stoptothink wrote: ↑Fri Aug 12, 2022 7:33 am
billaster wrote: ↑Thu Aug 11, 2022 7:04 pm
Given car makers can't build EVs as fast as they can sell them these days, there's really no reason for subsidies at this point. It would be better to spend all the money on electrical infrastructure and charging stations.
Not to derail this thread further, but I doubt a single person here would disagree.
I understand the sentiment, but the situation is a little more complicated.
As someone who has been following the EV market for a dozen years now, I would have to state that all is not as it appears. The dark secret is not that EVs are secretly terrible for the environment, its that the production volume historically (and currently) has been miniscule. Supply and demand are both closely linked (I think we will all agree). The price of batteries was a significant limit in the past (and could only be improved by production via a learning curve). There weren't a pile of unsold BEVs sitting around for the last 10 years and there aren't now. Instead, subsidies (and legacy makers accepting low profits on low production volumes) have enabled a LOW level of demand at the heavily (fed and legacy maker) subsidized price. And the legacy makers have built to match that low level of demand.
So subsidies historically have been key for propping up the historical (low) level of demand. This was the 'compliance car' era, with other effects from carbon and mpg trading due to California and Fed regulations.
For all those years, many EV fans were saying, IF ONLY Nissan would make 5X as many LEAFs, or GM 5X as many Volts (or later, Bolts) then they would sell and EVs would hit the tipping point for mass adoption. I think the demand was indeed higher than the supply that whole time. But the fact of the matter was that batteries were too expensive then, and if the makers had tried to up the volume at that time, they would've blown out existing subsidies, saturated the carbon credit system, and then demand would've fallen (due to the higher effective price). IOW, the makers knew how much volume could be sold with the historical subsidies (not too many) and just matched that.
Tesla is a special case that could'n't afford to lose money on each car, so they went after the luxury market, raised a lot of capital with good PR, and banked lots of carbon credits too. And they 'promised' to sell economy cars (the $35k Model 3)... and then they never did! Bc it wasn't profitable at that time.
So until fairly recently, it would be fair to say that EVs WERE vapor-ware. They ONLY made sense financially as super luxury cars or as heavily subsidized (and low profit) economy cars. They could NOT replace ICE cars in the economy market (or SUVs or pickups) on a level playing field.
So is this a case of govt waste, or corporate mismanagement funding a bunch of silly vehicles with taxpayer dollars? Nope.
And the answer to that is learning curve. Like the exponentially falling price of solar PV, the prices of EV batteries have been falling exponentially for the last 15 years. Like an 80% drop since the LEAF was launched in 2010. And if there hadn't been an (artificial) market for those batteries, that price fall would not have happened. It was no the result of Research in a lab. It was the result of Development in a factory and testing in the field.
Historical subsidies lead to the Development of the current generation of EVs which are just at the tipping point as ICE replacements (of small cars) without subsidies and historical average gasoline and electricity costs, in terms of TCO. We are NOT quite yet at the unsubsidized tipping point for pickups and SUVs. Earlier in the thread, all the cost per mile calcs and TCO estimates for small EVs versus ICE cars were coming out CLOSE. This doesn't mean the 2022 EVs are vapor-ware, or a marginal technology. It signifies that the EV car has arrived at its tipping point.
But the future belongs to EVs bc batteries are STILL GETTING CHEAPER. They still cost a significant multiple of their materials costs (which sets the floor price, ofc). And the flip side of the learning curve, is that continued exponential cost declines REQUIRE continued exponential rise in production volume to materialize. So if market forces lead to the current sales volume to be flat, the rate of battery price reductions would slow down. And then it might take 5-10 years to get a SUV/pickup tipping point. But if subsidies can keep an exponential adoption curve going, then we will get to the tipping point for heavier vehicles much sooner.
And it is the arrival at the battery cost tipping point that has all the makers scaling EV production now, and not 5 years ago. They have no choice, because they can see the battery price projections that EV drivetrains will become cheaper than ICE drivetrains, across the market over the next 5-10 years. If they don't switch, they will go bankrupt. Its not them all jumping on a green bandwagon, or shopping for subsidies (which it was 5-10 years ago). Now its existential.
RE Subsidies, they will increase demand. Increased demand will lead to makers building more EVs. Building more will lead to cheaper batteries and EVs (learning curve). And that will feed back to increasing EV demand on the front. This is a 'virtuous cycle' termed the 'Green Vortex'. Subsidies make the Vortex spin faster, pulling forward the US and global EV adoption curves. (in the process reducing cumulative CO2 emissions before 2050)
If a subsidy at this time was announced that lasted only a year, I would agree that it would be a total waste... people would pocket the money, and the makers would make the same number of cars. However, if a subsidy lasts a decade, then that will alter production planning at the makers upwards, driving the Vortex.