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California vs US on emissions – not a sane argument in sight

Sometimes when people are still arguing, the outcome of the argument is obvious to everyone but those still arguing. That is very much the case with Donald Trump’s blind attempts to go to bat on behalf of car makers, against the fuel efficiency standards of California. The outcome does not matter a jot, regardless of which side wins.

The situation is now pretty much a draw, with this week Reuters and other sources reporting that General Motors, Toyota, Fiat-Chrysler and Hyundai all saying they agree with the Trump administration’s attempts to bar California from setting its own fuel efficiency rules.

We’re not sure a court really gives a damn about what car makers say about this – surely the “victims” of high emissions are individuals who consume the air they produce, not the car companies who have to make the investments to obey regulations. The court is hearing legal challenges by California and 22 other states as well as environmental groups over President’s Trumps decision to remove the ability of California to set its own emissions standards.

In September the administration decided that federal law can block California from setting stiffer emission rules for vehicles traveling in its territory.

The point everyone is missing here is a bit like the point oil companies have made about the move from coal to natural gas. Whatever halfway house you end up at, it can only save you money or CO2 emissions in the short term. Eventually in order to get to zero emissions, and that will cost a whole other lot of money after you have paid to get to the halfway house.

Car makers will eventually have to convert the majority of their output to EVs. Pretending this is not so, and that climate change is merely a fad that voters will soon stop “believing in” and we can all get back to using gas guzzlers, is to miss the point entirely. As chunks of California burns, the evidence of climate change is staring state officials right in the face. If one presidential administration fails to understand this to be true, it will still not stop the fires, and a future administration will see it.

Energy companies like PG&E will still go bankrupt for causing such fires, and we will still end up in the dark ages if they have to operate a blackout every time a fire starts.

And the car companies that finally accept that EVs are the future, and who implement them at the lowest prices possible and captures a greater market share in the new age of electric vehicles, is the car maker that wins. Right now it is likely to be the Chinese car makers that no-one has ever heard of, heralding in a car age dominated by China, to the huge economic detriment of the USA.

Meanwhile they engage in a car argument that neither side can win, because both sides see the outcome as “essential” to their position.

Allowing higher emissions for “just a while longer” is to miss the point. Failure to jump on the bandwagon of EV innovation, is to miss the next generation of prosperity. If Mr. Trump remains in power, which we acknowledge he might in the 2020 election, then the US will be left for another 5 years behind the innovation curve.

Right now all these car markers assume they are large enough and have strong enough brands that they have the god-given right to deliver America’s next generation cars. Let’s look at those names again?

General Motors gets the great bulk of its car sales in the US, and wants to guide it slowly through hybrids to plug in hybrids to hydrogen cars to EVs and will launch a fully electric Bolt in 2020. Is it perhaps trying to avoid designing another “low emissions” petrol engine in parallel with that investment, and now finally, after years’ of resistance, realizes that it must hop straight to EVs.

Toyota banks on all cars going the hydrogen route in its home country of Japan, something that is looking less and less likely. It plans to make its debut into luxury EVs as late as 2021, and in the meantime is targeting low range, local runabouts as its first EVs with ranges as low as 60 miles. It has lost all control over the key ingredient of the lithium ion battery and has multiple deals with Chinese businesses for these. It cannot make money out of EVs, but finally understands it is an inevitable move.

Fiat-Chrysler tied itself to hybrids and this has completely failed it, and now want to get to EVs in the 2022 timeframe, when it will bring out 30 car designs with some form of electric element, but still many of these will be hybrids. It will have to partner on the technology because it has moved so late into this market.

Finally Hyundai has decided to piggy-back on Croatian auto-maker Rimac, for its power train, a company that has sold only 150 cars of its second generation EV. Others on Trump’s side of the argument include Mazda, Nissan, Kia and Subaru, really minority players in the US markets.

These are then car companies which are not well placed to either increase their engine efficiency or get into the EV era. Apart from their brand value, they are effectively dead.

The car maker’s which have said they will embrace the California emissions standards include Ford, Honda, BMW and Volkswagen and these cut a voluntary deal with California in July on emissions rules, so do not want to join up with the Trump push back against California. But even Ford has cancelled new efficient engines in Europe, closing factories, because costs are prohibitive to design new engines which use less gasoline per mile, and go some way to cutting emissions, when the ultimate goal is to eliminate them altogether. Its EV strategy rests on externally produced technology.

There’s not a car maker in the world which can afford to do both and still make money.

California law-makers HAVE to do something to cut emissions right now, and Trump’s unholy alliance with oil companies means he has no option, but to push back. He and his kind are in denial about the eventual shift to EVs.

Meanwhile car marker still say that it costs MORE to build an EV than to build an internal combustion engine (ICE) car. But can this be true? In China EVs are coming off production lines costing as little as $13,000, and falling. There a far less moving parts on an EV than there are in an ICE. So why is this still true? It only requires economies of scale to cut in to change this.

A famous Forbes article early in the EV argument addressed this, making it plain that conventional powertrains may have as many as 2,000 moving parts, while electric powertrains may have as few 20. It cannot be true for very much longer than the more complex engine costs less to make than the simpler engine.

So with half of the major car companies on one side of the argument and half on the other, this has become political, when in fact neither side is interested in cutting emissions by a little, they either need to go fully to EVs or they are in denial about climate change. There really is no middle ground.

And if Trump does not win the next election then those car companies which sided with him, will have even less time to react when the democrats change the law and begin incentivizing EVs in the US.

This week seven US states, among them Alabama, Ohio, Texas, Utah and West Virginia, filed support of the Trump regulation, setting themselves up against the other States which are fighting for greater emissions efficiency with California.

Obama rules adopted in 2012 looked for 46.7 miles per gallon by 2026, and an average annual increase of 5%, more compared with 37 mpg by 2026 under Trump.

Meanwhile on the other side of the political wall, leader of the democrats in the senate, Chuck Schumer has this week called for a ten year US plan to promote EVs, which he said would cost $454 billion. It includes discounts of $5,000 to trade in gasoline cars for EVs; a $45 billion spend on charging stations throughout the US and a subsidy to automakers costing $17 billion to increase production of EVs.

Such action might put the US back in the drivers’ seat in global car manufacture once again.

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