The West’s humiliating electric car climbdown has begun
By Paul Homewood
Ambitious plans for an electrification-led industrial revolution are in full-scale retreat
France’s President Macron had a plan to make millions of electric vehicles a year. Chancellor Scholz planned to put 15 million on Germany’s roads by 2030. President Biden trumped the lot with a $174bn (£138bn) plan to make the US the world leader. Even Boris Johnson – remember him – had a £1bn plan to beef up our charging network.
Rewind only a couple of years, and almost every president or prime minister was making electric vehicles the cornerstone of an industrial strategy. And yet, this week we have learned that Renault is abandoning plans to separately list its electric vehicle (EV) and software business, while Volvo is winding down its Polestar electric sports car subsidiary.
In reality, amid an onslaught of Chinese competition, and falling sales, the West’s electric vehicle dream is quickly unravelling – and we need to relearn all the lessons in why grand, state-led industrial strategies never work.
It was not so long ago that countries were competing furiously to launch battery-powered visions of the future. With Tesla riding the wave of green demand to become the world’s largest car manufacturer, measured by market value if not volume, and with ambitious net zero targets to meet, they all wanted to make sure they could compete in electric vehicles.
We would reduce carbon emissions, create many jobs, and shore up our industrial base. Sure, governments would have to commit a few billions – or tens of billions – to make it happen. But it would pay for itself many times over.
And yet, right now, plans for an EV-led industrial revolution are in full-scale retreat.
Renault, despite the programme of state support, has this week scrapped the separate listing of its EV unit Ampere, which has been scheduled for the first half of the year. It was a “pragmatic decision” according to the company’s chief executive Luca de Meo, arguing that falling sales for EVs across Europe meant the market was more challenging than forecast.
Likewise, Volvo announced that it would stop funding its EV unit, Polestar, and might even offload its 48pc stake on other shareholders, including China’s Geely. Last September, Volkswagen said it was cutting production of two of its flagship EV models, while in November, Ford said it was scaling back its battery plant in Michigan.
It looks like all those “well-paid green jobs” are going to take a little longer to arrive than anyone anticipated. As for the payback on huge sums various governments have “invested” in the industry, it looks like the returns on that money will take a while to come through as well.
There is nothing wrong with EVs themselves. They are often great as run-arounds for dense urban environments, and as long as the raw materials are sourced correctly, and the chargers are not powered by coal-burning generators, they are probably a little better for the environment than the petrol version.
If people want them, then that’s great. The trouble with the industry right now is that demand is falling because the vehicles cost far more than anyone expected, and what market there is will be captured by Chinese manufacturers such as BYD that can make vehicles far more cheaply than anyone in the West can. The result? A lot of government money will be wasted.
There is a lesson in the humiliating climbdown. State-led industrial strategies never work. Indeed, the failure of the drive into EV is a textbook example of everything that goes wrong.
First, it backs the wrong industries. No one really has any idea what products people might want in five or ten years time, which is why it is best to leave it to private companies and their investors to make their own bets, reap the rewards when they get it right, and bear the losses when they don’t.
Politicians and bureaucrats are no better at making those decisions, as usually a lot worse. Don’t believe me? Just ask consumers. Hertz in the US is disposing of the 20,000 EVs it bought with great fanfare in recent years, and is replacing them with petrol models, due to lack of demand. Over the past year, figures from the Society for Motor Manufacturers and Traders revealed a steep fall in EV interest from private buyers.
Next, the state over-invests. Even if there is a small market for EVs, there certainly wasn’t space for huge new industries in France, Germany, the US, or in a dozen smaller countries. The car industry was awash with over-capacity already, and that was before the Government started throwing billions at electric vehicle plants. All that happens is that prices collapse, and no one makes any money.
Finally, it distorts the market with subsidies. Governments start out spending a few billion on new EV factories, then they have to start subsidising the EVs so that people actually buy them, then they have to impose tariffs and quotas to stop imports from countries where other government have invested too much.
Finally, they have to pay out even more to keep alive the factories making a product that no one wants. It’s a vicious cycle, and once it starts it is very hard to stop.
The one relief for the UK is that our political and administrative class was too inept to pour even more money in, despite the best efforts of the former PM’s Theresa May and Boris Johnson to splurge a few tens of billions into the “race for EVs” and the endless warnings that we risked “getting left behind’”. We will be spared the worst of the pain ahead.
In reality, the volte-face on the electrification of the auto industry is underway. Major manufacturers have started to pull back, but all the grand projects for battery factories, for shiny new EV plants, and for charging infrastructure, will inevitably be scrapped very soon.
Billions of taxpayer’s money will have been wasted. We should draw the lesson from that, as bitter as it might prove. The Government never knows what the industries of the future will be – and should leave it to entrepreneurs and customers to work that out.
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NOT A LOT OF PEOPLE KNOW THAT 
50 years since Hayek received his Nobel for demonstrating precisely this.
Correct, but the last prime minister to read Hayek left office in 1990.
Nonsense on stilts. Limited range, insufficient charging points, inadequate power for the points, 50% depreciation after three years, heavy, liable to catch fire. What’s not to like?
Just met a lady who has a Tesla supplied as a company car. With all the range anxiety, charging point anxiety etc she swears she will insist on a diesel when the company decides to replace her car.
Chew through tyres, stress steering and suspension components, expensive to repair, increasingly expensive to insure….
“There is nothing wrong with EVs themselves.“
Oh dear. Where to start.
They are expensive
Suffer from excessively high depreciation
Have limited range
Are prone to catch fire
High repair costs leading to high insurance premiums
Impossible to charge at home for the very many people who do not have the luxury of off street parking
But they are very virtuous!
A lot of Parisians live in appartments
Except, as I say to anyone who tells me they are virtuously going to buy an EV “so you are joining the ranks of the polluters?”. If an EV has to cover around 90k miles before it repays its battery-production debt relative to its petrol/diesel equivalent but can only be effectively used for local journeys then how will it ever cover that mileage?
Not to mention that the battery may have to be replaced shortly after those miles, and the pollution-balancing clock will start all over again…
Very Very Virtuous indeed, Charles!
Ironically, they’re not. Their weight means more pollution from tyres and brakes – far in excess of ICE vehicles.
Matthew Lynn writes some quite good anti net zero articles but he always spoils them with remarks like ” there is nothing wrong with EVs themselves” and “very few people dispute the need to reduce our carbon emissions”.
He has no basis for these assertions and I guess puts them in to ingratiate himself with the DTs more eco loon staff h
Actually, if he had stopped with There is nothing wrong with EVs themselves, it would have been okay. The rest is a stupid declaration of orthodoxy.
and they can be controlled via wifi by government/manufacturer at any time they like
I see the Parisians, or at least roughly just 3.25 percent of the Paris electorate, have voted to triple parking charges for SUVs. Apparently it is the latest move in a drive by Socialist Mayor Anne Hidalgo to make the host city for this year’s Olympic Games greener and friendlier for pedestrians and cyclists.
Now those affected may be more than those voting for the ban may not have anticipated the full effect.
“The new SUV prices will apply to vehicles weighing more than 1.6 tonnes with a combustion engine or hybrid vehicles, and more than 2 tonnes for electric vehicles.”
That EV limit means things like Polestar 4, Tesla Model 3 and Model Y Long Range will be over the limit.
https://www.dailymail.co.uk/news/article-13046181/Paris-goes-war-SUVs-calls-London-follow-suit.html
Oh! ? So what exactly IS an SUV ? This modern talking parlance IS a Generational thing, _ I seem to have lost all notion of what they / you are talking about….. Neighbour has a heavy LOOKING 2WD vehicle with Large diameter ROad-going tyres – Pretty obvious to country folk what it is ….. but a’body else its a Chelsea tractor …… EH? Who makes them? and like jcb ‘s are diggers even if its a Massey or Ford or CNH or Case, but if its a CAT, it’s got to be a BullDozer and then is it a Drott …. Ohhhhh these stupid folk, Perpetuated by the stupid Media Don’t know the difference between Hi Range Gearbox and Low RATIO ….. Mebbe don’t even know if their knickers are in a Furckle or wazzat Furkel ? Ach it’s all Twisted. Call a Spade a spade.
“Call a Spade a spade”
Not these days, it’s racest !!
and what do the Germans think of this Parisian nonsense ? Huh, cars are just too heavy, said one Know-all woman on the Morning magazine program out on the street. What am I missing? Has she been calibrated? Could then get a job for Weights n Measures. An’ it’s the Germans who were building these bigger vehicles.
China has a shortage of Oil/Gas but plenty of coal, so using coal to generate electricity to power EVs isn’t such a bad strategy.
Europe, the West in general, has plenty of Oil/Gas, (and Coal), but has, in the infinite wisdom of Arts and Humanities graduates 🙂 , decided to use those inefficient, unreliable Energy Collectors, Wind and Solar farms, instead.
And as this manipulated situation has improved China’s economic strength in the World, relative to the West, it highlights just how dysfunctional Western governments and their civil servants have become. The reasons for this look more sinister every day that passes.
there is irony in this statement, “No one really has any idea what products people might want in five or ten years time, which is why it is best to leave it to private companies and their investors to make their own bets, reap the rewards when they get it right, and bear the losses when they don’t.”
If EV mandates get watered down substantially, it might be China that finds it over invested in EV’s for export. The pain of that will likely be tempered by the fact that the Chinese auto market is the biggest in the world and their government can tell people what they can buy. They also have plenty of electric generation but little oil.
China’s leadership is foolishly mercantilist.
and for another wee story: Like previous week we were way up West in the wild Glens near Morar last Friday & Yesterday. Battling the Headwinds which weren’t forecast for there AT THE TIME plus the rainfall and broken rotten trees littering the roadsides: Anyone been down the A82 in the Fort Augustus Area ? A Site to be seen. Anyway with all the possible diversions and certainly TODAY along Loch Lochy, the Hillside is coming down to meet with its Maker ( Gravity taking back control) and folk have had to turn back…. thankfully the spares we were given were wrong ( again) and we don’t need to return today, but otherwise IF we’d had one of those EVs …. we’d have had to plan for MUCH further ahead than just leaving yesterday to struggle against headwinds and then get home, … last week with the Diesel, or maybe next MONTH if it’s an EV.
PS How did all those record breaking EVs ever get where they arrived ( Antarctic etc expeditions) when there are no Eco Charging stations in / on those Places ?
They tow a diesel generator!!
Hush thou! … but we had to tow ( pull) a trailer as well! MPG not a problem, miles per charge, ahem, erm, ehhh, …. ( you know where this is going )
The director of the SMMt was over zealous about EVs when if anyone could see the way the market was going it was the SMMT. Wrong man at the helm ?
The Torygraph’s Matthew Lynn is way too kind, not only to the ridiculous BEVs, but also to the even more ridiculous, venal, incompetent, virtue signalling Uniparty politicians who threw OUR money after them.
And if anyony wants some “cheap”, “efficient”, “safe” lightbulbs, I still have a box of the twisty, mercury filled, slow start and increasingly dim Uniparty picked and mandated bulbs somewhere. Issued “free”, just like “smart” meters.
On the other hand, the same Uniparty dimwits (headed up by “Sir” Potato Ed Davey, of Far Horizon fame) were quick enough to “ban fracking” on absolutely bogus grounds.
A dank dungeon for the rest of their worthless lives would be far better than they deserve.
Not one for EVs then? How about that water producing other ones? The UK is making a play for hydrogen leadership, but a lack of applications in domestic road transport limit the scope for success …..
Paywalled at https://www.automotiveworld.com/articles/uk-unlikely-to-lead-on-hydrogen-despite-investment/?mc_cid=9da9345978
I haven’t read any articles, but from my days as a risk analyst, hydrogen was (and still is) considered a hugely dangerous, explosive, gas that has a very wide flammable range . It is very good at escaping, so I am wondering, regardless of the ‘tailpipe’ H2O, who would want a cylinder of hydrogen strapped their rear? In a crash, the gas would be exceptionally dangerous, and thinking of car park fires seen recently, even if the hydrogen vehicle wasn’t the one to ignite, an EV next to it would cause immense heat and no doubt a serious conflagration risk. I would not want to be anywhere near a fire in those circumstances and neither, I’m sure, would a fire fighter. Anyone know what the mitigation would be if the authorities push or allow hydrogen vehicles?
Correct; have the political class never seen the film of the Zeppelin docking in US
“A lot of government money will be wasted.“
The governments don’t have any money, they confiscate ours, then waste it in madcap ideas !!
Automakers Reel as EV Demand Plummets – Feb 03, 2024
Blinded by their own climate ambitions, the net-zero crowd doesn’t see the writing on the wall.
https://oilprice.com/Finance/the-Markets/Automakers-Reel-as-EV-Demand-Plummets.html
Subsidies running out.
If only the article used ‘taxpayers money’ in place of ‘government funding’ throughout instead of just at the end.
Tesla’s market valuation was the biggest bubble in history given that at the time of its peak its turnover matched GM’s profit! However, to be fair to Musk there was a market for a high end battery car to leftie virtue-signallers and had it stayed that way Tesla would have been fine. But trying to go mass market is something completely different when the most vital part of the car requires an element that is expensive to extract, very dirty to process and in limited supply. When it all collapses I suspect Tesla may struggle through.
When I last looked at Tesla,s figures for the year , [ think it was 2022 ,] they showed a profit for the year of about $700 million .
But to get that profit they had about $1.5 billion in subsidies , which meant that they were really losing money on their actual car business .
So the whole EV market thing was a scam to take money from the public to pay for a few virtue signallers .
And the main objective is to destroy the economy of Western countries .
https://www.investors.com/politics/editorials/climate-change-scare-tool-to-destroy-capitalism/
I just wish Conservative governments had not been complicit in this boondoggle.
No actual Conservatives were involved in this disaster. Just Members of Parliament for the Conservative Party.
The last Conservative government expired on 28/11/1990.
Once again we see the stupidly of politicians forcing change on consumers without a fair grasp of the facts and an understanding of the implications. EVs are a great example. This year in the UK car companies have to meet a 22% EV target or face a £15,000 fine per car. Very few will meet this apart from the pure EV crowd, Tesla and now the growing Chinese brands. Leaving the Germans: VW, Mercedes and BMW looking a little daft as they cant make EVs cheap enough to complete with Tesla.
Tesla is the only manufacture to design and build the complete power train in house. This is a huge cost advantage over all others who have to buy in batteries from China or Korea and pluck motors and controllers from parts catalogues. Tesla Germany just passed 6,000 car / week production run rate for the Model Y. Plus the Model Y was the best selling car in the world last year.
If the law is not repealed, like the boiler tax, then we can kiss large scale European car manufacturing goodbye. Without them we will hit some Green target but loose many millions of well paying jobs in Germany and France and cement the EC into terminal decline.
C’mon man, saving the planet™ must be worth something.
The virtue signallers have already got one, the Car Renters are dropping them, the business fleets will drop them when they realise they’re paying employees to hang around waiting for a charge. Many ferry companies prohibit them. Large automotive manufacturers are scaling back models and production.
It doesn’t look good for EV’s
The political class is not content with controlling us, they wish to control the people of the future, too. A supreme ego trip.
No one really has any idea what products people might want in five or ten years time
How about 26 years time – Net Zero 2050?
The next move should be banning public money for a “charging network.” Public charging is a subsidy for the rich.
SMMT figures for Jan just out – BEVs up since last Jan from 13.1% to 14.7% – well below last year’s average, and 50% short of the 22% target. Also telling that it says “However, while fleet and business demand for BEVs grew by 41.7% in January, registrations by private buyers fell by -25.1% – an ongoing trend that will undermine Britain’s ability to deliver net zero.2“
Oh dear, still only the the heavily subsidised Co Car users having them, and presumably the finance houses taking a bath. By Mid year it should be obvious that 22% is pie in the sky and the makers will be starting to squeal.
“With Tesla riding the wave of green . . . “ subsidizes and payments (indulgences) from other companies and virtuous early adopters, Elon played chess while political leaders took marching orders from a pig-tailed girl from Sweden. The faces on a future wall-of-shame are well known.
Company cars are taxed as a benefit in kind: are EVs similarly taxed by HMRC? If so, this would also make the EV less attractive, despite the massively subsidised fuel cost.
Good question JB. ICEs are a taxable benefit in kind, subject to various business/private mileage proportions but I have long retired from driving company cars so I don’t know the current Regs nor the BE allowances.
EVs are taxed a BiK but at a far lower rate than ICE: 2% vs 35+%, iirc. That generates a massive tax saving for company car drivers – I’ve seen figures of £7000 per year quoted for 40% taxpayers previously driving a typical BMW 320 or whatever.
Back in my working days (creak, creak), I occasionally had to go from the office outside Pretoria to a site in the Transvaal Lowveld next to the Kruger Park. This was a 5-hour drive, with a coffee break halfway, and a petrol fill up at the end. The actual distance was about 4-500 km (I forget, these days!), and once out of the built-up areas, there was a petrol station approximately every hour. BEV? No way would one of those golf carts make that trip!
so which is it? The West climbing down, or the Chinese eating their lunch, just like the Japanese before them?