Although the legacy media has ignored the story, U.S. Secretary of Energy Jennifer Granholm was just nailed for violating the Hatch Act which limits the political campaigning activities of federal employees, except the president and vice president. The violation stems from an interview Granholm did with Marie Claire reporter Emily Tisch Sussman during which Granholm sputtered something seemingly innocuous about the Democrats having eked out a Congressional majority.
When I first read about U.S. Office of Special Counsel citing Granholm for the violation, my immediate question was why would Granholm be giving interviews to Marie Claire, a publication I’ve long perceived as a fashion, entertainment, and culture rag? Thinking perhaps the publication had pivoted over the years, I took a quick online peek. Marie Claire is more downscale than I thought, given this story headlined, “The 24 Best Sex Toys For Partner Play.” There was nary a mention of the environmental sustainability of these toys.
Turns out Emily Tish Sussman isn’t just any reporter. As reported by the Washington Free Beacon, she is the daughter of liberal Democratic megadonor Donald Sussman, a hedge fund manager who donated more than $23 million in support of Democratic candidates and liberal causes in 2020 alone.
Granholm is a political hack, and even my most die-hard liberal Michigan friend readily concedes that Granholm was ineffective when she served as governor of Michigan from 2003 to 2011. More alarmingly was Granholm’s unblemished track record of green energy boondoggles. And with former South Bend mayor Pete Buttigieg, who has an undergraduate Harvard degree in history and literature, overseeing the Department of Transportation, one must be wildly optimistic to believe that America’s conversion to electric vehicles is being managed and planned by capable, qualified, and experienced leaders.
Auto company executives, including the heads of Toyota and BMW, have warned that the accelerated conversion to electric vehicles is happening too fast and without real-world considerations such as the limited availability of the materials needed to manufacture EVs. During a media tour of some of the company’s French facilities, Arnaud Deboeuf, chief manufacturing officer for Stellantis, whose U.S. brands include Dodge, Ram, and Chrysler, on Wednesday warned that if prices for electric vehicles don’t significantly come down, the industry is doomed.
“The market will collapse,” if prices don’t come down,” Bloomberg reported Deboeuf as saying. “It’s a big challenge.”
Policy makers appear to “not care” whether automakers have enough raw materials to underpin the shift, added Stellantis CEO Carlos Tavares.
Seemingly on cue, Reuters reported this morning that a proposed flat-tax on lithium produced in California’s Salton Sea region will delay deliveries of the electric vehicle battery metal to General Motors and Stellantis and may push some mining companies to exit the state entirely.
“This tax would stifle our industry before it even begins,” Eric Spomer, chief executive of EnergySource Minerals, told Reuters. “We’re willing to pay and contribute to the local community, but it has to be a rational tax.”
Rod Colwell, CEO of Controlled Thermal Resources (CTR) Ltd, which has contracts to supply lithium to GM by 2024 and Stellantis by 2025, said the tax would force the company to miss those delivery deadlines.
“Just the mere concept of this type of tax is having a chilling effect on development,” Colwell told Reuters.
Eliminating a U.S. source of supply is great news for China which already dominates the global lithium battery supply chain. According to Bloomberg NEF, China controls of 80% of the world’s raw material refining, 77% of the world’s cell capacity and 60% of the world’s component manufacturing.
Tesla so far has managed to weather the storm because its brand carries so much cachet that it raised the prices on its vehicles this year by as much as $6,000. Ford recently disclosed that higher materials’ prices have wiped out the profits on its Mexican-made electric Mustang.
Granholm, and others in the Biden Administration including President Biden himself, have said rising gas prices make converting to electric vehicles more practical than ever. They and the media cite an often-repeated stat that electric vehicles are cheaper to maintain and refuel. The EPA, according to Barron’s, estimates a Tesla Model 3 owner saves roughly $1,800 a year on fuel, at current prices, compared with a similar-sized gas engine sedan.
The EPA’s stats exclude the cost of tire replacement which must be done with more frequency with electric vehicles because EVs are considerably heavier. According to the publication autoevolution, some EV manufacturers reported their cars’ tires must be replaced after just 28,000 miles. The U.S. Tire Manufacturers Association says most gas cars can normally travel 60,000 miles before their tires need replacement.
According to a mechanic and YouTuber named Scotty Kilmer, replacing the tires on a Tesla Model 3 currently costs about $1,300 before tax. Kilmer said that factory installed Tesla tires don’t come with the run-flat advantage which allows a driver to continue operating their vehicle in the event of a punctured tire. Electric vehicle tires must also be rotated with more frequency, driving up costs for those not handy enough to do it themselves.
According to the website zohr.com, the average Tesla owner buys a third more tires than the average Camry driver. Tire prices are rising faster than the cost of new cars. Analyst John Healy said average prices rose 20 percent in 2021 over the year ago period and in January he estimated they’d increase nine percent this year. All the major tire manufacturers have announced price increases in recent weeks.
As an aside, tires are significant environmental hazards, a detail I’m doubtful has received much consideration among those leading the EV charge in the Biden Administration.
Underscoring the thoughtlessness of U.S. policy, the Congressional Research Service estimated that in 2019, 78 percent of the available electric vehicle tax credits were claimed by people making at least $100,000 a year, while seven percent were claimed by consumers earning $1 million or more. Given that electric vehicles have increased significantly in the intervening years, it’s reasonable to assume that EV credits are still primarily being used by America’s affluent.
The Biden Administration and Congressional Democrats wanted to increase the $7,500 tax credit to $12,500 as part of the Build Back Better legislation, but Senator Joe Manchin reportedly was instrumental in nixing the increase.
Projected material shortages will continue to drive up the cost of new EV vehicles, giving more credence to the warning from Stellantis’ manufacturing chief that the entire automotive industry could collapse. Barron’s reader Mike Staples understands the direness of America’s situation.
“The US made car market may collapse, but China stands ready to fill the gap,” Staples commented on a Barron’s story insisting that Stellantis’ manufacturing chief was mistaken. “They have the raw materials, they have lower costs, they are only waiting for our regulators to shut down manufacturing.”