Investors confront electric car production
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By Robert L. Bradley Jr.
Recently, SolarCity, Elon Musk's rooftop solar company, inched closer to bankruptcy. So it shocked investors everywhere when Musk's other brainchild, Tesla Motors, itself struggling, announced plans to acquire the panel maker and installer.
"Tesla Talks Big, Falls Short," read a Wall Street Journal headline. The subtitle: "Car maker has failed to meet more than 20 of Musk's projections in the past five years."
Entrepreneurship is normally punished by losses. But taxpayer subsidies allow Musk's bad show to continue -- and expand.
Musk has received almost $5 billion in government assistance. Nevada recently handed Tesla $1.3 billion for a battery facility near Reno.
Tesla receives $7,500 in tax credits for each car sold. And California allows additional rebates.
Even the President is throwing cash Musk's way through $4.5 billion in loan guarantees for electric vehicle entrepreneurs.
Tesla redefines "too big to fail" as "politically correct, so bail."
Musk retorts that he receives fewer subsidies than oil and gas companies. But Tesla's cronyism exceeds what the oil and gas industries combined receive annually ($4 billion).
Tesla subsidies and rebates reach 15 percent of the consumer price. Gas and oil subsidies are only .33 percent. Oil and gas never needed subsidies to survive.
Moreover, electric vehicles (EVs) are a political solution to a nonproblem. Gasoline and diesel fuels are affordable and exceedingly reliable. Last year, Americans drove a record-setting 3.1 trillion miles. This year's mileage should be even higher.
With summer peak prices averaging below $2.15 per gallon, consumers pumped 2.4 percent more gasoline each day than 2015.
Despite claims from energy intelligentsia, there is no market failure at the pump.
Modern fuel is an environmental product. Compared to 1970, today's vehicles are 99 percent cleaner in terms of hydrocarbons, carbon monoxide, nitrogen oxides, and particle emissions.
The Auto Alliance is confident improvements will continue:
By 2030 passenger cars will contribute only about 1% of ozone emissions from all sources of smog. Clean cars are here to stay, and as more consumers buy new vehicles with advanced emissions control systems, we will progress even faster.
EVs, in contrast, are really EEVs, or emission elsewhere vehicles, a term popularized by Amory Lovins in the 1990s.
So-called zero-emission vehicles reflect the fuel-profile of electricity generation. 2015 US electricity generation consisted of 33 percent coal; 33 percent natural gas; 20 percent nuclear; 13 percent renewables; and 1 percent oil.
Fossil fuels, in other words, have a two-thirds market share for EVs, wind and solar just 5 percent.
Electric vehicles are hardly part of an infant industry. Electrics were central to transportation before sidelined by the internal combustion engine in the early 20th century.
Even Thomas Edison advised Henry Ford choose the internal combustion engine over electricity. "'Young man,' he said, 'you have it. Keep at it. Electric cars must keep near to power stations. The storage battery is too heavy.'"
Ford responded: "The man who knew most about electricity in the world had said that, for the purpose, my gas motor was better than any electric motor could be -- it could go long distances, he said, and there would be stations to supply the cars with hydro-carbon."
President Obama and political-CEO Elon Musk are at war with energy physics, consumers, and vehicular history. It's high time they stop throwing good money after bad.
History opposes government-engineered plans to electrify transportation rather than improving conventional energy technology. It's time that Americans were relieved of the responsibility of subsidizing alternative energy fantasies.
Robert L. Bradley Jr. is the founder and CEO of the Institute for Energy Research.