The Quad Report

Thinking about buying an electric car as a small step to protectng the planet against global warming? Maybe you should think again.

First, the environmental advantages of cars that run entirely on electricity and not on fossil fuels may be more hype than reality, according to economist Jonathan Lesser in a report for the conservative Manhattan Institute, and in a commentary in Politico. Zero emissions vehicles, he says, are getting billions of dollars in government (read that, taxpayer) subsidies because of their presumed benign environmental impacts.

“These subsidies,” he writes, “include state and federal tax credits for purchasing ZEVs and programs to subsidize the installation of vehicle-charging infrastructure in businesses, households, and along highways. Several states also have mandated the sale of ZEVs. For example, an executive order signed by California governor Jerry Brown in January requires 5 million ZEVs to be on the state’s roads and highways by 2030.”

Will that pay off in substantial environmental benefits? Lesser says there is little evidence for those claims, based on his review of the available literature.

The U.S. fuel mix for electric generation is still gas and coal and will be for many years. Electric vehicles, he says, “will increase overall emissions of sulfur dioxide, oxides of nitrogen, and particulates, compared with the same number of new internal combustion engines. The simple fact is that, because of stringent emissions standards and low-sulfur gasoline, new gasoline-powered cars and trucks today emit very little pollution, and they will emit even less in the future.”

In a recent tweet, Matt Wald, former New York Times energy reporter now working for the Nuclear Energy Institute, quipped, “Charging up an electric car in Germany provides barely any climate benefit compared to using gasoline. It’s fueling your car with coal.”

While EVs have lower carbon dioxide emissions than new gasoline and diesel engines, says Lesser, “the overall reduction will be less than 1% of total forecast energy-related U.S. CO2 emissions through 2050. That reduction will have no measurable impact on world climate—and thus the economic value of CO2 emissions reductions associated with ZEVs is effectively zero.”

The bottom line, says Lesser: “Electric vehicle subsidies and mandates share an unfortunate, and all too common trait with other government policies: They’re based on ‘conventional wisdom’ that turns out to be wrong. Wealthy consumers who have purchased Teslas and Chevy Bolts primarily to signal their green bona fides for their friends and neighbors, and who have socialized many of the costs of their purchases to those who are less well-off, might wish to take a closer look at the numbers. Their hands may not be quite so clean as they believe.”

Then there are the cars themselves. Let’s take the long-awaited and still staggering Tesla Model 3, the “$35,000” EV that will turn the money bleeding firm into a profitable company. Tesla has shown over the past couple of years that it really doesn’t know how to mass manufacture a car. Production is slow, quality is dicey, and it looks like the price point may be unobtainable, even with the generous subsidies. Bloomberg reports that Tesla is now pitching the “low-end” Model 3 as a $78,000 muscle car. In a tweet, Tesla founder Elon Musk wrote, “Cost of all options, wheels, paint, etc is included (apart from Autopilot). Cost is $78k. About same as BMW M3, but 15% quicker & with better handling. Will beat anything in its class on the track.”

That’s not what Tesla had in mind when it announced the Model 3, billing it as the low-cost EV for a mass market and ringing up hundreds of thousands of advanced orders at $1000 a pop. “A Model 3 with a $35,000 price will be the rarest of the rare,” said Kevin Tynan, a Bloomberg Intelligence analyst. “Perhaps the second most collectible Tesla ever, behind the one floating around in space.”The Wall Street Journal asked, “Is Tesla abandoning the mass market?”

How important is the $35,000 price tag to Tesla’s future? “With the Model 3 being less expensive,” wrote financial analyst Bill Maurer on the Seeking Alpha web site, “demand can obviously be higher, but we don’t know what it will be like with most current versions running at $50,000 plus.”

The existing Model 3 machines have drawn brickbats from Consumers Reports, which has long viewed Tesla cars positively. The independent consumer rating magazine trashed the Model 3 for a braking distance longer than a Ford 150 full-sized pickup, and said its touch-screen controls “with no gauges on the dash, and few buttons inside the car” are confusing and a disruptive safety hazard. Tesla said it has improved the breaking performance with a software upgrade and CR agreed to retest the car.

Then there is the Chevy Bolt, an all-electric car that appears to be everything the Model 3 started up to be and has not. It’s well-made, with nice fit and finish (I visually inspected one recently parked on a street in Boonesboro, Md), and a real base price of $35,000 (exclusive of the $7500 federal subsidy). Consumer Reports said, “The Bolt offers consumers further proof that mainstream electric cars can deliver strong driving performance,”

Sales are dismal. GM has eschewed monthly sale reporting, but InsideEVs estimates April deliveries at 1,275, compared to last April’s 1,292, with sales of the now-elderly plug-in hybrid Volt at 1325 for the month. By contrast, Tesla’s highly hyped Model 3 sales hit 3,875 in April. Ford’s F-series pickups sold 73,104 for the month, the best April sales in 18 years.

— Kennedy Maize