Opinion: Electric vehicle production mandates, like Canada’s, are so wrong on so many levels and could backfire

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Any feeling that the electric vehicle market was overhyped was confirmed this week when Hertz took the off-ramp on the EV highway. The car-rental giant plans to unload 20,000 cars, about a third of its American EV fleet, and make up the shortfall with regular gasoline cars.

Weak rental demand, high maintenance costs and low resale prices were behind the about-face. When Hertz began loading up on EVs – all of them Teslas – in 2021, the move was seen as a vote of confidence in zero-tailpipe-emission motoring for the masses. The reversal signals the opposite and Hertz is not alone. EV sales in North American, Europe and elsewhere are rising at ever-diminishing rates and China, the biggest EV producer, is stuffing thousands of unwanted battery-powered cars in fields, where they are left to rot.

While manufacturers and consumers appear to have received the message that there is less to the EV “revolution” than meets the eye, governments have not. Canada last month unveiled regulations that will ban the sale of cars, light trucks and SUVs with tailpipe emissions starting in 2035. In the United States, the Environmental Protection Agency wants two-thirds of new vehicles sold by 2032 to be electric. In Britain, the target is 80 per cent by 2030 and 100 per cent by 2035.

There is so much wrong with these government mandates – all in the name of fighting climate change and cleaning the air in cities – that it’s hard to believe that Western governments have turned into EV disciples. Putting aside waning consumer demand, here are four reasons why forcing manufacturers to pump out EVs is somewhere between wrong and outright loony.

Various reports say they are generally a quarter to a third more costly to buy, depending on government rebates and taxation. Governments everywhere seem to assume that EV prices will naturally decline as production increases and the metals used in making the cars – cobalt, nickel, copper, lithium, rare earths – become more plentiful. But will they? All of these metals are finite resources and there is simply not enough supply on Earth’s crust to convert 1.3 billion cars and light trucks to electric propulsion. Last year, copper sold for U$8,000 to US$9,000 per tonne, double the price in 2016, and new discoveries are rare. Politicians forcing the purchase of expensive cars while they raise fuel taxes risk annihilation.

Gift to China: Government EV mandates are cheered in China, whose battery and carmakers know that the Western auto industry will struggle to lift EV production fast enough to meet the onerous sales regulations. They would be happy to fill the gap and could do so fairly easily since China dominates the production and processing of most of the key metals used in batteries and electric motors. According to the International Energy Agency, Chinese companies process more than half of the world’s lithium, two-thirds of its cobalt, one-third of its nickel and more than 70 per cent of its graphite Three-quarters of all lithium-ion batteries, the main source of power for today’s EVs, are made in China. While enormous battery plants are under construction in Canada, United States and Europe, China’s long head start and relatively cheap production costs will ensure it will call the shots in the EV market for some time. The Chinese will soon export millions of EVs as they move up the value chain and flood the low-priced segments of the EV market, where the American and European car companies pay scant attention. In short, EV mandates stand to transfer wealth and jobs to China’s EV industry.

Cleaner, really?: Driving a car in, say, Quebec and Ontario, where most of the electricity comes from hydro, solar, wind and nuclear, makes environmental sense. In most other parts of the planet, where fossil fuels dominate power generation, it does not. In Alberta, almost 90 per cent of the electricity comes from burning coal and natural gas. When you plug in an EV there, you are merely transferring the emissions from the car tailpipe to the smokestack. Ottawa is dreaming if it thinks Alberta’s electricity production will become as green as Quebec’s or Ontario’s within the next decade. At the same time, no country has figured out how to dispose of car batteries, or recycle their toxic materials, in a safe and clean way. Visions of millions of batteries piled into landfills should horrify politicians, but apparently do not. Will governments, having spent lavishly to finance EV purchase incentives, soon be forced to spend billions to subsidize battery recycling plants? Wait for it.

EVs are still cars: They still have to be parked, still need roads and still kill pedestrians. As they gain popularity, more roads and parking lots have to be built because families may not swap their gas car for an EV; they may buy an EV for city use and keep the gas car for long-range trips. How about a government mandate insisting that high-speed electric trains between, say, Toronto and Montreal, replace air travel by 2035? France is banning short-haul flights where a train alternative of 2.5 hours or less exists. Electrified mass transportation, not EVs, are the answer to emissions – and creating pleasant, walkable cities. Government EV mandates are simply extending, and intensifying, the car culture.