President Biden promised on Monday “to work like the devil” to bring down gas prices, but he’s mistaken. America’s working-class people need to do more to facilitate the transfer of wealth to America’s one percent. At the end of the day, America’s electric vehicle policies are designed to do just that.
Please allow me to explain why.
Although Green New Deal champion and Tesla owner Alexandria Ocasio-Cortez possibly is unaware, electric vehicles do a lot more damage to the roads because they are considerably heavier. GM’s electric Hummer truck weighs 9,063 pounds. The truck’s battery weighs more than a Honda Civic.
A Tesla Model 3, Elon Musk’s most popular car, weighs 3,648 to 4,250 lbs. The Tesla Model X weights 5,185 to 5,390 lbs. By comparison, a Toyota Camry, the top selling car in America, weighs 3,310 to 3,595 lbs.
Although it hasn’t yet been determined how much more road damage electric vehicles will cause, scientists agree the amount is likely significant.
“Research has shown that electric vehicles do indeed cause extra (road) wear due to their weight,” Bruno Van Zeebroeck, a researcher at a Belgium transport and mobility research center, told The Brussel Times.
The ability for electric cars to accelerate from 0 to 60 in mere seconds also isn’t good for the roads.
“Asphalt is an extraordinary material. The faster you accelerate, the harder it gets and the more counter-pressure it gives,” Sandra Erkens, professor of applied civil engineering at the TU Delft, told The Brussel Times. “We know that acceleration, braking, and steering movements cause additional wear… But we do not have good tools yet to calculate this effect.”
As electric cars gain popularity and do more road damage, that will further increase emissions from gas cars because damaged roads reduce fuel efficiency. They also increase fatalities.
Road Repair Funding
Nearly 50 percent of America’s roads are in poor or mediocre condition. Why would that be?
In the U.S., federal, state, and local governments rely on fuel taxes for more than 40 percent of transportation funding, including road repairs and mass transit. But the federal government hasn’t raised the gas tax since 1993, when it was fixed at 18.4 cents a gallon. Jen Psaki, Biden’s spokesperson, said in June that raising the fuel tax was a “nonstarter” because of the president’s pledge not to raise taxes on people making less than $400,000 a year.
Although federal and state taxes remaining stagnant for decades, gas prices have surged since Biden took office. The higher gas prices go, the more incentive there is to buy an electric vehicle – that is if you are among the rare few who can afford one.
According to a December CNBC report, the average transaction price for an electric vehicle is $56,437, about $10,000 higher than the overall industry average of $46,329 that includes gas and electric vehicles. At this writing, Teslas, the most popular electric vehicles, fully range in price from $44,990 to $138,990.
Simply put, the cost of an electric vehicle is the equivalent of an entry-level luxury car to a high-end one.
Tax Subsidies For Luxury Cars
Only 18 percent of Americans can afford the cost of a new gas car, so a new electric vehicle is, as Psaki might say, a nonstarter for the masses.
Federal and state governments in their infinite wisdom think it’s best that people who can afford luxury vehicles be the recipients of generous tax subsidies to purchase their wheels, including a Tesla, which already has received billions in tax subsidies.
Here’s the rub. Tax subsidies are only offered for new electric cars, so cash strapped Americans who can only afford used cars will get no assistance when they become available.
And here’s another rub: Despite Elon Musk’s pledge to make electric cars more affordable, Tesla last year raised its prices about a dozen times. Meanwhile, in China where Tesla faces more competition and has a poor reputation for quality, Musk prices his cars significantly lower. That has led to charges that U.S. taxpayers are subsidizing Tesla purchases in China as well as the U.S.
Little wonder Musk speaks so fawningly of China’s Communist Party leadership and the management of their economy.
Michigan says Yes! to Mexico
Let’s consider Michigan and see what Governor Gretchen Whitmer, who Biden seriously considered as his running mate and a rising star in the Democratic Party, is doing for electric vehicle sales.
Whitmer in her latest budget proposed giving a $2,500 tax break to the buyers of all electric vehicles. The tax goody can be paired with a $7,500 federal tax credit, which Whitmer proudly declared ‘knocks off’ $10,000 off the price of a new electric car.
I know what you’re thinking: Ford and GM are based in Michigan, both companies say electric vehicles are their futures, so what’s good for Ford and GM is good for all Michiganders.
That’s what Ford and GM would have you believe.
Know where the Mustang Mach-E is made?
And the automotive press has reported that Ford is mulling building two more electric models at its Mexico site. Ford is also considering manufacturing electric vehicles in India for export. Ford also plans to “significantly expand” its India workforce, where the company already has offshored more than 11,000 white collar jobs. I expect Ford will become like IBM and have more employees outside the U.S.
Ford this year will introduce an electric F-150 truck, which will cost anywhere from $40,000 to $95,000. Ford is so committed to building electric vehicles that CEO Jim Farley is on record saying that he’s thinking of spinning Ford’s electric vehicle business into a separate company. That would be great for Ford shareholders because a Ford EV stock would be deemed a “socially responsible” investment, which is all the rage these days. Tesla is the fifth largest holding in Vanguard’s socially responsible fund, despite a State of California lawsuit with horrific racist allegations.
Indications are that Ford’s electric vehicle business won’t be headquartered in Michigan. The company last year committed more than $11 billion to build EV plants in Tennessee and Kentucky. Ford thinks thinks so little of Whitmer it didn’t even consult with her before cutting its southern state deals.
Farley is on record as saying he doesn’t care what Detroit thinks. He said so in so many words in a 2008 interview with the New York Times. Farley pulling up stakes and relocating Ford to greener pastures shouldn’t come as a surprise to Michiganders. Former Ford CEO Mark Fields refused to move his family to Michigan when he ran the company.
Bye Bye Car Dealerships
Despite Tesla raising its prices more than a dozen times (the company doesn’t have third-party dealerships), Ford and GM are beating up their car dealerships for selling cars above their suggested list prices. Spinning out their EV businesses into separate companies, Ford and GM likely could figure out ways to get out of their dealership commitments, allowing them to capture the negligible profits dealers make on new car sales.
As of May 2021, there were 534,000 people employed in the Automobile Dealers industry, earning on average of $55,000. U.S. car dealerships spend $10 billion on advertising, so television, radio, and print and online publications will take major hits if car dealerships disappear. Car dealerships are major donors to local charities and civic groups. The California New Car Dealers Association in 2017 donated more than $49 million to a wide range of organizations, including a Bay area food bank, the Make-A-Wish-Foundation, and Alzheimer’s Association.
Converting to electric cars will also eliminate the need for service stations. The gas stations industry employs more than 140,000 people. More than 60 percent of America’s gas stations are owned by immigrants.
Fix The “Damn” Roads?
Whitmer in 2018 ran on a campaign to “fix the damn roads.” While Whitmer claims to have made “huge progress” on road repairs, Michigan’s roads in December were ranked the 10th worse in the nation. Once the Hummer EV truck, the electric Ford-150 (6,171 to 6,590 lbs) and Chevy’s electric Silverado (7,148 lbs) are unleashed, Michiganders will quickly recall today’s roads as the good ‘ol days.
Whitmer in her latest budget earmarked $1 billion for road repairs, transit spending, and other programs. This includes $378 million from the $1 trillion federal infrastructure spending law. I can find no public record that road repair spending is based on projected damage caused by electric vehicles.
Most likely, Whitmer, like Joe Biden, has no comprehensive plan on how to fund road and bridge repairs as electric vehicles gain popularity. It wouldn’t surprise me if they aren’t even aware of the road damage electric vehicles cause.
What seems clear is that people who can’t afford electric vehicles will fund the transition for those who can. Someone buying an electric Hummer, which starts at $108,700, getting a $10,000 tax break while someone working three jobs to put food on the table gets socked at the gas pump, doesn’t strike me as fair or equitable public policy.
The Rich Get Richer
What’s also apparent is that electric vehicles will make a select few one percenters even wealthier. Electric vehicles are a godsend to Ford’s Farley and GM CEO Mary Barra, whose companies’ stocks languished for years, have refashioned themselves as environmentalists and getting a boost from Wall Street’s EV hype. They will reap tens of millions of dollars in bonuses after spinning off their EV businesses. (Barra in 2020 was paid more than $40 million.) Although Ford and GM have been manufacturing gas engine vehicles for more than a century, their products are still mostly lackluster and substandard. It’s a giant leap of faith that they will instantly master making quality and reliable electric vehicles, something even Musk has yet to do. GM’s Chevy Bolt debacle hardly fosters confidence.
While Wall Street and Elon Musk’s legion of acolytes in the U.S. say Tesla’s future is assured, I’m not convinced. Tesla’s repeated recalls and growing unfavorable media coverage could eventually harm the brand’s image and sales, as well as the public’s perception of electric vehicles. A story making the rounds on social media is about the owner of a top-of-the-line Model S (starting price $94,990) trading in his car for a Stellantis Chrysler 300 (list price $33,545) because he got so fed up with his Tesla’s problems and costly repairs.
“Yeah, I know FCA [now Stellantis] quality leaves a lot to be desired, but hey, Tesla prepared me just fine for that,” the former Tesla owner told a reporter.
Musk’s Twitter antics might start wearing thin with the public. He tweeted (since deleted) a meme comparing Canadian Prime Minister Justin Trudeau to Adolf Hitler. Even for Musk, that’s a new low. Regardless, billions of U.S. taxpayer subsidies have made him one of the richest people in the world.
My guess is Whitmer has an implicit understanding with Ford that the company won’t announce a relocation of its EV business until after the election. Whitmer likely will get reelected, not due to her record but because she is the least awful of candidates. If the predicted trouncing of Republicans in the midterms prevents Whitmer from getting a plum Washington job, Whitmer will become a talking head on one of the cable networks, join a myriad of public boards, and become far wealthier than she likely already is. (Whitmer’s father is the former CEO of Michigan Blue Cross Blue Shield of Michigan, a job paying millions a year. The current CEO set her up in politics.)
Michiganders and other state residents will eventually be hit with a steeper tax bill to repair their roads, but Whitmer likely will be long gone. Wall Street will make millions floating the bond offerings to fund the repairs. That’s on top of the millions Wall Street will make spinning off Ford’s and GM’s EV businesses.
The Wisdom of Toyota
I’m all for dealing with climate change, but I prefer to listen to a car company I know and trust and has a long history of manufacturing reliable and more fuel-efficient vehicles for people of all economic means, including the hybrid.
That would be Toyota, which argues that “too little attention is being paid to what happens between today, when 98 percent of the cars and trucks sold are powered at least in part by gasoline, and that fully electrified future.”
Seems to me Toyota knows what it’s talking about.