago, Governor Jerry Brown signed an executive order that set a long-term target of having 1.5 million ZEVs on California’s roadways by 2025. By December 2019, 670,000 EVs had been cumulatively sold in the Golden State.

In addition, Governor Gavin Newsom announced last September that California will disallow the sale of gasoline-powered cars by 2035. Take that, you heathens who keep buying non-EVs.

Not to be left behind, the Berkeley city Council is considering how to ban the sale of new gasoline-powered vehicles by 2027, eight years ahead of the rest of California. Prematurely instituting such a ban could reduce the city’s tax revenues by at least 10%. Berkeley's business tax revenues have already shrunk 13.2% due to Covid and it faces a $40M budget deficit. Do the councilmembers absurdly think their non-EV car-buying residents won’t simply drive a couple of miles to purchase such autos in Oakland or elsewhere. Perhaps the Council plans to pull up its drawbridges seven years from now.

President Biden has already signed an executive order that calls for the federal fleet of about 645,000 vehicles, principally of the US Postal Service, to be converted to electric power. He has also vowed to expand charging stations for EVs, revise and extend EV tax credits and tighten fuel economy standards for gas-powered vehicles. It’s doubtful that he will use reconciliation to legislate these actions, so when this becomes law is unknown.  

Such actions and incentives will help, but immense changes in the nation’s vehicle fleet will not be possible without vastly more consumers choosing to buy EVs. Mainstreaming our EV market will require convincing “regular people” like the Katharine and Jack Cooper family, who have 2 young, mini Coopers, to buy an EV, and not feel like they’re being forced to. In the main, pro-active EV policy makers have mostly forgotten about folks like the Coopers. Instead, they’ve principally dealt with suppliers of EVs, hoping that more supplied EVs will in turn create more demand for them. Such thinking was popular among 19th-century economists, but not since then.

The sooner Katharine and Jack become convinced about EVs, the better for our environment. People like the Coopers represent more typical, and far more numerous, car purchasers than many of the privileged folks, to use a currently-popular term, who have bought most EVs so far.

Changing the Cooper’s long-established automobile purchase habits so they actually consider buying an EV will require coordinated government influence. It will be marathon rather than a dash. To date federal and state EV policies have been sadly unidimensional, offering mainly financial incentives, which are useful but not sufficient to radically electrify transportation. Typical car-buyers’ behavior will need to change appreciably, if EVs are to become mainstream.

What’s needed? First, capable, moderately-priced EVs must be available in the marketplace. This will happen over the coming years. Thanks Elon and now Mary.

Second, these vehicles must be comparable with non-EV vehicles, regarding cost, range, performance and supporting infrastructure, especially having a sufficient number of standardized, fast-charging stations across the US, including at multi-tenet buildings.

Nationally, there are about 115,000 gas stations and only 25,000 EV charging stations. Sadly, EV infrastructure is lagging due to an electric chicken-and-egg problem. Increasing the number of charging stations will be costly with so few EVs amping along our roads, but without more fast-charging stations, less people will be interested in buying/leasing an EV. A typical Level-3 commercial, fast-charging station can cost $50,000, taking about an hour for a full charge. A Tesla “supercharge” facility can cost five times as much.

Successfully creating an integrated, electrified transport system is ultimately up to us consumers. Manufacturers like GM, Ford, Volvo, Tesla and others will contribute by offering an expanded variety of attractive, high-value EVs. But there’ll not be any EV tangoing in Paris Kentucky, Paris Oregon or Paris Wisconsin without folks like the Coopers becoming satisfied, repeat EV owners. As Hamlet said, there’s the rub.

 

MYTHS COMMON TO BERKELEY RESIDENTS AND OTHERS WHO LIVE IN COBALT BLUE BUBBLES

A myth is a way of making sense in a senseless world.  Rollo May  

Here are five myths that residents of Berkeley, California may abide by.

1.      The majority of food consumers are vegetarians or vegans.  Nope. The “Vegetarianism in America” study published by Vegetarian Times showed that just 3.2% of US adults follow a vegetarian-based diet. Approximately 0.5% of those are vegans, who consume no animal products at all.

2.      Nearly everyone eats organic food.  Not yet, probably not ever. In 2017 total organic food sales reached a new high, $45.2 billion. However, these organic sales represent a petite 5.5%, also a new high, of all food sold in retail channels in the US. Organic food is more expensive than “regular” food products. Organic price premiums can range from 25% for veges and fruits to over 70% for milk products.

3.      Electric vehicles and hybrids have captured the auto market.  Hardly. L It’s true; the SF Bay Area has had the highest per capita electric vehicle (EV) sales for a while. Berkeley enjoys the 8th highest purchase share of EVs of California cities, about 18%. When you drive around Berkeley the number of Teslas, and to a much lesser extent Chevy Bolts and Nissan Leafs, is quite impressive. Nevertheless, when I travelled 6,200 miles on highways back and forth across the US within the last month, my EV sitings were very far and very few between. No surprise; the market share of battery-powered EVs across America is a meagre 2.4% as of September. If you add plug-in hybrids, the EV market share inches upwards to a frail 3.1%.

4.      Summer.  Summer in Berkeley is a myth. It’s filled with fog and cool temperatures. Daily high temperatures in Berkeley during the usual summer months (June – August) are much nippier than many other places. Visitors to the SF Bay Area during summer are often shocked that they need sweaters, not just t-shirts to feel comfortable during the day. That’s because the weather in Berkeley is dominated by the cool Pacific Ocean. As Mark Twain allegedly stated, "The coldest winter I ever saw was the summer I spent in San Francisco." Berkeley’s warmest (e.g., summer) month is actually September, when the average daily high temp is 74.8˚F. The average high temp for June through August is a chillier 73.8˚F. If you want to be cool, Berkeley’s your place. But to avoid the myth of Berkeley summer, you’ll need to know the way to San Jose, where the average high temp for June through August is balmy 81.0˚F.

5.      Inequality.  For decades the City of Berkeley, and its voters, have been actively engaged in reducing many forms of social and economic inequality. Yet by some measures Berkeley’s inequality is persistently higher; it’s not utopian pure parity. The Berkeley Unified School District was the first in the nation (in 1968) to voluntarily implement a two-way busing program to facilitate desegregation. In June, Berkeley opened the doors of another and new $2.4 million shelter for the homeless. Starting Oct. 1, the city’s minimum wage is $15/hr. It has offered a host of social services for those who don’t have resources and/or opportunities that others have. However, one curious result is that the city’s Gini Index (GI) – a statistical measure of income inequality – is much higher (indicating more inequality) than its neighboring communities. The GI for Berkeley is 0.532 (comparable to that of Guatemala, ranked 10th highest in income inequality). In contrast, the GI for Alameda County is 0.459 and for nearby Concord is 0.389. Why is this, despite the city’s demonstrably broad efforts to provide for its poorer residents? Most likely, it’s because of the fairly large degree of economic "natural diversity" within the city. This is also why the GI's for Concord and Alameda County are much lower, since they’re less economically diverse. In this sense, Berkeley’s lower GI, although concerning, may not be totally dire. 

OUR FRENZIED FISCAL FUTURE

Often wrong, but never in doubt. ~ Ivy Baker Priest 

So here we are, attempting to figure out how much we may benefit or lose from the ever-changing Republican tax “reform” proposals now winding their way at nearly legislative warp speed through the lobbyist-infested Congress. What is a knowledgeable citizen to do – let alone the vast majority of taxpayers who haven’t a clue about macro- or micro-economic fiscal policies?

Here’s a cast-in-concrete general canon about any change in tax legislation, rules or regulations:

Tax reform always creates winners, losers and unintended consequences.

The winners quietly chortle. The losers loudly cry, complain, moan and commiserate, and hope their public upset will change the rules to lessen their expected torment. Others hope they're not negative unintended consequences. 

I’d suggest we pay some attention now to discussions about who will come out ahead and who will suffer from the Republicans' currently-proposed tax changes. My advice also includes applying a very large discount to the mandated 10-year forecasts that accompany each and every change in federal fiscal policy for the simple fact that making such macro predications are always challenging, and rarely accurate. The Economist posted an assessment of “budgetary crystal balls” that illustrates forecasting’s fallacies. Most forecasters recognize this inevitable problem, but only mention it sotto voce. Outwardly, forecasters firmly stand by their predictions. But as Ivy Baker Priest, a Republican US Treasurer in the 1950s cogently stated, forecasters are “often wrong, but never in doubt.”

Futures that are directly influenced by political dogma and whims, er policy, are especially problematic. The proposed House and Senate tax bills change the principal corporate income tax rate from 35% to 20%, the pass-through rate for subchapter S corps and partnerships drops to 25%.

Intuitively, we can readily realize that despite the Republicans’ unfounded declarations that all this additional corporate welfare will produce higher wages and higher growth (relationships that are not founded on past empirical data), we can understand that businesses and corporations will greatly benefit and most individuals won’t. To recognize these tax changes’ effects we don’t need to rely on complex macro models that involve hundreds of equations and scads of variables – variables in addition to the very necessary but never-talked-about add-factors and mul-factors. 

Nevertheless, such models show that the Republicans’ reforms likely will provide a stunning 67% of the deficit-financed tax benefits to corporations, not citizens, as a Vox article showed. Here’s a summary of that analysis:

Type of Tax Change	Dollar impact over 10 years	Percent of total tax cuts
Individual tax cuts	$3.3 trillion (T)
Individual tax increases	-$3.0 T
Net individual tax cuts	$0.3 T	20%
Business tax cuts	$2.2 T
Business tax increases	-$1.2 T
Net business tax cuts	$1.0 T	67%
Estate tax repeal	$0.17 T	11%
Total tax cuts	$1.5 T

Source: Committee for a Responsible Federal Budget via Vox.

Notice the $3.0 trillion of individual tax increases. Also noteworthy and thoroughly unsurprising is that of 47.5% of the total federal tax reduction will be directed to the top 1% of income-earners. This large share does not include the benefits of repealing the estate tax that will aid only the already-wealthy. The middle 20% of income-earners (aka, the middle class) will receive but 8.7% of federal tax changes (worth on average $320). The Top 0.1%ers will benefit from receiving a disproportionate 25.1% of tax reductions, worth a tidy $278,370. Is this in any way equitable? Not in the slightest.

The Senate bill offers beneficence to high-roller GOP contributors that the House bill does in spades. These dispiriting results are likely to persist when the ultimate legislation has been agreed to by the Congressional conference committee and signed by our deeply-uninformed, don’t-connect-any-dots president. 

There are interesting stories about which slice of the “middle class” will or won’t benefit from the latest version of the House and Senate tax bills; or how residents in high-tax mostly blue states, student-loan holders, future electric vehicle and solar panel purchasers and low-income housing developers will surely suffer. And distressingly, these precursor bills probably have all too much to do with the likely final legislation.

At this point, it’s the many potential losers who are understandably audible. Unfortunately, I remain cynical enough to doubt that individual citizens or worthy causes can motivate any Republican legislator to make reasoned, broadly-beneficial changes to these biased tax change proposals so they can produce more effective and efficient tax policy. Why? Because of flawed Republican dogma and the herds of corporate lobbyists who are now attempting to further twist legislators’ arms and minds.

The Congressional rules that dictate calculating a decade’s worth of impacts are absurd on their face. They’re mostly a cover for false legitimacy. After long-disparaging President Obama’s effective fiscal stimulus legislation in 2009, the Republicans now dismiss any and all concerns about adding at least $1.5T to the national debt. Yet another example of hypocritical political double-speak.

We’ve known since last November that Republican tax reform was unlikely to help many people who need assistance, including countless people who voted for the president. Nevertheless, as Tacitus mentioned several millennia ago, and perhaps reading into the 2017 collective Republican mind, the unknown always passes for the marvelous. The Republican tax reform legislation won't be marvelous for all too many people. 

MAINSTREAMING ELECTRIC CARS

Amping along the byways… 

Hark, electric vehicles (EVs) are hopefully travelling towards the broader car-buying public. Under very strong prodding by the California Air Resources Board (CARB) and the Obama administration, 32 different models of EVs are currently being sold in the US, principally in CA. To date, the 6-year old US market for EVs remains a very thin one; optimism about future growth far outweighs actual sales. As of last December, EV sales represent a slender 1.43% sliver of US new car sales, when you count both plug-in hybrid sales together with battery-only vehicles’ sales. If you consider only battery electric vehicle sales, the EV market share shrinks to 0.76% of new car sales. This negligible market share maps the rocky road EVs need to travel towards genuine public interest and acceptability. This road contains both opportunities and potholes that need filling.

The automotive press observantly genuflected last week as Tesla finally displayed a production version of its smaller, more affordable Model 3 EV. Much hope (and hype) accompanies Tesla’s Model 3 that it produces in Freemont, California, because its base price is said to be about $35,000, less than one-half as much as the two other EVs it makes. Last year Tesla raised much-needed cash by requiring Model 3 customers to provide a $1,000 down-payment/deposit for their car. At this point roughly 400,000 customers have provided a deposit. Very impressive. Some of these folks will be waiting for quite a while to get their car; and some of them might not receive the entire currently-available federal tax credit.

Tesla’s chief executive, Elon Musk, said he expects 100 Model 3s will be produced in August and 1,500 or more in September. He also said that he expects the company to be able to produce 20,000 a month starting in December. In the first quarter of 2017, Tesla lost $397 million, 40% more than a year earlier, but its revenue more than doubled, to $2.7 billion.

Flying far under the hood of the Model 3's media coverage is Chevrolet’s comparable Bolt EV, which with little fanfare has already been selling in CA for seven months. The Bolt has captured strong reviews and has an impressive 238 mile battery range. The Bolt’s MSRP is $36,600 before rebates. Sales of the Bolt have inched forward; in June 1,745 were sold, ranked second behind Tesla’s Model S, whose MSRP ranges from $68k to $138k. All EVs sales are measured in proverbial inches. Of the 32 EV models being sold in CA, only 6 had more than 1,000 sales in June. For perspective, the nation’s best-selling car, the Toyota RAV4 SUV, sold 34,120 vehicles in June. The top-selling vehicle in the US remains the Ford F-Series pickups that sold 77,895 trucks in June. The top-selling EV in June, Tesla's Model X (its crossover vehicle), is ranked 151st, with national sales of 1800 vehicles, down 10% from June 2015. The Chevy Volt has 1642 sales, ranked 162nd.   

Effective environmental policy necessitates mainstreaming electric vehicles that will appeal to and convince “regular people” like Jane and Joe Van (who have 2.4 mini-Vans) to buy an EV. The transportation sector now produces the most CO2 emissions of any industry in the US. The sooner they’re convinced, the better for the environment. People like the Vans represent far more typical car purchasers than rich folks who can afford to and choose to buy expensive Model S’s and X’s. 

Changing people’s automobile purchase habits so they actually consider buying an EV requires numerous changes and is a marathon rather than a sprint. To date federal and state EV oriented policies are sadly unidimensional, offering financial incentives. What’s needed? First, attractive, capable EVs must be available in the marketplace; and second, these vehicles must be comparable with non-EV vehicles, especially regarding cost, range performance and supporting infrastructure. Only a select few EVs are now available for mainstreamers like the Vans.

Electric vehicles have been available since the beginnings of automobiles. Gustave Trouvé, a French electrical engineer, invented perhaps the first EV in 1881. But they have never succeeded against internal-combustion engine technology. Al Jardine, who is a musician and co-founded the Beach Boys as the band's rhythm guitarist, has mentioned that his grandfather worked with Thomas Edison on the electric car and he sold electric cars at the 1900 World's Fair in Paris. Those were the days.

When I was growing up in Philadelphia during the 1950s, I remember being impressed by the big, lumbering trucks of the Saturday Evening Post Co. on downtown streets filled with giant, heavy rolls of paper used to publish the magazine. These trucks were all electrically powered by lead-acid batteries. The magazine was published weekly from 1897 to 1963. Its heavy-duty electric trucks disappeared some time before its fall from weekly readers’ grace.

As mentioned before, the federal government and the State of California have actively promoted electric vehicles with several mechanisms. The Obama administration boldly increased the required corporate average fuel economy (CAFE) standards. In 2011, President Obama announced an agreement with 13 large automakers to increase CAFE to 54.5 miles per gallon (mpg) by model year 2025. The administration was able to secure agreement with the manufacturers in no small part because of its increased leverage. The federal government had bailed out both General Motors and Chrysler, two of the three largest US automakers, from bankruptcy in 2009. This big increase the CAFE standard has provided strong incentive for auto makers to improve their cars’ fuel efficiency and to introduce more hybrids and EVs towards that end.

Adding to the EV charge, Volvo Cars (owned by the Chinese firm Geely Holding Group) announced will stop investing in internal combustion technologies for its cars starting in 2020 and will focus exclusively on plug-in hybrid and all-electric vehicles. In addition, France declared last week it would end sales of internal-combustion engine vehicles by 2040.

However, when gasoline prices started tumbling five years ago, the sales growth of hybrid and EV cars unsurprisingly plummeted. In January, sales of two different, popular Prius models fell over 30% on average from a year earlier. With gas prices down, consumers have bought more low-mpg SUVs and pickups rather than cars, which have made achieving the 54.5 mpg goal increasingly unrealistic. In fact, the major car producers have begun laying off workers in their car factories due to lower sales. Recently, car manufacturers have complained to the Trump administration that the 2025 CAFE standard needs to be relaxed, given the purchasing behavior of consumers. Who knows if they can gain the president’s ear let alone his brain?  

The California Air Resources Board (CARB), the state’s environmental agency, has formally adopted the 2025 CAFE standard for vehicles sold in the state and upped their mandate for zero-emission vehicles (ZEVs): battery, fuel-cell and hydrogen powered vehicles. California has optimistically estimated its regulations would result in ZEVs making up about 15% of all California auto sales by 2025, but the current share has been stuck in first gear, around 3% since 2014 with regulations in force. [EVs actually don’t have first gears, they use gearless, continuously variable transmissions, but you get the idea.]

The CARB’s ZEV mandate is a complex set of regulations that prioritizes the offering of ZEVs via a California cap-and-trade mechanism using the issuance of ZEV credits when a manufacturer sells a ZEV. This ZEV credit system has greatly benefited Tesla in particular, as well as other ZEV manufacturers like Nissan and Toyota. Because it’s a low-volume manufacturer that sells only EVs, Tesla has built up an impressive surplus of credits and has gladly sold them to other manufacturers who don’t sell enough ZEVs in California. These credit sales have significantly helped Tesla’s cash-flow challenges as it rapidly expands.

A Fortune article states that Tesla has received a total of $600 million from sales of these credits over time. Due to its surplus, Tesla has had no trouble meeting the CARB's ZEV mandate — because it can satisfy those obligations with state-awarded ZEV credits instead of actually producing zero-emission vehicles. Tesla has thus significantly benefited from some automakers' decisions to buy more credits instead of building more cars. Critics of the ZEV cap-and-trade program understandably argue that the CARB has issued far more credits than needed. Manufacturers have decried the ZEV credit program, saying the mandate covers only the supply-side production of such vehicles; there’s no mandate for (so far reluctant) customers to buy them. They have a point, but. With a substantial stretch, mandating customer purchases of ZEVs might work in China, given its new-found interest in the environment, but not California or the rest of the US where it’s a first-order political non-starter. That only works for health care insurance, another subsidy-loaded, heavily regulated industry. And that mandate won’t be around for much longer if the Republicans ever get their act together; perish the thought.

Nevertheless, the federal government and individual states like California have provided fiscal incentives-subsidies to customers for EV purchases. Rebates and tax credits are offered directly to buyers, to entice consumers – the demand-side of the vehicle market – like the Vans to purchase ZEVs and counter “the forces of carbonization,” as Governor Jerry Brown just categorized climate-change deniers.

The federal EV purchase subsidy is an income tax credit of up to $7,500. This credit has been in effect since 2010 and will begin to phase out once a manufacturer has reached 200,000 EVs sold. Given Tesla’s sales success, its customers may not enjoy the full federal credit within the next year or so. The California ZEV subsidy offers up to an additional $2,500 for the purchase or lease of battery EVs. In addition, several of the state’s electric utilities provide residential EV owners a lower off-peak hours’ rate when they can charge their vehicle.

These consumer subsidies seem to be effectively promoting EV sales to an extent. When the State of Georgia and Hong Kong eliminated their EV subsidies, sales crashed. After 2015 when the Georgia state legislature removed the state’s EV credit, the sales of the Nissan Leaf dropped from 15 times the national average to a small fraction of what they were. In Hong Kong, Tesla sales dropped to zero in April from nearly 3,000 the month before when the province’s EV tax break was eliminated. Thus a big question is raised about future EV sales as the president’s 6-shooter Dept. of Energy Secretary Rick Perry considers eliminating the federal EV tax credit. If all federal EV incentives and involvement are removed, Navigant, a consulting firm, expects overall demand for plug-in hybrids and EVs could be reduced as much as 20% by 2025. When it comes to energy, whatever the form, nary a BTU is produced, sold or used without some sort of subsidy.

Aside from public policy, what other potholes are in the EVs’ road to mainstreaming? There are three. First, is EV batteries. Producing lithium-ion EV battery packs that are cost-effective and enduring has been an ongoing challenge. Costs are coming down and battery efficiencies are incrementally increasing, but when compared to tried-and-true internal-combustion engines battery drive-trains are more expensive.

Experts believe if the price for one kilowatt-hour’s (kWh) worth of lithium-ion battery capacity can be reduced to $150, electric vehicles can become cost competitive with internal-combustion vehicles, without subsidies. Knowledgeable specialists guestimate that the Chevrolet Bolt’s 60-kWh pack costs about $215 per kWh. Tesla’s head of investor relations claims the Model S battery packs cost $190 per kWh, although that figure might be derived with Tesla (nontraditional) math—accounting that often ignores R&D and capital investment costs.

The final $50 or so per kWh are likely to be the most difficult to attain. No one now predicts significant leaps for today’s lithium-ion battery technology. Instead, cost reductions are more likely to be found over the near-term from economies of scale and manufacturing improvements. Tesla’s Gigafactory is a $5 billion battery-making building in Nevada may pare up to 30% of a pack’s cost, if it comes together as planned by 2020. Here’s hoping.

The second pothole is charging infrastructure (aka, EV “fuel” stations). Electric vehicle charging stations are necessary for anyone who owns an EV, especially those whose range is diminutive. Here's a nice visualization showing more than two dozen EVs' and plug-in hybrids' charging range along with their base prices. With several 200+ mile electric vehicles now available (the Chevy Bolt and Tesla Models S, X and 3) and longer-range EVs hopefully arriving in the next several years, today’s parallel to a pre-Interstate America is the utter lack of a consistent, standardized fast-charging infrastructure for EVs. If EVs are to replace gasoline-fueled vehicles, a national, automaker-independent network of direct-current fast charging stations will be required, that can restore up to 100 miles of range in just 30 minutes.

Unfortunately, standardized charging isn’t yet on the EV horizon. EV drivers from every automaker face a very different experience than gas-fueled vehicles. Electric charging is usually a-frustrating amalgam of chargers run by separate charging networks, using varied hardware. There’s little consistency among interfaces, with some of the chargers only accepting membership cards and fobs for proprietary networks. Is this any way to build popular demand for your EV product? No. But that’s what EV owners now confront and will be for the foreseeable future unless someone (say the IEEE, the Society of Automotive Engineers or much less likely given the present administration’s carbonization focus, the federal government) sets a uniform, national standard for “fueling” EVs.  

Third, the environmental benefits of switching from gasoline to electricity as the source of vehicle power are augmented only if electric utilities generate their power from low-carbon sources. Nationally, electric utilities now use fossil-fuels for 65.1% of electricity generation (including 30.4% from coal), according to the DOE/EIA. That’s not low-carbon.

I know, I know, we humans (especially we Americans) have to change the way we behave and live if we’re going to avoid more bad things from happening to our environment. And while I question the validity of really long-term environmental systems models’ predictions 50 or 100 years out, we still need to do something significant today. Forget the future, post-Industrial Revolution data to date show we’ve already caused key, detrimental changes in the world’s weather and environment.

But really, having the CARB exercise supernumerary control over what technologies California motor vehicles can use is concerning for me, an admitted car guy since I could barely walk. My concern centers on the CARB because it seems to not care one milliliter about what the price of gasoline is or at all about how customers actually make vehicle choice decisions. The CARB mandate only focuses on vehicle supply, not demand. No wonder their mandate keeps slipping.

But why should the CARB change; its goal is environmental greenness, not customer satisfaction. The ZEV mandate which specifies the number of vehicles that must be sold has been revised several times due to unexpected market conditions (e.g., the changing market price of gasoline that influences consumer vehicle-purchasing habits). The CARB first set its mandate for low-emission vehicles 27 years ago, when the nominal price of a gallon of gas was $1.12 ($2.03 in real terms).

 With all the challenges that remain, I don’t yet want to buy an EV by trading in my sports car. Do you? There is, however, the plug-in hybrid Porsche 918 Spyder. I’m not the only person who remains reluctant to hop on the EV bandwagon. I hope the potholes get fixed speedily. More than 98% of car buyers haven’t bought an EV. A smoother byway will help greatly. But hop on it we should; the sooner the better if we and the Vans are to go amping along the byways under bluer skies.