Post-ridiculous IRINA SLAV
“We can’t push EVs into the market against demand.” Thus spake the head of Ford’s European operations this week, commenting on the company’s plans to start diverting ICE car deliveries from the UK
Post-ridiculous
MAY 8
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PAID
“We can’t push EVs into the market against demand.” Thus spake the head of Ford’s European operations this week, commenting on the company’s plans to start diverting ICE car deliveries from the UK to the continent. Why? Because the UK has EV sales goals and if carmakers don’t align their business with these goals, they face substantial penalties
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“We are not going to sell EVs at huge losses just to buy compliance. The only alternative is to take our shipments of [engine] vehicles to the UK down and sell these vehicles somewhere else,” the brave man, by the name of Martin Sander, said, speaking at the FT’s Future of the Car conference in London.
Strange words if you have read reports that EV sales were off to a very strong start in the country, with a stunning 100,000 fully electric vehicles sold over the first four months of the year. This was a 10% increase on the year, which, let’s be honest, is rather impressive. What comes next is also impressive but in quite a different way.
Back in January, Bloomberg’s Javier Blas published a column, in which he sounded an alarm for governments willing to listen. I like to flatter myself, whenever I feel such an urge, by thinking I got there before Blas, whom I deeply respect — about a year or so earlier, if I remember correctly. In any case, I do remember wondering publicly here what governments were going to do about fuel duty income replacement if their EV plans panned out.
The reader consensus was that they would have to come up with a way to tax EVs as well — and that this would wound the EV revolution mortally. Well, guess what, boys and girls, ladies and gentlemen, friends and neighbours? We were right.
We were so right we should form a global government if only to watch our current governments scramble to fill the massive income hole EV incentives have opened up in their budgets. The kicker: to fill that hole, governments would need to start taxing EVs and tax them quite heftily. Because there is no other comparable alternative to the fuel excise duty.
Blas’ January column was headlined You'll Have to Pay to Use the Highway. Blame EVs. In it, Blas detailed why governments needed to start thinking about a tax to replace their lost income from fuel duty collection because there was no time to waste — the EVs were coming and they were not paying any taxes while displacing a growing number of tax-generating internal combustion engine vehicles.
Blas was his usual helpful, too, unlike me. He offered realistic options such as road use charges based on number of miles travelled every year or GPS tracking, which was the worse option for obvious reasons. While both these options have certain shortcomings, notably a regressive streak, they are both better than other alternatives such as car ownership charges or additions to income taxes.
In any case, the message was alarming: the EV revolution is costing governments much needed income and something must be done about it. Only some governments were already doing something about it. Amazingly, they had managed to realise that they’re losing money with their EV ambitions on their very own. So they started taxing EV drivers. EV drivers are not happy.
“It is more like a penalty,” a gentleman by the name of Jeff Shoffner, a Tennessee EV owner, told the FT for a story that came out this week. “I’m not averse to paying the extra fee, but I think it’s too high.”
The comments were prompted by Tennessee’s decision to double the state registration fee for EV owners from $100 to $200. Quite a hike, you might say. Whatever may have made such a radical increase necessary, you might wonder. Well, it’s the same realisation that EVs have turned into cash-guzzlers and are giving nothing back — except the absence of tailpipe smoke. And that’s not good enough for a frugal government.
Tennessee is one of more than 30 states that are starting to “penalise” EV owners with registration fees and public charger taxes to try and fill the growing gap between past and present fuel duty income. Oh, and before you ask how much of that EVs could have replaced since they are still a tiny portion of all cars, constant improvement in fuel efficiency has also contributed to the income decline as cars consume ever less fuel (unless they’re driven by boys with ego problems, that is. They’re usually BMWs, for some reason).
So, we’ve got most U.S. states penalising EV owners by bringing them on a more equal footing with ICE car owners, which is totally unfair and discriminatory I’m sure. They’re not the only ones.
The UK — that same UK that’s forcing carmakers to deprive their potential customers of choice — is phasing out some of its EV incentive programs because, well, they cost money and EVs don’t bring any in.
New Zealand has decided to experiment with road use fees, to the tune of 76 local dollars per 1,000 miles travelled, which is actually great because now we have an actual trial in real time rather than just talk about trialling this or that measure. We already have results, too, even though the measure was only introduced in April.
“April 2024 marks the fourth month in a row of low EV registrations,” a local EV market stats provider reported. The reason? Well, New Zealand scrapped its tax rebate scheme for EVs at the end of 2023 and then it introduced that 76-dollar thing for road use and, you know, people don’t like to pay more for anything, so… there you have it.
In case this sounds familiar, it’s because Germany also scrapped an EV incentive scheme because it ran out of money. Following this decision, EV sales in the country plummeted and that’s not an overstatement. Sales of electric cars in January 2024 dropped by 55% and kept falling.
If I was writing for Oilprice, where I am immeasurably more measured, this is the place where I would have said something like “This highlights the precarious position EV-friendly governments have found themselves in, with time running out to find a way out.”
Since I am writing for my own personal Subtack, however, I’ll put it more bluntly. Our brave leaders forgot about the consequences of their actions yet again, and are now preparing to unleash chaos on their most prized “pillar of the transition”. Because it’s either that or keep losing billions in fuel duty income by forcing people to buy EVs by removing the alternatives. The bill, as estimated by the IEA, so take it with a kilo of salt, is $110 billion in fuel duty income losses by 2035. Before all the ICE car bans come into effect. How about that?
Of course, none of this is actually going to happen because as they start taxing EV ownership, governments will only be able to watch in despair how their electrification plans fly out the window with gusto, never to return. But fuel duties will stay with them for longer, so that should be some consolation.
For the umpteenth time, then, we have our dear Western governments try to have their transition cake and eat it, too, and not gain a single ounce of extra weight. The wanted combustion engine cars out but forgot that these cars bring in billions in tax income. They wanted a fully electrified transport but forgot it wouldn’t bring in money unless they make it more expensive. They wanted a revolution but forgot rule #1 for revolutions: the successful ones never start from the top. They start from the bottom.
I leave you with the heartfelt words of one victim of governments’ offensive against EV adopters. I would have paraphrased but tears choked me and made my hands shake, so a quote it is, from the FT.
““It’s discouraging. We were glad to be at the forefront with incentives and adoption rates . . . This particular thing with the registration fees seems to go against that,” said Patrick McDevitt, a Tesla driver in New Jersey.”
I would admit that the above burst of sarcasm is too crude, even for me. But you see, we told them this would happen. We told them repeatedly. They didn’t listen. So now they’ll be joining the tax-paying drivers’ club. Life’s cruel.