Inflated EV Assessments Deflate Production Incentives

Written by Larry Bell on November 1, 2023. Posted in Current News

Applications of legislated automotive efficiency standards to force production and purchases of electric vehicles (EVs) on a reluctant U.S. market are resulting in a reverse influence

This adverse circumstance began with Congress’s 1979 Chrysler bailout which required the Department of Energy (DOE) to implement a “Petroleum Equivalency Factor” (PEF) de facto subsidy to incentivize Detroit auto makers to produce more EVs in compliance with its Corporate Average Fuel Economy (CAFE) standards established by the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA).

PEF is calculated by a pseudo-scientific assessment of well-to-tank efficiency of gasoline in comparison with theoretical electricity efficiencies projected from combined grid sources in addition to related energy distribution/transmission economies.

Dividing the estimated full-cycle energy content of gasoline (141,347 BTU/gal) by the full-cycle energy content of electricity (6,105 BTU/Watt-hour) yields a hypothetical PEF of 23,153 Wh/gal.

The current PEF value of 82,049Wh/gal, nearly four times that value, demonstrates artificial inflation of EV efficiencies to achieve two stated legislative purposes: to reduce dependence upon petroleum, and to reduce CO2 emissions.

The Clinton administration’s DOE sweetened the EV incentive by assigning electric plug-ins a magical fuel economy multiplier of 6.7 whereby an EV calculated to get 40 miles per gallon would receive credit for 266.8 mpg under the CAFE standards.

These high PEF allowance ratings for plug-ins have provided a production downside as well…enabling auto companies to meet ever-rising overall CAFE fleet requirements by building fewer of them as profit-losers while continuing to produce popular higher demand petroleum-fueled light trucks.

In response to this self-inflicted regulatory dilemma, the Sierra Club and Natural Defense Council has petitioned the Biden administration to scrap the 6.7 multiplier, noting that:

“Excessively high imputed fuel economy values for EVs means that a relatively small number of EVs will mathematically guarantee compliance.”

As a result, a Ford-150 Lightning would only be credited with 67.1 mpg, down from 237.7 mpg.

Since light trucks and SUVs make up the majority share of U.S. fleet sales, Ford and GM have increased production of profitable gasoline fueled models while producing only enough EV pickups to meet CAFE mandates and avoid getting stuck with unsold inventory despite hyped efficiency claims.

Although EV sales have continued to grow, the rate has slowed from a year earlier with a limited pool of consumers willing to pay more to own them even with generous taxpayer funded government subsidies.

The research firm Motor Intelligence reported that last month that Ford had a 3½-month supply of unsold Mustang Mach-E SUVs, more than double the industry average.

With falling demand, Ford pushed back a plan to produce 600,000 EVs annually to late 2024 instead of the end of this year, and as sales for that model falter, is reportedly considering canceling a shift of factory production on its electric F-150 Lightning truck.

Ford has temporarily cut one of the production shifts for the electric pickup, and has paused construction of a $3.5 billion battery plant in Michigan.

General Motors has said it will delay opening a planned large EV truck factory in Michigan by a year, citing a need “to better manage capital investments while aligning with evolving EV demand.”

Toyota is tempering their expectations for EVs in favor of shifting more resources into hybrids, which have been drawing consumers at a faster clip which combine a gasoline engine with battery power to save on fuel.

In September, Toyota had a little more than one week’s worth of Prius hybrids in stock, forcing many customers to face long waits.

By comparison, they had a more-than-two-months’ supply of its newest electric SUV, the bZ4X.

Motor Intelligence reported that U.S. hybrid sales jumped 48 percent in this year’s first three quarters, a reversal from 2022 which saw a six percent decline over 2021.

As Wall Street Journal contributor Sean McLain notes:

“The first wave of buyers willing to pay a premium for a battery-powered car has already made the purchase, dealers and executives say, and automakers are now dealing with a more hesitant group, just as a barrage of new EV models are expected to hit dealerships in the coming years.”

Customers expecting to make up added average Kelley Blue Book costs of $11,000 or more to buy a plug-in than a full-sized gas-powered car and nearly $30,000 more than the average compact in net mileage efficiency are delusional as “gas guzzlers” are replaced with “electricity drainers.”

And forget any notion that costs of all that “green energy” needed to recharge them won’t escalate as the Biden administration, or any Democratic successor, continues to put the kibosh on ‘fossil fuel’ that supplies more than 80 percent of U.S. and world energy, replacing it with seasonal and weather-dependent electricity from friendly breezes and sunbeams that produce about three percent combined.

On top of that, consider the consequences of adding all those new EV electricity demands to already overloaded power grids, plus depend on China which controls 85 percent of the world supply of rare earth minerals required for all those solar, wind and EV batteries.

As for ‘saving the planet’ from ‘climate change’, according to an environmental assessment accompanying the Department of Transportation’s newly proposed fuel standards including a two percent increase in mandated requirements each year would reduce average global temperatures in 2060 by 0.0 percent. That’s right; zero.

By government standards, that’s considered a big success.

See more here newsmax.com

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Header image: Ford

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