The EV Revolution, One Year In

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It's been a year since the CBC and the New York Times announced that the electric-vehicle (EV) revolution was upon us. The watchword last summer, to quote Tony Han, founder of the Canadian startup Havelaar, was that "If Canadians want to achieve the dream of driving electric vehicles across Canada, they need to start now, learning and adapting technologies now. Either way, it's going to happen—it's just a matter of time." Virtually everywhere in the world where the dream of emission-free transportation had gripped the public imagination, the messaging was the same. Catch the wave, or be left behind with the other gas-guzzling, carbon-emitting dinosaurs.

So where do we stand, these twelve months later?

For starters, we know a lot more about the practical limitations of EVs, and also about their public-policy and environmental impacts. Last summer the main roadblocks to the mass marketing of electrics were thought to be range anxiety and a shortage of charging capacity—which EV boosters characterized as a chicken-and-egg problem easily solved by the large-scale electrification of our cities and highways. Heartless critics of the EV revolution who opined that battery-powered vehicles might be ill-suited to vast, cold countries like Canada took a lot of heat. The insinuation was that, with the health of the Earth and the future of humanity hanging in the balance, it was unseemly to quibble about the dubious performance of EV batteries in sub-zero temperatures or the limited appeal to Canada's SUV-driving families of electrified sub-compacts.

But thanks to economists based at the Montreal Economic Institute (MEI), the University of California at Berkeley, and elsewhere, we learned over the course of the year how much EV "incentives" were costing North American taxpayers and, more to the point, how regressive these subsidies were. In January 2018, for example, a Globe and Mail editorial citing MEI data revealed that EV subsidies in Ontario—including the $14,000 in kickbacks Tesla Model 3 buyers received—were costing taxpayers "a whopping $523 per tonne" of CO2. "For Ontario to reach its goal of electric vehicles constituting five per cent of the new-car market, it will have to spend $8.6-billion in subsidies over the next 13 years," the Globe concluded. "That is simply too much money for too little outcome." Two months later, the editorial board at the Washington Post drew the same conclusion, calling America's generous tax credit for EVs "a Robin-Hood-in-reverse policy" via which "some 90 percent of the credit’s benefits accrue to the top 20 percent of taxpayers."

We also learned some inconvenient truths about how the Chinese EV tail is wagging the North American dog. China today builds and sells twice as many cars as the United States. And because it has a formidable air-pollution problem and a rising middle class that won't abide it, China is also the world leader in the production of EVs. Asked last fall why U.S. automakers were rolling out dozens of new EV models, automotive consultant Michael Dunn told NPR's Tom Ashbrook bluntly, "It is safe to say the moves we've seen by Ford and GM this week are exactly aligned with what China wants them to do, that is, China recently announced new quotas, saying by 2019, if you want to sell cars in China, ten per cent of your fleet must be electrified. If you want to play in our market, you must build electrics here." One-third of GM's global sales are now concentrated in China. The venerable U.S. automaker is not merely playing in the Chinese market but staking out a serious claim. So, too, are GM's North American and European competitors, all of whom are entering the Asian EV market at full throttle, irrespective of what is happening with electrics in their domestic markets.

Here's something else we've learned, courtesy of a University of Michigan well-to-wheels study. If we are going to compare automotive apples with apples, we must acknowledge both the extraordinary manufacturing costs of EVs and their back-door carbon costs in territories where electricity comes from fossil-fuel-powered generating stations. It turns out that the "break-even point" when comparing EVs and gas-powered cars in the United States is 55.4 MPG, meaning that if a conventional vehicle can deliver at this level of fuel efficiency or higher, it is nominally greener than an EV. In coal-fired China, the break-even point is a mere 40 MPG. In Canada, where EVs are powered by clean and plentiful hydro and nuclear, the break-even is an impressive 169.5 MPG. Yet, according to National Post columnist David Booth, even these comparisons skew in favour of EVs by failing to account for the manufacturing costs of lithium-ion batteries. "Tesla battery production releases as much CO2 as eight years of gasoline driving," Booth notes. "In other words, a Model S has accounted for about 17.5 tons of CO2 even before it has used a mile of coal-fired electricity."

A new report from the International Energy Agency (IEA), entitled Global EV Outlook 2018, confirms the obvious. "So far, EV deployment has mostly been driven by policy. Taxes that reflect the CO2 content are important to ensure that the policy environment is conductive to increased EV uptake. Fiscal incentives at vehicle purchase, as well as complementary measures that enhance the value proposition of driving electric on a daily basis (e.g. preferential parking rates, road toll rebates and low emission zones) are pivotal to attract consumers and businesses to electric vehicles." 

EVs, in short, still do not sell themselves. For better or worse, they remain creatures of the state.

So here we are, one year later. Ontario's newly elected premier, Doug Ford, has cancelled his predecessor's generous EV incentive program and announced that he will fight the feds' promised imposition of a carbon tax. Tesla Model 3 buyers in Ontario who narrowly missed out on the $14,000 rebate feel cheated. So do EV drivers who were expecting a $1000 rebate to offset the costs of installing home-charging stations. EVs accounted for a paltry 1.4 percent of Canadian vehicle sales in 2017, a number that is certain to roll off significantly in the absence of government incentives. Gas- and diesel-powered SUVs, on the other hand, have had a banner year, and not just in North America. Consumers' return to larger sport vehicles appears to be global in scale. “This is not just a trend," says auto analyst Michelle Krebs. "This is a total shift in the market, and it isn’t just in Canada and the U.S. It’s in China, it’s in Western Europe, it’s everywhere.”

But fear not, the EV prophets will continue to command the international stage, preaching the revolution as a fait accompli without the slightest qualm that they alone are on the right side of history. As FleetCarma CEO Matt Stevens told the National Observer last week, "The long-term future of electric vehicles being where Ontario's going to go. It continues."