What Is the True Cost of EV?

Standard

The battery electric vehicle (EV) versus the internal combustion engine (ICE) powered debate is one of the most irrational of our time. On both sides of the discussion, you have those frothing-at-the-mouth types who attack the moment you disagree. And this is exactly the response that I got after I had casually mentioned that ICE is 1/3 the cost under a click-bait post…

Model Y starts at $43,990 FYI.

One just called me ignorant, but others tried to make an argument, including this response:

I’m trying to figure out what car cost 1/3 of the price of a Tesla🤔🤔? The long range Model 3 (the one you want for a roadtrip) is $42,500 – $7500 tax credit is $35,000. This is not factoring in gas savings. Please tell me what new car is availability for under $12,000 (that’s the 1/3 cost of a Tesla you mentioned)?

Fair enough question.

Note, I never said new, but assuming that I did…

Believe it or not, and even in this inflationary age, there are still reliable sedans that come in under $20,000. Starting with a Mitsubishi Mirage G4 ($18,500), the Kia Rio ($17,875), and the Nissan Versa ($17,075), the lowest-priced option is half of even the subsidized price of the Tesla base model.

But you can’t exclude the subsidy from the cost of the EV, the government doesn’t have a magic wand to create value and we all end up paying for their expenditures in our taxes or by inflation due to money printing. And it only begins with that “tax credit” (so-called) given directly to privileged people who can afford a new luxury car.

What is the true cost of subsidies?

According to a study by the Texas Public Policy Foundation, the cost to us is nearly $50,000 for every EV produced:

Federal and state subsidies and regulatory credits for EVs totaled nearly $22 billion in 2021, or nearly $50,000 per EV, socializing the true cost of these vehicles to taxpayers, utility ratepayers, and owners of gasoline vehicles

Tens of billions of dollars have been spent trying to make EVs viable, and yet still the average cost of these vehicles is $65,000, compared to $48,000 for ICE. Why haven’t these subsidies leveled the playing field? It is simply the fact that batteries require tons of extra material and a much more complex process to produce.

So we can at least double that visible “tax credit” subsidy and already the true cost of an EV is close to three times a comparable ICE sedan.

We could stop there—the 1/3 number reached—but let’s continue…

What is the true cost of production?

The cost of a vehicle isn’t just the window sticker price or the money that it takes to manufacture. The bigger question—given the reason many say we should switch to EVs is about emissions—is what the increased environmental impact is of producing the batteries that go into these cars. Is this a trade-off we are willing to make?

Lithium batteries are costly, they require an enormous amount of water and also leave a toxic legacy that will grow exponentially as EV is adopted. Is it worth this cost to only marginally reduce carbon emissions?  That is to say, around 17-30% less emissions according to European Energy Agency? 

Sure, it could get better with a heavy investment in electrical generation and transmission—yet that is another huge cost financially and environmentally…

What is the cost of infrastructure demand?

This is where the conversation is the most interesting. We have the refining capacity and distribution network already built for ICE vehicles. Gasoline and diesel fuel have the advantage of being energy-dense and can be moved around using the existing highways. But what about EVs?

There is an illusion that comes with plugging something in. The load we put on the system is invisible. But there is no magic to it. Electricity is something that must be produced somewhere and then transmitted to the charging stations. If everyone adopted EV technology the grid would collapse.

We’re currently nowhere even near what it would take in capacity to convert everyone to EV. The easiest route to more electrical generation is to go anuclear. So how many new nuclear power plants would it take? Well, if we use miles driven and the number of cars on the road today, then we would need to build 250 additional nuclear power plants as big as the largest plant in the US, and the supporting infrastructure to keep up with this demand.

So are you willing to have a Palo Verde in your own backyard?

It cost 5.9 billion dollars to build one in 1988 (the equivalent of 13.9 billion in 2023) and we needed to start building 250 of them yesterday.  The solar and wind equivalent would be even more costly to build and maintain.

The costs would be astronomical and that’s just considering only passenger vehicles. Switching Class 8 trucks would take even more of these massive power plants and spending—the cost of switching would be insane.  Not to mention you would need more trucks to do the same work as you did with diesel.  And remember, every dime that we spend on this mass EV conversion could go to health care or education instead.

Can you now see how extremely costly EVs will become as they are adopted?

But it does not end there…

Why is the cost of wear items greater?

Batteries are heavy and weight is the enemy of “wear items” like brakes or tires—which is not to mention the additional damage to the highway infrastructure.

EV tires wear 20% faster than comparable ICE vehicles.  That is a cost out of your own pocket and also a concern for the environment. And do not forget, to be safe you’ll need those heavy-duty EV-specific tires. Sure, maybe this is not a very big problem for those who can already afford the premium cost of a new EV?  However, for that waitress struggling to make ends meet she will have to make the choice between safety and home utilities.

Next up is excess road wear.  Big trucks are obviously the leading cause of damage to roads. However, EV proliferation will start to cause problems for existing infrastructure:

A 6,000-pound vehicle causes more than five times as much road damage as a 4,000-pound sedan. A GMC Hummer EV, which weighs 9,063 pounds, will cause 116 times as much road damage as a Honda Civic, weighing 2,762 pounds.

The article cited above isn’t about EVs yet does apply given it is about the vehicle weight. Even the Model 3 is a whopping 3,862 to 4,054 lbs. Sure, one vehicle is not going to do a whole lot by itself, but the volume over time will significantly impact bridges and parking garages that were designed for lighter ICE vehicles. This EV vehicle weight bloat caused by batteries will require very costly upgrades to prevent catastrophic failures—like the Ann Street Building Collapse:

Speaking of disasters. With EV there is potential for a thermal runaway or reaction that can’t be stopped—like an ICE fire—by simply denying the source of oxygen. This hazard will result in more damage to road surfaces, more time spent in traffic jams after incidents, and additional toxic emissions. This is a cost to be seriously considered with all of the others.

Cost of time, capability, and resale value…

Many of the costs and drawbacks of EVs are hidden under a pile of subsidies or are moved upstream like the emissions—out of sight out of mind.

But what cannot be ignored is performance in terms of range. Time is by far our most valuable resource and nobody wants to spend hours in a place they don’t want to be because their vehicle battery is drained.

As far as capabilities, even EV trucks are useless for towing, both the Tesla Cybertruck and the Ford Lightning—both costing around $100,000 in the higher trim levels—aren’t so good at doing typical truck things. Sure, they produce a ton of low-end torque and are very fast. But the F-150 EV only went 90 miles pulling a camper and the Tesla only fared a little better.

7000lb luxury land yachts

And finally, we need to talk about plunging resale values. For a while EV was a novelty, the “way of the future” every suburban geek needed to virtue signal. But it appears that this is now starting to fade and reality is starting to take over again—46% of EV owners in the US plan to ditch EV to return back to ICE—and many will not recoup their cost because the floor is dropping out for used EVs:

A recent study from iSeeCars.com showed the average price of a 1- to 5-year-old used EV in the U.S. fell 31.8% over the past 12 months, equating to a value loss of $14,418. In comparison, the average price for a comparably aged internal combustion engine vehicle fell just 3.6%.

That’s bad news for the EV industry.  That is probably why Ford, after losing billions on their EV investments, has made plans to pivot back to hybrid.  Toyota, ever conservative, never made the mistake of getting sucked into the EV mania.  My wife’s C-Max (hybrid) has no range anxiety, saves fuel, and has a plug-in version that can go on battery for a length of a commute.  This is the right compromise.

ICE costs less to build, but the hybrid will likely emerge as the winner for being the best of both worlds. It has range like ICE, and torque like an EV, while also keeping its value and not requiring vast new expenditures to upgrade the electrical infrastructure. If costs are reflected in the market hybrid will come out victorious in the end.  Some can afford EVs today, but only because others are absorbing more than half of the real costs.

As a footnote, I’m not opposed to EVs nor do I think they are destined to go extinct. If resale values continue to drop I would even consider owning one. The whole point of this article is simply to give a bit of pushback against the Pollyannaish sentiments that would lead to an ill-advised mandate. There would be an enormous cost, and opportunity cost, that would come with this. Just the fact that EVs need massive subsidies to be sold should tell us enough. If it isn’t viable in the market it isn’t viable.

The Difference Between A Car Enthusiast And An EV Fanboy…

Standard

Ferrari has decided to stick with internal combustion engines rather than join the crowd.  The famed Italian supercar manufacturer is known for its shrieking V8 and V10 engines.  And, despite government pressure, will not force electric drivetrains onto their customers.  The sound is, after all, a big part of what makes them a Ferrari.

Under the article, there was a comment “a Ferrari that doesn’t win races isn’t a Ferrari” and went on to suggest that the tune would change “when their $600,000 works of art start getting blown away by an electric minivan full of kids, driven by a soccer mom sipping a latte and talking to her mom about her test results, and towing two jet skis.”

If owning a Ferrari was about winning illegal drag races, redlight to redlight, this is a valid point.  Obviously, being formidably fast is part of the supercar equation and electric does have a significant torque advantage right off the line.  Nobody who spent half a million on a vehicle wants to be dusted by a minivan full of kids.

The van was faster and legend is, in the book of Things That Never Happened, the guy with the McLaren traded it for the modded Honda.

However, the problem with this argument is that there are already muscle cars that will beat a Ferrari in a straight-line race.  And many mundane cars can be modified or tuned to at least give a supercar a run for their money.  But that’s not the point.  Nobody is going to trade their F50 for a Civic with a big turbocharger.  Why is that?

First of all, what it takes to win a drag race is completely different from being competitive in the 24 hours of LeMans.  

Currently, there is no EV in the world that has the kind of endurance to go full bore (or coil) for as long as a real track car.  The Tesla P100DL can only last a lap and a half before it must be pitted due to the batteries overheating.  But the main problem is simply that batteries do not store enough energy and take far too long to recharge to be viable in competition.

The huge advantage of petroleum is energy density.  This means both extended range and also lightweight.  This translates to better driving dynamics, and less demand (or wear) on brakes and tires, which is key to winning races.

And there is no magic wand that will solve these massive drawbacks of EVs either.  It’s just how the chemistry and physics work out.

Secondly, most people who drive a Ferrari aren’t racing them nor do they need to own the fastest car on the road.  They own the car for the same reason that a person buys a painting rather than a photograph.  Sure, the image a cell phone can produce is much more realistic than the artwork, but arguing that this makes a van Gogh worthless is silliness.  

Or, more to the point, a true aviation enthusiast isn’t going to turn down a ride in a P-51 Mustang arguing that commercial airliners are fast or that the jet engine made that V12 Merlin obsolete.  Sure, the car may have replaced the horse, but that doesn’t mean that everyone who enjoys these beautiful animals is Amish or a Luddite.  No, rather they enjoy the experience of riding a horse, being near something with a personality, breathing and majestic.

A pure driving experience is not about only the performance stats on paper.  No, it is about way more than that.  It is about how it feels.

There’s a reason why Mazda Miatas are a favorite and it had nothing to do with being able to blow the doors off all comers.  It was about those intangibles.  A combination of size and handling makes a driver’s car.

My Shelby GT-350 isn’t the fastest Mustang on the road.  The manual transmission makes it slower than it could be with the latest automatics.  But there is just something glorious about the whole experience that was not matched during my test drive of a similarly powered Mustang Mach-E. 

Sure, EV fanboys may only care about the 0-60 numbers.  But, if that’s all it is about, then why not buy the theoretical future EV minivan that accelerates like a top fuel dragster while pulling jet skis?  It’s much more practical than a Ferrari.  Why pay a premium for a less capable vehicle?

A car enthusiast knows the answer. They know why the old guy in the neighborhood putters around in their Model T Ford and they also understand why someone restores a vintage Porsche that’s not even a match for a family sedan. 

There’s no way to rank fine art.  It is all subjective, finesse and balance, what does it for you, those who want to turn everything into some kind of adolescent tool measuring contest don’t get it—they never will.

The Beautiful Thing

Standard

An old couple found this thing.  It was sleek and shiny, some parts transparent, but had many mysteries packed under the opaque surface at the bottom.  One of the intriguing features was the little boxes that could be pushed in or out again, giving a satisfying *click* that delighted them both.  The upper portion, with a strange metallic knife inside, could be separated from the lower and there was also a third higher portion that was very easily removed.  None of it made that much sense, but it was very beautiful and thus they decided to put this trophy on prominent display in their home.

The old couple were avid readers, they loved the stories of ancient people, and that was one of the reasons why this old object stood out to them.  They knew it had to have been something special, a sacred object for past generations, and they treasured it.  But their desire for this food called “smoothie” would have to wait.  It required a blender and they had none.  So they continued their most faithful prayers, finding many pleasant (but mostly decorative and practically useless) things over the years, which they put to work to use as tables or art. 

At the end of it all they decided that if God had wanted them to have that perfect blend of many fruits and other ingredients they would have been given the tools—so they decided to be content with these beautiful things He provided instead…

Tesla’s Cybertruck Is Already A Huge Success, Here’s Why…

Standard

Did you hear the news?

Tesla is making a pickup truck!

Of course, I doubt anyone who pays a slight bit of attention on social media missed the debut of Cybertruck. I mean, who could miss such a disaster of epic proportions, right?

At first glance, Elon Musk blew it. The truck looks absolutely hideous to your typical truck buyer, like something off a Blade Runner movie set, a future that never will be and never meant to ever reflect what consumers actually want in a vehicle.

But the reality is that Tesla just scored a huge marketing win. Those of you who hate the design, you are not in the actual target audience. A traditional truck buyer isn’t really interested in anything Tesla is offering and taking sledgehammers to windows won’t change that. However, if you have joined those talking about this awful truck then you are doing exactly what Musk’s rollout was intended to do and that is you are providing free-advertising for Tesla.

You might say, “But, wait a minute, everyone is ridiculing this design, laughing about the broken glass, how is that a good thing?”

It doesn’t make sense that what appears to be a failure is anything but a failure, right?

However, there is one thing I’ve discovered in the past few years and that is that almost all publicity is good publicity for those who know how to leverage it. From Miley Cyrus selling albums by twerking awkwardly like an ex-Mennonite ‘woke’ feminist-wannabe still angry at her parents—to Trump winning the White House by offending “libtards” (a term I’m borrowing from a smart liberal friend) with his strategically insensitive Tweets—bad press can most certainly be turned into bankable success.

Sure, you might never, in a million years, buy a Cybertruck. But, who cares? I can about guarantee some version of this truck will be hitting the road in the next few years and now everyone that could possibly want one knows about it.

Musk gets it.

Musk, love him or hate him, understands that people aren’t only buying transportation.

No, ever since Chevy coupes could be bought in more than one color (and much to the chargin’ of Henry Ford and his venerable Model T that was available in any color you want—so long as that color is black), consumers are buying an image as much as anything else. Image trumps practicality at every turn in this age of consumerism.

Musk, for his part, is in the business of creating image and, on this front, has delivered before…

Tesla Successfully Changed What it Means To Be Green

When electric vehicles were first introduced by established carmakers (or rather reintroduced after a century-long hiatus) they were always sold as being ‘green’ and a compromise. The EV1, for example, that billion dollar General Motors boondoggle, while winning a cult of leftist conspiracy theorists, failed to inspire the car buying masses.

And, sure, you can find enough virtue-signaling professor types or too practical appliance-car buyers to purchase a Toyota Prius. But, for the simple reason that it is boring as Al Gore’s personality, you’ll never convince the general public that this should be their next vehicle . Nobody wants to settle, every big-ticket item we buy is an extension of us, shows our personality, and an electric Toyota has all the excitement of a tweed sweater.

Musk changed the game. He changed the focus from economy and compromise (for sake of some hypothetical greater good abstraction) to real luxury and serious power. There was really nothing that new or innovative about his designs. In a sense, all Telsa cars (at least up until the Cybertruck) had styling cues that belonged next to a 1990s Ford Taurus or Chevy Caprice of the bubble car era. But the marketing strategy worked.

Telsa made electric cars something relevant and cool.

To the target demographic Model S and subsequent offerings have looked sleek and sophisticated. They also offer real-world performance, exclusivity, and appearances of eco-friendliness on top of that. They pretty much bested the existing offerings of BMW, Lexus, Audi and Mercedes Benz in every metric that mattered to that demographic.

So what happened???

How did we go from that to Cybertruck?!?

But, first…

Why Does Anyone Buy a Pick-up Truck?

Truck buyers might claim to be practical. And that may be the case if you have an old Ford Ranger in your driveway, farm or hang drywall for a living. But most people do not need a pick-up truck any more than I need a Shelby GT-350.

With a pick-up truck you are buying an image.

Sure, pick-up trucks are often sold for their utility, for their ability to tow a trailer full of excavating equipment up a rocky cliff, and some do get used for this purpose, but let’s be real: The reality is that many of these two-ton behemoths (if not most) are used primarily as grocery getters, are not very practical for that task and that’s the point.

Come on, do you really think that guy (waking you up at an ungodly hour) put those obnoxious straight pipes on his Dodge Ram to uncork a little more power?

Is that six-foot lift kit on a late-model Duramax really about ground clearance and rock-climbing ability?

Don’t kid yourself, the jacked-up smoke-spewing monstrosity is all about trying to get you to notice and that goon behind the wheel will enjoy your disgust as much as your approval.

What we purchase is never only about the real-world utility of the thing. It is also to make a statement of some kind and trucks to make a statement. Owning a truck is often about getting noticed, it is a status symbol, it is a projection of strength, security and good ol’ American independence.

It is about possessing capabilities (real or imagined) that others do not have with their wimpy cars. And that’s generally why people prefer trucks over the alternatives.

Tesla’s Cybertruck Is Already A Huge Success

Believe it or not, Musk’s marketing plan was executed perfectly broken glass and all.

How do I know this to be the case?

Well, everyone is talking about it, even people who aren’t normally truck buyers or very interested in automotive news period are talking about Tesla’s hideous new Cybertruck creation, laughing about the busted window, making videos about the tug-of-war, etc.

Meanwhile, amid this free publicity is a subliminal message: If you want to be truly different, if you want to really stick it to the status quo, then buying the most loathed vehicle on the planet will give you that notoriety and the attention you want.

Call the Cybertruck ugly, but since when is a pick-up truck supposed to be pretty, dainty and delicate?

Laugh about a broken window, but since when have you seen someone dare to throw a steel ball at their shiny new F-150 or Silverado?

Say that the tug-of-war test is meaningless (and it is as far as something of practical value) and yet who hasn’t seen the videos online of similar contests between trucks?

Musk understands the average truck buyer better than they understand themselves. He also already knows that he’s not going to attract the traditional truck buyer.

Bubba ain’t giving up his “square body” Chevy even if you gave him ten Teslas and Billy Bob will be tweaking his “first-gen” Cummins until the thing dissolves entirely into a heap of rust and accumulated soot.

Likewise, pappy will continue to buy his overpriced four-wheel drive luxury barge, from a traditional brand, because new cars aren’t ‘safe’ like his 1960’s Oldsmobile.

The traditional truck buyer is not the target audience of Telsa’s campaign.

No, Tesla has, in effect, created the parody of a pick-up truck, the one that takes the increasingly squared shoulder look of pick-up trucks and goes straight-up box on wheels.

Cybertruck is extreme, it defies convention, which has been what the “big three” (if you can still call them that) have been doing for years. I mean, have you seen the new Silverados? The things are extremely exaggerated compared to the designs they replaced, almost cartoonish, and that has been the design direction for all full-size trucks, bigger, more aggressive, etc.

In reality, the Cybertruck is brilliant because it is the only way you can go to be more rugged, more independent and different.

It is a design that says, “I don’t care about you being offended.”

The only thing different is that the target demographic is not some redneck “rolling coal” in Arkansas who doesn’t want an electric truck, period, and never will.

Rather Musk’s target is someone like Arnold Swartzeneggar in Hollywood who in times past would’ve bought a Hummer to make a display of his unbridled masculinity, is desperate to be unique and yet now, to win female attention in his social strata, has to also signal his eco-consciousness.

There will be many out there who will emulate the boldness of their celebrity idols. Many who would enjoy irritating everyone else on the road with their annoying tastes and will especially enjoy the ire of the traditional truck buyers.

A successful product doesn’t need to be liked by everyone. In fact, when it comes to vehicles, it is better to have a specific group in mind and not to worry about what those outside that particular target group think.

Bad publicity isn’t bad if it gets your message to those who would potentially buy your product. The negative buzz can turn into a positive.

But will it work?

The Problem with Shock and Awe

Trump might win by a wider margin in 2020.

Tesla may have as much success with the Cybertruck as they have with their other vehicles.

However, people are fickle and the fresh direction that worked before might become old news and the next Edsel on the second go around.

Tesla (unlike Trump) also has some serious competition. Not only is Ford translating their proven F-150 platform into electric, but there is also the up and coming Rivian R1T that looks a little more thought out and has some traditional cues despite being differentiated.

It could be that most of Tesla’s target demographic consumers would settle for something a bit less radical and a bit more refined in appearance. The Cybertruck may simply be too silly to be taken seriously in the very competitive truck market—it may need to be tweaked towards a more traditional design.

There is a point when being controversial ceases to be appealing to anyone, goes full-on Aztec, and alienates everyone. (It didn’t work for Trump’s opponents who tried to adopt his brash style either, it completely backfired, it made them look even more lacking in authenticity than they did before.) And time will tell if Musk’s successful marketing of Cybertruck will turn into an actual sales success. But he did get our attention, that’s for sure, and that is half the game!

Musk, like Trump, has mobilized his haters and used them as a hugely successful marketing campaign.

Tesla’s Uphill Battle in the Trucking Industry…

Standard

There is no question that Elon Musk has changed the conversation as far as electric vehicles.  Musk, unlike his predecessors, focused on building an image of luxury and performance.

Electric powered vehicles, until the Tesla Model S arrived as an option, were boring, slow and impractical.  Now, while Musk’s cars still remain impractical for most people (both in terms of range and price) and while it remains to be seen whether or not his company could survive without corporate welfare, Tesla has at least undone some of the negative image of electric vehicles.

Tesla seems to be taking one more step in the direction of practicality with the introduction of commercial vehicle.  Semi, this latest opportunity for Musk to attract media attention, reminds me of something I would’ve drawn up in a middle school daydream: It has a sleek exterior, it is loaded up with LCD screens, it promises to perform at a level one would expect from a sports car, it is priced similar to other Class 8 trucks, and yet also makes me question if any experienced truck drivers were consulted in the design process…

Sure, middle school me would be salivating over this technological wonder.  However now, as one having had years of experience behind the wheel of a big rig, the center seating position, glare of screens, wheel fenders and charging times make it totally unappealing to me.

The ergonomic and design issues, obvious from a driver’s perspective, are covered in another former trucker’s article (click here if you want to know more about them) but there are more serious matters and practical concerns yet to be addressed.  Acceleration numbers and having the fastest truck on the road might increase coolness factor, but it might also leave all of your cargo on the road (or like the unmitigated disaster recalled unfondly from my days unloading trucks at the paint store) and distracts from questions of actual viability in the real world.

To many the promised 300-500 mile range and 30 minute recharging may seem wonderful. But, from a trucking industry standard, it is truly abysmal and completely impractical.  The range of an over-the-road diesel truck, with 250 gallons of fuel, is anywhere from 1000 to 2000 miles and it only takes fifteen minutes every other day to refill the tanks—multiple extra stops per day is intolerable given the current hours of service requirements.  

And, that’s assuming good conditions, what happens in cold weather when battery capacity is reduced by 40-50% like owners of other Telsa products have experienced?

It is no big secret that fossil fuels carry a greater amount of energy per pound than the alternatives currently available. This energy density is especially important in commercial trucking where every ounce of extra weight takes away from payload.  Batteries with the range Telsa has promised will certainly be very heavy and that will be a huge competive disadvantage.  It means you might need an additional Tesla truck to do what one diesel truck does—which wipes out any illusion of energy savings and cost effectiveness.

Then there is the question of longevity and servicing the truck.  It could very well be that the Tesla Semi will be completely reliable and go a million miles like a diesel truck.  But, even assuming that is the case, what sort of maintenance program and roadside assistance will they offer when things do inevitably go wrong?  Service infrastructure is a more significant in commercial trucking than it is in general.  Diesels are relatively easy to work on and the network is already established—those are questions that must be answered.

My own back-of-the-napkin analysis, based in what has already been said and can be reasonably assumed, is that this new Tesla offering will have the same liabilities of other battery electric vehicles except on a far larger scale.  The question of Tesla being the future of trucking (or is simply a niché vehicle for those who can afford the unavoidable range and weight disadvantages, as well as potential maintenance issues) is not answered.

Trucking companies, unlike wealthy luxury car buyers aided by government subsidies, need to be profitable and competive to survive.

What do my trucker friends think?