For now, let’s dive into today’s news: President Biden’s Inflation Reduction Act could be a bigger effing deal than expected, Hyundai and Kia get back on track, Toyota’s top scientist fires back at EV evangelists and Americans aren’t doing great on the car repossession front.
The EV Tax Incentive Boom For Battery Manufacturing Could Be Even Bigger Than Predicted
We begin today with a scoop from Axios‘ Joann Muller, who reports that the tax breaks for automakers and battery manufacturers under the IRA might just be significantly more than even Congress initially anticipated. In case you’ve been living under a rock, the legislation passed last year resets and modernizes the EV and PHEV tax credits, adds credits for used cars for the first time, and incentivizes the production of both cars and batteries in this country because manufacturers that produce abroad won’t qualify for the credits. (It’s also been a giant, confounding mess on a lot of fronts, but hey, that’s the federal government for you.) A big goal of the IRA is to build a homegrown battery and EV manufacturing infrastructure so that industry isn’t entirely ceded to China. And so far, early projections indicate the plan is working. Axios reports the Congressional Budget Office projected the tax credits specifically for battery manufacturing would equal about $30.6 billion over 10 years; new research from Benchmark Mineral Intelligence indicates it could be more like $136 billion over 10 years, if not higher than that thanks to Tesla’s new battery plant plans. Hot damn. This number seems to include both car companies and battery manufacturers building facilities in the U.S. to take advantage of the credits. A few notable details from that story:
Tesla’s Nevada plant, for example, will soon be able to produce 100 gigawatt-hours of battery cells, and that could grow to 500 gigawatt-hours in the future. At an annual production rate of 500 gigawatt-hours, the credits would be worth a staggering $17.5 billion per year. Ford expects more than $7 billion in tax breaks from 2023 to 2026, with CEO Jim Farley predicting a “large step-up in annual credits” starting in 2027 during a recent earnings call. GM chief financial officer Paul Jacobson told reporters that the automaker will earn about $300 million this year, with the credits eventually being worth $3,500 to $5,500 per vehicle.
Now, here’s where you might be saying, “We shouldn’t be subsidizing electric vehicles! The government shouldn’t be picking winners and losers, the market should sort all of that out!” Sure, in theory. But remember government intervention in energy markets is one of America’s proudest traditions and we already subsidize the oil and gas industry in a huge way, although that amount will be handily trumped by the EV subsidies if this latest research proves true. A way to modernize America’s green energy operation and add manufacturing jobs, or a giant tax break gift to big corporations? How about both?
Hyundai And Kia Mount A Comeback
Last year was a pretty brutal one as automakers fought through the chip shortage and supply chain issues, but things are finally starting to improve on the production front. Case in point, according to Automotive News: Hyundai and Kia posted some sales wins on the back of EV demand and fleet sales. It’s not huge yet, but it’s something: Also, good for Genesis here. That brand makes some really good stuff these days but it still feels kind of under the radar, even if it shouldn’t. Anyway, inventory is getting back on track, but the economy is squirrely and interest rates could go up a bit, which could put people off from actually buying all these new cars in stock. Fun times. Kia set a January record and said five models – Niro, Sportage, Telluride, Carnival and Forte – also posted record deliveries for the month. Combined deliveries of Kia’s electrified vehicles jumped 128 percent. Genesis also reported record January sales of 3,905, a 7.3 percent gain.
Toyota’s Scientist Hits Back At ‘EV-Only Extremists’ But That’s Not The Whole Story
On his way out the door, one gets the sense Toyota CEO Akio Toyoda is none too happy that his company’s been saddled with this anti-EV, anti-green image. And who can blame him? But Toyota’s later to the game on EVs than most rivals and its hydrogen push has gone absolutely nowhere. Now, in Automotive News, the automaker’s chief scientist is hitting back against those who say “EVs are the only way forward in the global battle to cap carbon dioxide emissions.” I have some issues with this piece that I’ll explain, but first, Toyota’s Chief Scientist Gill Pratt at Davos last month:
Americans Have A Car Repo Problem, Again
Pratt likened today’s enthusiasm for EVs to yesterday’s confidence in autonomous driving: It’s overly optimistic, he said, citing Amara’s Law, a maxim claiming humans “overestimate the effect of a technology in the short run and underestimate the effect in the long run.” Higher interest rates are making it even more difficult to make the monthly payments. The average new auto loan rate was 8.02% in December, up from 5.15% a year earlier, according to Cox Automotive. The rate can be much higher for subprime borrowers. It doesn’t help that America’s car-centric infrastructure means most people need a car to get to work, leading to stories of people like this poor 2013 Honda Fit owner who’s hiding her car from creditors, or the guy with a 26% interest rate on a 2013 Dodge Journey. We’re all feeling the sting these days.
The Flush: What Are Your Thoughts On Toyota’s Chief Scientist’s EV Pushback?
Is a mixed powertrain lineup the best way forward right now? In the near future? In the distant future?
“Basically, it’s hard to see Toyota’s arguments as anything more than justifying its own bottom line”
I actually think both things may be true. While Toyota was out hyping hydrogen and spurning EVs, their hybrid division was doing some pretty great stuff. Once Toyota realized the hydrogen thing wasn’t going to work out, someone looked around and said, “Hey, wait a minute, didn’t we already solve this whole emissions reduction thing like 20 years ago when we built the Prius?”
In the end, I think what he’s saying is correct. PHEVs are probably the short and possibly mid-term solution to emission reduction. It’s funny to me that multiple manufacturers have apparently accidentally stumbled onto the right path with hybrids. Someone claimed the other day that Ford expected 80% of Maverick sales to be non-hybrid, and in reality it’s been exactly the opposite. Toyota can’t keep the Prime versions of their vehicles in stock. Turns out people like to buy cars that are not terribly expensive, give them significant fuel economy gains, and make them feel a little better about their impact on the planet. Who knew?
He’s wrong. Lithium is not scarce or rare. https://energyx.com/blog/will-we-run-out-of-lithium/
And the truth is that in the future, we will get a lot of lithium through battery recycling.
In addition to that, even if Lithium does get to be too expensive due to short supply, there are other options depending on the application.
For example, Sodium Iron battery tech is on the horizon for stationary power applications where durability and low cost matters more than weight: https://batteryuniversity.com/article/bu-218-summary-table-of-future-batteries
And Nickle-based batteries could have a resurgence at some point in the future as well for some applications: https://batteryuniversity.com/article/bu-215-summary-table-of-nickel-based-batteries
Shifting to BEVs doesn’t absolutely mean they will always have lithium-based batteries.
Let’s not forget that the 1990s-tech GM EV1 with NiMH batteries was able to get as much as 140 miles of range out of a charge.
If someone took that original EV1 design and applied modern electronics, modern electric motors and if some R&D was put into improving the NiMH cells themselves, NiMH could once again become an option for BEVs and other applications.
Lithium batteries are used right now because they are the best option.
But that could change in the future for at least some applications.
Expecting magical battery tech to appear to meet the 2035ish EV goals is a pipe dream, cause even if there was better tech with less natural resources it would be exp as hell and need outrageous subsidies.
That’s false. 21 million is just for Bolivia alone. If we look at the top 6 countries: https://www.nsenergybusiness.com/features/six-largest-lithium-reserves-world/
… it’s over 64 million tonnes… or over 71 million tons
“, a ton is good for about 10 EVs at current battery capacities”
1 ton = 2000lbs
So you’re saying there is 200lbs of lithium in every BEV?
That’s false.
It’s more like 25 lbs: https://www.nationalreview.com/corner/just-how-clean-and-green-is-your-electric-car/#:~:text=Today%2C%20a%20typical%20EV%20battery,aluminum%2C%20steel%2C%20and%20plastic.
Which is to say that a ton of Lithium is enough for at least 80 BEVs.
And when we look at the reserves of the 6 top countries with lithium, 64 million tonnes converts to about 141,095,847,798 lbs. And given that in REALITY, the typical MODERN BEV pack uses 25lbs of lithium, from just these 6 countries (and without doing any extra exploration or getting any supply back from recycling), we have enough lithium to cover 5,643,833,911 vehicles… 5.6 billion vehicles.
If 1.5 billion vehicles need to be replaced, then we have enough lithium from just 6 countries to replace all the vehicles in the world with BEVs… at least 3 times over… even with the Tesla Semi replacing all conventional trucks. And that can be done even if no recycling is done or no additional reserves are found.
“Expecting magical battery tech to appear to meet the 2035ish EV goals is a pipe dream”
No magical tech is needed. All that is needed is for SOMEONE TO DO THEIR HOMEWORK AND NOT SPREAD ANTI-BEV BULLSHIT.
Mercedes EQS 120 kWh, Ford Lighting 130, battery, Hummer 200, Tesla Semi 1700. Nobody is making tiny BEVs outside of China.
Its not ANTI-BEV BS. The battery EV is a stupid idea and there is NOT enough lithium to electrify all the cars, trucks, SUVs, trucks, semis, farm equipment, etc in the world. What about nickel, cobalt, graphite, etc….. We are destroying the world to save it, typical modern short sightedness. EV push is driven by power & greed by some of the horrible powers that be in the world, nothing less.
I’ve owned an EV for 5+ years.
Uh huh… suuurre you have.
“Its not ANTI-BEV BS”
And right after saying that, you proceed to spout more anti-BEV BS…
Lithium reserves are like oil reserves: We know what we can extract now, and haven’t looked everywhere yet so we will likely find more. There might be reasons to avoid EVs, but lack of lithium isn’t one of them.
Bolivia and its Lithium resource, so its ok for evil powers that be to plunder and take advantage of them, most of it is already backdoor locked up by China.
Enough EV resources may exist for the next 20yrs plan, but the US & Europe may not be able to access it, as most of it China already has made alliances for it over the past 10yrs. Like I said wars over oil will just shift to wars over EV resources. Find a better plan to reducing greenhouse emissions than pushing one rooted in evil & greed.
Second point: Places like California, where they think wishes come true, apparently, are in for a huge awakening when they mandate EVs and discover they’ve been writing checks their electrical grid can’t cash.
Interesting article https://www.aljazeera.com/opinions/2023/1/29/greening-ourselves-to-extinction
The damage microplastics have caused likely won’t be realized before its effects have crippled people.
Acting like going to 100% BEVs will get rid of Oil is nonsense.
Strangely enough, I’m also OK with adding a small battery and motor to an ICE vehicle to boost performance. Mercedes is doing this to add 200 more HP to their already stout 4-cylinder turbo. They end up with more HP/torque than the bi-turbo V8 they’re replacing and better gas mileage. Different context, different solution.
I remember being in college and there was no car. I had a bicycle. I had friends who sometimes gave me rides. Used Greyhound several times. The two examples in the Bloomberg article were driving 2021 models. Someone at a dealer conned them into believing this would be the best choice because a newer car won’t need more maintenance. If you don’t have the dough for a car, get a motor scooter and wait until you have a higher and more reliable income. I would never share a car payment with a roommate that I wasn’t joined to by marriage. At times, there’s no shame in being on less than four wheels.
Many purchased them for the tax credit or HOV lane access and lack the access, ability or just inclination to use the EV part of the machine. They just use it like a plain old hybrid. Good, but not good enough.
https://insideevs.com/news/630341/plug-in-hybrids-arent-being-plugged-in-study/#:~:text=If%20you%20don't%20plug,exhaust%20fumes%20into%20the%20environment.&text=It's%20honestly%20no%20surprise%20that,and%20then%20not%20charging%20them.
The Maverick Hybrid has a 1.1kWh battery pack.
The F-150 Lightning has a 98kWh or 131kWh battery pack.
That means at the minimum you could 89 battery packs with the same capacity as the Maverick battery pack for every 1 F-150 lightning you chose not to make.
89+ Regular people buying Hybrid Pickups that get 42 MPG city/ 33 MPG Highway reduces emissions from exhaust much more than 1 Rich person buying a 5 seat Full size short bed super crew F-150 lightning (the only seating, cab, and bed configuration available for the Lightning).
