OPINION:
World leaders were a bit premature in announcing the death of internal combustion. Ford recently became the latest global manufacturer to acknowledge it made a colossal, $20 billion mistake in throwing all its energy behind electric vehicles.
“The $50, $60, $70,000 EVs just weren’t selling. We’re following customers to where the market is. … These really expensive $70,000 electric trucks, as much as I love the product, they didn’t make sense,” Ford CEO Jim Farley told CNBC.
The Dearborn, Michigan, automaker wasn’t alone in going all in on converting its entire lineup into plug-ins. Just about every major brand embraced the delusion that, one day, people would intend to be able to travel a few hundred miles, pull over and wait an hour or more at a roadside station for their high-tech jalopy to draw sufficient juice from the grid.
Toyota was the notable exception in refusing to hop onto the politically correct bandwagon like its peers. The Japanese firm produces just one battery-motivated vehicle. The remaining offerings include an assortment of hybrids, normal sedans and SUVs. It even offers a pair of gas-guzzling sports cars, a rare option in these times.
C-suite automotive executives elsewhere felt their world turn upside down when President Trump flipped the off switch on the subsidies. Predictably, EV sales plunged 53% the instant the freebies vanished. The administration is also eliminating the onerous fleet mileage targets that were meant to strangle vehicles animated by fossil fuels.
On the bright side, the big car companies will no longer toss billions of dollars into the bonfire by developing overpriced models that nobody wants. Misallocated capital resources pushed sticker prices skyward, even on gas-powered cars, because someone has to pay for that research and development.
Thus, an average automobile now costs $50,000, a staggering $16,000 rise over the past 10 years. With the scam unraveling, these numbers should settle.
“It was ridiculous, very expensive. It put tremendous upward pressure on car prices, combined with the insane electric vehicle mandate. Biden’s burdensome regulations have caused the price of cars to soar more than 25%, and in one case, they went up 18% in one year,” Mr. Trump said earlier this month as he signed the executive order killing the previous administration’s CAFE standards.
Transportation Secretary Sean Duffy added on X, “Freedom Means Affordable Cars,” and even the Europeans are seeing the wisdom of Mr. Trump’s actions. The European Commission released a package of reforms Tuesday that some have styled as a reversal of the EV mandate.
It’s more of a slight scaling back. Instead of dictating that 100% of cars must be electric, the bureaucrats in Brussels will allow 10% to be gas-powered. How generous of them. “The Automotive Omnibus will ease administrative burden and cut costs for European manufacturers, boosting their global competitiveness, and freeing up resources for decarbonisation,” a commission statement explained.
That’s good news for Detroit, because a 10% reprieve isn’t enough to stay competitive. Let the Continent continue to dwell in the schemes of the past while America readjusts to restore the liberty the public once had to buy the product that best suits its needs and tastes.
Government meddling in car design has flopped, and Ford’s misadventures serve as a cautionary tale for lawmakers intent on intruding elsewhere in the economy. When it comes to picking marketplace winners and losers, Uncle Sam is incompetent.
Please read our comment policy before commenting.