Politics & The EV Revolution: Tesla Germany, USPS, SKI, & Incentives
Most of us tend to think electric cars just sort of happen. Elon Musk wakes up one morning and decides to build the Model S and Shazam! The EV revolution is born. Volkswagen, Mercedes, GM, Ford climb aboard the EV Express. China spawns a gaggle of new EV companies. Suddenly, the future’s so bright, we gotta wear shades! Lost in all this goodness is the role governments play in promoting or hindering the EV revolution.
85% of all new cars sold in that country are either plug-in hybrids or battery electrics. But that sort of sales success didn’t happen without strong support for electric cars from the Norwegian government. In neighboring Sweden, government support has been much less and, not surprisingly, the percentage of electric cars sold there is lower.
Tesla Calls Out German Authorities
Tesla has filed a 10-page letter in support of a petition pending before the Higher Administrative Court of Berlin-Brandenburg brought by Deutsche Umwelthilfe, a German nonprofit dedicated to environmental justice. Its name translates as Environmental Action Germany and it explains on its website it has been “campaigning to preserve the natural foundations of life for more than 40 years, The organisation fights for the preservation of biological diversity and the protection of natural assets as well as for climate protection. The organisation is convinced that only energy supplies based on efficiency and regenerative energies, sustainable mobility, the respectful handling of our natural resources and the avoidance of waste will secure life on our planet.” Sounds like a group that CleanTechnica readers could embrace.
The petition it filed complains the permitting process in Germany is too slow and too cumbersome to meet the urgent need for emissions reductions in accordance with Germany’s commitments to the world community in the Paris climate accords of 2015. The April 7 letter from Tesla Manufacturing Brandenburg SE, a subsidiary of Tesla, is in the nature of an amicus curie brief to the court, according to a report by Electrive. “Tesla Brandenburg has experienced first hand that obstacles in German licensing law are slowing down the necessary industrial transformation and thus the transport and energy turnaround,” it reads. Germany has announced ambitious climate goals, but “the German approval and planning processes originate from a time when these concerns seemed less urgent.”
“The result is that the approval process for an environmentally friendly project is still the same as for a coal-fired power plant,” writes Tesla. The process takes too long, the letter says. “It is very difficult to make changes, even if they are overall positive” and “the process is fraught with legal risks at every step.” As a result, necessary investments in clean energy projects and infrastructure are suppressed, which will make it nearly impossible for Germany to achieve its climate goals.
Tesla is particularly upset that “16 months after the application [for approval of the Tesla factory in Grünhiede], there is still no schedule for granting a final approval.” This is “particularly irritating,” the letter says. That factory is supposed to be turning out finished cars in a few months, but up until this point, all work has been done on the basis of temporary permits. In theory, if those permits are not made permanent, Tesla could be required to dismantle the factory and return the land to its pre-construction condition at its own expense. Is that likely to happen? No. But it’s the kind of impediment that might make other companies think twice before making similar investments.
Careful readers will quickly spot the similarity between Tesla’s complaint and the protestations of many in the US who argue that environmental reviews take too long and are too expensive, which leaves us with the conundrum of whether an undertaking that promises to address global warming in a meaningful way should be permitted to harm the local environment in exchange for accomplishing a higher purpose. Such questions have no easy answers.
Should The USPS Go Electric?
A similarly thorny political question surrounds the decision by the US Postal Service to replace its aging fleet of delivery vehicles with new gasoline-powered vehicles. On the one hand, the current administration has decreed the federal government should only buy electric vehicles. On the other hand, we have the post office, a quasi-public corporation, opting to buy tens of thousands of vehicles with internal combustion engines. The rationale is that electrics are more expensive and the USPS simply doesn’t have the money for them. Furthermore, switching to electrics would require a large capital investment in EV charging infrastructure.
Because USPS is a semi-autonomous organization, the administration cannot simply order it to buy electric vehicles. Instead, some members of Congress are proposing to significantly increase funding for the USPS, provided it uses the money to buy electrics instead of conventional vehicles. Clearly, the postal service should be leading the way toward an EV future but the USPS has been a political football for generations and nothing about it follows normal rules of behavior. It will be interesting to see how the Biden administration cuts this particular Gordian knot.
LG Chem vs SK Innovaton
Here’s one that will make everyone’s head spin. Two South Korean battery companies are having a legal slug fest that has massive political implications. LG Chem says SK Innovation hired a bunch of its top battery engineers and used their knowledge to gain a competitive advantage, a claim SKI hotly denies. Claims of poaching and patent infringement are rampant throughout the tech sector, but one of the more prominent examples was a suit brought by Waymo against Uber after one of its top engineers snuck out the back door with a load of pirated software and allegedly used it to help Uber advance its autonomous driving ambitions.
Earlier this year, the US International Trade Commission ruled in favor of LG Chem and imposed a 10-year ban on SK Innovation battery sales in the US. The problem is, SKI has been picked as the supplier by both Volkswagen and Ford for some of the battery-powered vehicles they plan to build in the US. SKI has started construction of a battery factory in Georgia, but says if the ban is upheld, it will abandon the project and quit the US.
Not only are thousands of jobs at stake at the battery factory in Georgia, but jobs building EVs at Volkswagen’s factory in Chattanooga and at Ford’s electric F-150 factory may be affected. The Biden administration has until April 11 to either accept or reject the ITC decision. The political pressure is intense. On the one hand, if what LG Chem says is true, SKI is pinning its battery business on technology purloined from a competitor. Who could countenance such behavior?
On the other hand, America lags far behind China and Europe when it comes to having enough battery factories to support the transition to electric cars and can ill afford to have SKI pull the plug on one of the few new factories in America. The administration is stressing American jobs for American industry. One suspects there is a fair amount of horse trading and arm twisting in Washington, DC this weekend.
New US EV Incentives
At the present time, there is a federal tax credit of up to $7,500 available to people who purchase an electric car. The current administration is touting ambitious plans to promote the sale of electric vehicles made by Americans in America with American made parts. The problem is, that tax credit only applies to the first 200,000 EVs sold by a manufacturer. The two largest US EV manufacturers — Tesla and GM — have each sold more than 200,000 EVs, so now we have a situation where the only EV makers whose cars qualify are based in South Korea or Germany. Obviously, it makes no sense to subsidize foreign corporations, does it?
What to do. What to do. A rethink of federal EV incentives is underway within the Biden administration. This week, transportation secretary Pete Buttigieg told Yahoo Finance “So we think it is important to continue incentivizing and encouraging electric vehicle adoption. We’ve got to make sure that electric vehicles are not just a luxury item, especially because the fuel savings from not having to pay to fill it up with gas will be especially meaningful to lower and middle income American car owners.”
What does that mean? There are rumors the tax credit may be dumped in favor of a point of sale rebate of $10,000. That would actually almost exactly match the current rebate system in German which is worth €9,000 to EV buyers. In Germany, the government pays 2/3 the cost and the manufacturer pays the other 1/3. It would not be a surprise to see any new incentive program have income limits attached — no one thinks a millionaire needs help from the taxpayers to buy a $112,000 Hummer, for instance — or limits on the the sale price of the vehicle. Such restrictions are common in other countries. Some believe there is a greater need for 500,000 people to be able to afford a new medium-priced EV than 5,000 people being able to afford a Tesla Model X, for instance. The rest of the rumor is that the new incentive plan would apply to a manufacturer’s first 600,000 electric vehicle sales in the US, which would put Tesla and GM back in the game.
Politics Everywhere You Look
The upshot of all this is that how America moves forward with the EV revolution will depend in large measure on political decisions that will be made in the coming days, weeks, and months. Sad to say for free market advocates, doing nothing and letting the economic system sort out the winners and losers isn’t going to cut it. The world is overheating and we have to address that first and foremost if we wish to prevent an existential crisis for humanity. No one will be selling anything to anyone if we are all dead.
There are those (some of them regular CleanTechnica readers) who think it’s long past time to rethink the whole notion or personal transportation devices. They are used for only a few hours a day at most, require vast amounts of pavement that interrupts the natural flow of water in the environment, produce significant carbon emissions to build the factories and operate supply chains, and deprive our cities of much needed green spaces for pedestrians and bicyclists to enjoy. Getting rid of cars altogether is probably a bridge too far for most, but it’s an idea that is gaining traction.
Some say CleanTechnica should steer clear of politics, but the battle to save the Earth from human degradation is all about politics. Ignore the topic at your peril.