One of the Trump Administration\u2019s most crucial economic decisions was its withdrawal in June from the Paris Climate Accords. Politically, the decision upheld a campaign promise. Practically, it avoided saddling the country with the deal\u2019s arbitrary, restrictive CO2-emissions caps.<\/p>\n
Just how suffocating those strictures could have been was illustrated this week when the French government upended its automotive sector by mandating the elimination of gas and diesel engines by 2040 in order to meet the climate accord\u2019s targets. The decision will give French consumers \u2014 and manufacturers \u2014 no choice but to transition to expensive, unproven battery-powered vehicles. It comes on the 25th anniversary of the publication of Al Gore\u2019s Earth in the Balance, in which the then-senator called for eliminating the internal combustion engine by 2017. Needless to say, none of the environmental calamities Gore predicted a quarter century ago have come to pass.<\/p>\n
But that hasn\u2019t slowed the march of wrongheaded policies meant to combat climate change. Just 24 hours before the French government\u2019s decision, Volvo announced that it would electrify every vehicle in its lineup beginning in 2019. The move may be intended to place Volvo at the forefront of the electric-vehicle revolution \u2014 but in fact it shows how deeply government global-warming diktats threaten the future of global automakers.<\/p>\n
Volvo\u2019s announcement was met with universal praise from left-wing U.S. media; it was also universally mis-reported. \u201cVolvo Vaults to Volts, Planning to Pull Plug on Gasoline Engines\u201d Bloomberg\u2019s headline blared. \u201cVolvo going electric, phasing out gas and diesel engines,\u201d\u00a0read the Seattle Times\u2019. \u201cVolvo Moves to Phase Out Conventional Engines,\u201d declared the New York Times.<\/p>\n
Not quite. In truth Volvo\u2019s decision will help perpetuate the internal combustion engine, which still makes up the overwhelming majority of vehicle sales. While the automaker will add a plugin-hybrid option to every model line and build five all-electric cars beginning in 2019, its core, best-selling gas- and diesel-engine variants will simply add a small, 48-volt battery to compliment existing twelve-volt batteries.<\/p>\n
Where traditional twelve-volt batteries turn on a car\u2019s lights and infotainment systems, the 48-volt unit will help power the influx of electric features \u2014 steering racks, brake pumps, etc. \u2014 into modern cars, while increasing fuel economy by 10\u201320 percent in order to satisfy looming Chinese and European CO2 mandates. (Europe will force automakers to reduce the CO2 emissions of their vehicles to 95 grams per kilometer by 2021.) In short, contrary to news reports that Volvo is ending gas engines, the company is merely making such engines compliant with the coming rules.<\/p>\n
\u201cSensationalist headlines today suggest Volvo is going 100 percent electric and ending gasoline and diesel engines,\u201d wrote auto-industry analyst Anton Wahlman. \u201cThe Volvo announcement was not (about) going to 100 percent EVs. It wasn\u2019t even about setting an end-date for gasoline or diesel cars. It was about making 48 volt systems standard in all cars.\u201d<\/p>\n
If more countries follow France\u2019s lead in banning the gasoline engine, other automakers will similarly struggle to turn a profit. Volvo\u2019s compliance strategy is understandable, because few customers are buying electrified vehicles. In France, just 1.1 percent of new cars sold are fully electric. In the U.S., despite over 50 new battery-powered vehicles introduced since 2009, fully electric models have just a 2.4 percent share of the automotive market.<\/p>\n
Volvo itself currently sells only one battery-powered vehicle, a plugin version of its best-selling Volvo XC90 SUV that costs $18,000 more than its $50,000 gasoline model. This year, Volvo has sold just 807 XC90 plugins, accounting for a mere 7 percent of the XC90\u2019s overall sales. Yet, in adding more electric and plugin hybrids to its lineup this week, Volvo CEO H\u00e5kan Samuelsson claimed that \u201cpeople are increasingly asking for electrified cars and we want to meet our customers\u2019 current and future needs.\u201d<\/p>\n
To be sure, many auto executives count themselves members of the global elite that shares Gore\u2019s belief in the \u201cmortal threat\u201d posed to society by the gasoline engine. The green religion is strongest among upper-middle-class buyers who purchase premium cars from the likes of BMW and Audi, which are also pursuing 48-volt strategies. But despite $7,500 tax breaks offered to American consumers who purchase fully electric models, even the wealthy have been shy to take the plunge. Tesla\u2019s miniscule pool of customers is the exception, but Elon Musk\u2019s company has yet to turn a profit, despite average prices in excess of $100,000 for its Model S and Model X vehicles.<\/p>\n
If more countries follow France\u2019s lead in banning the gasoline engine, other automakers will similarly struggle to turn a profit. In condemning the Trump Administration\u2019s withdrawal from the Paris Accords, media darling and former Obama EPA official Marge Oge told the New York Times that \u201cthe rest of the world is moving forward with electric cars. If the Trump administration goes backward, the U.S. won\u2019t be able to compete globally.\u201d<\/p>\n
In reality, the opposite is true. Thanks to less-stringent emissions rules and low gas prices, the U.S. is essential to most automakers\u2019 profits, driving as it does the high-margin sales of popular pickup trucks and SUVs that can\u2019t be sold elsewhere in the world. GM, for example, withdrew from the European market this year because its small cars are unprofitable there.<\/p>\n
Ford joined the corporate chorus in condemning Trump\u2019s Paris withdrawal saying that \u201cwe believe climate change is real, and remain deeply committed to reducing greenhouse gas emissions in our vehicles and our facilities.\u201d Yet the politically correct statement would seem a financial death wish. Some 80 percent of Ford\u2019s profit reportedly comes from U.S. pickup sales. A France-like gas-engine ban to satisfy CO2 targets would destroy the company\u2019s bottom line.<\/p>\n
Chinese-owned Volvo\u2019s 48-volt strategy will, say experts, increase its cars\u2019 prices by $1,000-$1,500. Though that\u2019s not insignificant, it likely won\u2019t prove prohibitive for those who would otherwise purchase the premium XC90. But mainstream automakers such as Ford and Chevrolet have not committed to installing 48-volt systems as a baseline in their cars, precisely because their profit margins are slimmer than Volvo\u2019s already.<\/p>\n
\u201cA 48-volt system is an expensive add-on for a $16,000 basic car,\u201d Wahlman writes. \u201cFor a $38,000 Volvo, not as much.\u201d<\/p>\n
Force compact cars \u2014 currently popular in France \u2014 to go all-electric at an additional cost of $5,000\u2013$10,000 each and they will simply become unaffordable.<\/p>\n","protected":false},"excerpt":{"rendered":"
One of the Trump Administration\u2019s most crucial economic decisions was its withdrawal in June from the Paris Climate Accords. Politically, the decision upheld a campaign promise. Practically, it avoided saddling the country with the deal\u2019s arbitrary, restrictive CO2-emissions caps. Just how suffocating those strictures could have been was illustrated this week when the French government […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,87],"tags":[],"_links":{"self":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts\/20810"}],"collection":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/comments?post=20810"}],"version-history":[{"count":1,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts\/20810\/revisions"}],"predecessor-version":[{"id":20811,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts\/20810\/revisions\/20811"}],"wp:attachment":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/media?parent=20810"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/categories?post=20810"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/tags?post=20810"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}