At the end of September, Robert Habeck, Germany’s de facto economic minister, met with Volkswagen’s leadership to see if he could keep the troubled firm from closing several assembly plants across the country. Readers who can remember the near impossibility of buying a new car, any new car, during the COVID-19 era might well wonder at why the second-largest automaker in the world wants to rid itself of production capacity now, and the answer is simple. For close to a decade now, the European Union has been bullying its manufacturers into a mandatory “EV transition” that buyers don’t want and will not accept. New car sales in Europe are the lowest they’ve been since 2021, and this time, it’s not for lack of production capacity. It’s the EV, plain and simple. Sales of electric-only cars are down 44% across Europe and 68.8% in Germany. The EV mandate from Brussels has easily accomplished what the 581,000 tons of bombs dropped by the Allies in 1944 could not, namely turning off German industrial production.
Not that we should be gloating here in the United States. The most recent EV welfare packages announced by the Biden administration in the first half of 2024 throw more than $2.5 billion of good money onto a bonfire of bad taxpayer-funded subsidies that, by general consensus, have already consumed more than $30 billion, the inflation-adjusted cost of the Manhattan Project, with essentially nothing to show for it. The numbers behind the boondoggle beggar belief, to the point where one suspects the lack of blowback on President Joe Biden and Vice President Kamala Harris is simply because the actual facts of the matter are outrageous enough that when accurately related they come across like the drunken after-midnight Facebook post of an illiterate relative who has strong opinions regarding Area 51.
A few examples: Ford has lost $47,600 for every electric vehicle it has built so far in 2024. It would have literally been cheaper for the company to fill Ford Field, the home of the Lions, to the brim with local families and then give each of them the choice of a brand-new Mustang GT or an F-150 XLT. Of course, the above figure doesn’t include the $7,500 of federal tax credits provided to each buyer of the F-150 Lightning. Can you imagine what would happen at Ford showrooms if Biden announced that each buyer of a normal F-150 would receive more than seven grand from the government? There would likely be riots to get through the front door. When the incentive is tied to electric Fords, however…crickets.
The money Ford and the other domestic manufacturers lose on EVs has to be made up from somewhere, of course. So prices on gasoline-powered cars have soared over the past two years, often beyond even our rather robust recent inflation on goods other than automobiles. This, in turn, affects the ability of buyers to afford what they really want, which influences production, which means that the prices have to increase further, and so on. Some of the choices made by automakers to cover EV costs verge on the comedic, as with the 2024 Ford Super Duty 4×4, which got a locking front hub on just one side for the first time in the model’s history.
Various media sources report that sales of hybrid and electric vehicles in the U.S. are increasing, but that’s a lot like saying that Roger Maris and Yogi Berra combined for an all-time peak home-run number in 1961. EVs are sharply down, while hybrids are up. Not that people are genuinely interested in hybrids, mind you. Toyota Prius sales are half what they were 10 years ago. It’s just a matter of the manufacturers making hybrid drivetrains the base equipment, or a low-cost option, in a steadily increasing percentage of their model lines. There are six Honda Accord models available for 2025, for example, but the top four are hybrid-only.
Recent economic conditions have made the purchase of a new car significantly rarer, and therefore more enviable, than it was in 1998 or 2016. Adjusted for population size, things are significantly worse now in that respect than they were under Gerald Ford or Jimmy Carter. Yet it’s difficult not to have some pity for today’s car shopper, who cannot escape the consequences of our government’s love affair with the EV. His or her choice is between a battery-powered vehicle that nobody wants and a gasoline-powered car that has been cost-cut, equipment-starved, power-reduced, and marked-up to cover the losses from those EVs. That is, if he or she gets a choice at all, of course. Last year, Stellantis canceled production of the Dodge Charger Hellcat and Scat Pack, vehicles so popular that they fetched $70,000 or more despite being based on a decades-old design, to free up capacity for the new Charger EV. Customers who disapproved have been forced to shop used cars instead.
Forcing an “EV transition” via a command economy-style combination of regulation and subsidies has done nothing besides close factories, eliminate jobs, and overheat the already red-hot money printers. Yet the Biden administration has no solution to the problem other than to turn up the fire hose and hope for the best. To worsen matters, seven states have joined the feds in this spendthrift misappropriation of public funds. Colorado is perhaps the biggest offender here, offering $7,500 to buyers of entry-level EVs and a full $5,000 to those economically disadvantaged folks who have just purchased, say, a $75,000 Tesla. This is a state that is facing a $900 million budget deficit. What’s next? Offering $10,000 in tax credits to purchasers of Rolex Submariners? One could argue that they are better for the environment than a Timex, after all.
Surely the saying “When you find yourself in a hole, stop digging” applies here. That is exactly what Habeck has done. Asked by Volkswagen for additional EV subsidies, he replied that it would be better to do nothing than to create another “flash in the pan” via subsidies. He then referred to previous EV sales numbers, which were heavily subsidized by the German government, as a “souffle” — in other words, something that is difficult to make inflate and that only stays intact temporarily. The leader of the opposition in Germany, Friedrich Merz, has gone farther, calling for a reversal of the country’s ban on combustion engines starting in 2035.
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The time is fast approaching when the EV zealots will have blunted every tool at their disposal. Subsidies don’t work. If you can’t convince someone to buy an EV with a total of $55,000 in governmental and corporate giveaways, you won’t do it with $65,000. Limiting consumer choice via regulation just leads to factories being shut down, jobs being lost, and a Cuban-style future in which everyone becomes a master at pushing a 2014 Camry LE past the million-mile mark on the odometer. Their sole remaining hope is that a technological miracle occurs to make the EV roughly equal to a normal car in terms of cost, refueling, usability, and durability. A quick read of available research on the subject places that hope squarely where it belongs: in the category of what Biden’s advisers might call “science denial.”
Which is no surprise because the “EV transition” has, from its inception, been based on a willful denial of reality in all its forms: psychological, economic, and scientific. It is the ultimate expression of the modern neoliberal belief that all problems are solvable with enough public money or regulatory oppression. As such, it deserves the strongest possible rebuke, starting right now in 2024 and starting right here at home. If German politicians would rather let their manufacturing base dwindle to insignificance, if they would prefer to sacrifice their industrial might on the altar of environmental virtue signaling? Well, that is their choice. It should not be ours.
Jack Baruth was born in Brooklyn, New York, and lives in Ohio. He is a pro-am race car driver and a former columnist for Road and Track and Hagerty magazines who writes the Avoidable Contact Forever newsletter.