Juno News - July 06, 2024


Will Trudeau’s EV mandate kill Canada’s auto sector？

Mentioned
Justin Trudeau Ross McKittrick Andrew Lawton Show Pierre Poilievre Mark Gerritsen Cybertruck Hummer Biden
John A Macdonald gets memory-holed Trudeau’s war on free speech will cost hundreds of millions

Episode Stats


Length

15 minutes

Words per minute

165.21

Word count

2,497

Sentence count

164

Harmful content

Hate speech

2

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Justin Trudeau says the polls are wrong, and that the election is a reflection of a "global erosion of democracy." Andrew Yang and Ross McKittrick explain what's really going on with the polls, and why Justin Trudeau thinks it's not about him.

Transcript

Transcript generated with Whisper (turbo).
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.000 It's not an erosion of democracy when people vote against you, but Justin Trudeau thinks
00:00:14.760 it is.
00:00:15.400 And what's fascinating here is that Justin Trudeau is really trying to set the stage
00:00:21.160 for explaining and justifying and rationalizing his loss.
00:00:25.400 That's what he's doing here.
00:00:26.420 He's trying to make it so that when he loses, which I suspect will happen, the polls are
00:00:31.240 showing what they show.
00:00:32.720 What Justin Trudeau is saying here is that the polling, the eventual loss is not his fault.
00:00:39.600 It's part of a global erosion of democracy.
00:00:42.240 That's what he's going to say.
00:00:43.440 Justin Trudeau is going to be Canada's election denier when Pierre Polyev and the Conservatives
00:00:48.540 likely win a massive majority.
00:00:50.320 That's what the polls are suggesting.
00:00:52.140 Trudeau is going to say, oh, well, this was part of a global shift.
00:00:54.740 This was part of a global shift.
00:00:56.420 It had nothing to do with me.
00:00:57.620 I'm not the unpopular one.
00:00:59.060 It's just like Mark Gerritsen saying, oh, no, I'm not the guy that you need to look at
00:01:03.500 here.
00:01:03.740 Don't worry.
00:01:04.160 The carbon tax.
00:01:05.200 No one dislikes the policy.
00:01:07.040 People just don't like that Pierre Polyev and the Conservatives have been talking about
00:01:11.180 it.
00:01:11.360 That's where this is all coming from.
00:01:13.580 This is another clip from Justin Trudeau.
00:01:15.580 So basically just doing the everything is fine routine when forced with actually, no, we'll
00:01:21.480 get to that clip later.
00:01:22.280 In the meantime, I want to bring into this discussion here.
00:01:25.140 One of Trudeau's environmental policies that, again, is all virtue signaling and very little
00:01:30.300 in the way of substance behind it.
00:01:32.320 The electric vehicle mandate.
00:01:34.920 We are supposed to be staring down the barrel of all light duty vehicles.
00:01:38.640 So basically consumer cars being electric or hybrid by 2035.
00:01:44.020 It may seem like it's a long way away, but that is just about a decade.
00:01:48.180 And there is a very stark warning by economist Ross McKittrick in the Financial Post about
00:01:52.960 what this mandate is going to mean and is meaning for the auto sector.
00:01:56.940 Professor Ross McKittrick joins us once again.
00:01:59.940 Always good to see you, Ross.
00:02:00.880 Thanks for coming on today.
00:02:02.600 Hi, Andrew.
00:02:03.340 Always a pleasure.
00:02:04.420 So let's just start with the rationalization for this, because it's based on this idea that
00:02:10.740 this is going to solve or at least contribute to the solution to all of these economic and
00:02:15.800 environmental woes.
00:02:16.900 But the economic argument we've seen really falls apart on electric vehicles.
00:02:21.800 They are not desirable by consumers.
00:02:24.160 They are not particularly profitable for automakers without massive subsidies.
00:02:28.960 Like, where is the rationalization, if not just ideology?
00:02:32.780 Well, at this point, it is just ideology.
00:02:35.200 Everything you said is correct, that consumers don't want them.
00:02:39.240 The sales targets, it's not 2035 when the sales targets kick in.
00:02:44.560 They start in 2026.
00:02:46.240 It's not 100% in 2026, but it begins ramping up at that point.
00:02:51.020 British Columbia and Quebec are currently in compliance with the 2026 level, but they spend
00:02:57.160 a fortune on subsidies for their consumers.
00:03:00.640 The rest of the country, we're not seeing EVs move off the lot in enough number.
00:03:06.600 The other problem, though, and this is a focus of my column and also a paper that is coming
00:03:11.740 out in the Canadian Journal of Economics, is that the auto sector itself will lose money
00:03:18.020 under any conceivable technology scenario on EVs.
00:03:21.920 People just aren't willing to pay the costs that it involves to own and maintain them.
00:03:28.160 Yes, there are some cheap EVs.
00:03:29.740 You can buy some cheap EVs and costs are coming down for some makers.
00:03:33.900 But to be really indifferent between a gas-powered car and an EV, there's more to it than that.
00:03:40.840 The maintenance costs are higher for EVs.
00:03:44.100 The charging times, the cost of electricity.
00:03:46.340 I mean, electricity is a lot more expensive than it used to be, thanks to things like the
00:03:49.640 Green Energy Act.
00:03:51.400 And so Hertz, for example, the big auto rental company, they went big into EVs a couple of
00:03:58.040 years ago.
00:03:58.560 And they've reversed course.
00:04:00.540 They're selling on 20,000 EVs because they found they were too expensive to maintain and
00:04:05.700 customers didn't want them.
00:04:07.740 So the economics is not there under current and foreseeable technology.
00:04:14.880 And I think here, a good parallel is the switch from LPs and eight-track cassettes to CDs and
00:04:22.460 then music streaming.
00:04:23.700 If it's a good technology that saves people money and provides a superior product, they will
00:04:28.420 make the switch.
00:04:29.160 You don't have to force them.
00:04:30.920 But if we were trying to go the other direction, so if people were currently streaming and using
00:04:36.860 electronic devices and we're going to force them to go to LPs and eight-track cassettes,
00:04:42.500 obviously you'd need to bring it into law.
00:04:46.220 You'd need expensive penalties for people.
00:04:48.100 You'd need massive subsidies.
00:04:49.760 And the industry itself would go under because people would just rebel and they wouldn't buy
00:04:54.540 the product.
00:04:55.120 And that's what's going to happen with EVs.
00:04:57.680 Consumers are rebelling.
00:04:58.940 They're not buying the product.
00:05:00.540 And the auto sector itself, I predict, will disappear in Canada as a result.
00:05:05.880 Yeah.
00:05:06.160 And to be fair, the market is trying to do this.
00:05:09.360 I commend Tesla in particular for really trying to change the perception of electric vehicles
00:05:14.040 and make them a lot cooler, make them a lot trendier.
00:05:16.700 I was at a nice wholesome weekend activity on Friday.
00:05:20.100 I was at the tractor pull in Elmer, Ontario.
00:05:22.380 And if you've never been to tractor pulls, they're great fun.
00:05:25.140 And they had this electric, this GMC electric Hummer that was participating.
00:05:30.400 And I thought they were doing it to mock the thing.
00:05:32.420 I thought they were like, this was all some elaborate ruse to make fun of the electric
00:05:35.400 vehicle.
00:05:36.080 Man, that thing had some power.
00:05:37.660 It just absolutely motored.
00:05:39.240 It cleared everything else in that category.
00:05:41.920 So there's an example where they've made a product that some people will like and some
00:05:45.080 people want, but the market needs to be the one to cause the surge in support.
00:05:50.920 And the other thing is that even support for them right now, it's very false because of
00:05:55.480 those subsidies you mentioned.
00:05:56.780 So it's not an accurate reflection of what consumers are willing to pay for these things.
00:06:01.640 Right.
00:06:02.200 It's not an organic consumer led transition.
00:06:04.960 It's entirely dependent on policy measures.
00:06:07.340 Now, Tesla reports making profits on EVs.
00:06:12.020 They have aimed at the high income market because their products are pretty expensive, but they're
00:06:17.940 good cars.
00:06:18.800 I mean, people obviously like them.
00:06:20.580 The Cybertruck is a really impressive looking vehicle, but they're not penetrating the middle
00:06:28.280 income and lower income end of the market.
00:06:31.540 Tesla is also unique.
00:06:32.960 The other auto companies don't report their EV division separately except Ford.
00:06:38.500 Ford is the only company that breaks out their EV division profits, and they are losing money
00:06:43.640 massively.
00:06:44.400 They've reported a $67,000 loss per vehicle last year.
00:06:49.680 It's up to $100,000 in the first half of this year.
00:06:53.160 So that's obviously unsustainable.
00:06:55.840 Even with all the subsidies in the world, a company is just not going to be able to continue
00:07:00.200 producing a product where you lose $100,000 per vehicle.
00:07:04.200 Now, in the course of doing this research, some of my readers and referees said, yeah, but the
00:07:10.940 costs of producing them will come down.
00:07:12.640 But that's actually not the case.
00:07:14.580 Some elements are coming down.
00:07:16.840 But a lot of the key ingredients into the motors used in EVs, it's sole sourced from China.
00:07:22.460 China has basically a monopoly on some of the key metals that are needed for these high
00:07:27.040 performance motors.
00:07:27.900 And those costs are not going to come down.
00:07:30.300 Instead, if anything, China is going to exploit its monopoly position to make it even harder 0.82
00:07:35.540 for Western auto companies to produce these things.
00:07:38.780 Well, and we've already seen in the last few weeks, even the flare up on tariffs as people
00:07:43.320 try to prevent cheap Chinese EVs from being the ones that flood the market here.
00:07:48.680 Let me ask you where you think this is going to go.
00:07:51.240 I mean, obviously, bailing out the auto sector is not entirely unprecedented.
00:07:54.620 Now, drastically different circumstances to go back to 2008, 2009.
00:07:59.600 But if we are seeing this scenario in the auto sector of just a mandate that is going
00:08:04.860 to cripple or decimate large parts of their operation, is that not inevitable if the government
00:08:10.400 wants to fully commit to this mandate?
00:08:12.400 Yeah.
00:08:13.400 In the paper that I've published, I did computations based first on an assumption, maybe we get
00:08:22.940 to full cost parity by 2035.
00:08:24.940 And but if not, maybe we'll get there by 2050.
00:08:29.920 If it takes till 2050 to get full cost parity between EVs and gas powered cars, it'll take
00:08:37.040 more than a trillion dollars in subsidies to keep the auto sector in existence in Canada.
00:08:42.820 And if we were to get to full cost parity by 2035, it would cost about 150 billion in addition
00:08:51.920 to everything that we've already spent.
00:08:53.760 But the thing is, under that scenario, you don't need the mandate.
00:08:57.300 If if costs are going to come down so quickly and the products are going to improve so quickly
00:09:02.620 that people will happily buy an EV rather than a gas powered car, we don't need the mandate.
00:09:07.280 So the key takeaway here is, in any circumstance where we need a mandate to force people to switch
00:09:14.520 to EVs, in that scenario, the auto sector disappears, it can't survive.
00:09:20.120 If if there's a scenario where the auto sector in Canada can continue to exist and profitably
00:09:25.980 produce and sell EVs, we don't need a mandate to get them onto the market.
00:09:31.280 Is there not that I want to give anyone ideas, and I know you were mindful of that in your
00:09:35.820 column as well. But if if the United States were to adopt a very similar mandate, would that change
00:09:42.000 the calculation? Because all of a sudden you have a scale that you don't have when it's just
00:09:46.020 the Canadian market? Well, the US right now is pretty much talking along the same lines,
00:09:53.260 some states individually, but at the federal level, the Biden administration is putting in
00:09:59.120 place regulations for the auto sector that do substantially the same thing. Generally, no,
00:10:05.180 there are certain economies of scale that, okay, if the US begins mass producing EVs,
00:10:12.680 some aspects of the cost will come down. But remember, they're going to be bidding for all
00:10:17.100 those same rare earth minerals that we only get from China and the other really specialized inputs,
00:10:25.240 including into battery manufacture. So that could just as easily make it harder, not easier for us
00:10:31.080 to make affordable EVs.
00:10:34.540 Well, and when you mentioned the battery production, I mean, we've seen the government go whole hog into
00:10:38.440 trying to, you know, do domestic EV battery manufacturing here. And that's another layer
00:10:43.800 of subsidies on top of, you know, the subsidies on the purchase of the cars themselves.
00:10:48.640 Yeah, it's, it's amazing to listen to them brag about Canada's now this superstar in the supply chain
00:11:00.900 for EV batteries were nothing of the sort. It's, they had to pour $15 billion just to get one company
00:11:09.160 to open up a plant to make battery systems for EVs. That means that we're not a superpower in this
00:11:19.040 field. It means we're singularly unsuited for producing both in terms of the labor and then
00:11:26.060 the access to the inputs and the cost of electricity and all the rest of it. If we were a superpower in
00:11:31.840 this field, companies would be opening plants on their own, they'd be doing it on their own,
00:11:36.400 it would be profitable, but it's not profitable. It's not profitable. Now it's never going to be
00:11:40.180 profitable. So all we're doing is, I think it's just, you may not remember the old hydroponic
00:11:47.240 greenhouse fiasco in Newfoundland when the government of Newfoundland decided they were going to build a
00:11:53.620 whole industry in the province by subsidizing hydroponic greenhouses. And they wasted a ton of
00:12:00.280 money and the whole thing fell apart because of course there's no way to do it profitably in the
00:12:04.440 province. And at the time, everybody swore up and down, never again. We're not going to fall for
00:12:10.460 this. We're not going to do this again. We're doing it again, but on a much, much bigger scale
00:12:15.560 and it will come to the same end. Yeah. And you're right to keep pointing out the inputs because even
00:12:20.860 if you have all the domestic production and domestic assembly in the world, you still are not doing
00:12:25.920 anything about that choke point of the need to have the access to these minerals, which, and then in
00:12:30.400 the environmental aspect, that part's often overlooked as well as the environmental cost of
00:12:34.580 mining in general, but certainly mining in China. Right. And so with this new push to put big tariffs
00:12:45.480 on EVs, and this is kind of one of these ironies about the government. So in one office down the
00:12:54.700 corridor, they're putting this rule in that says, everybody's got to buy an EV. And then two doors
00:13:00.180 down the corridor, they're alarmed at the fact that there are too many cheap EVs coming from China.
00:13:05.080 So we're going to throw on heavy tariffs to try to stop them. The government created that problem
00:13:11.460 and they strategically, they did it by saying to China, we're going to give you massive leverage over
00:13:18.520 our industrial future. Like I'm sure the Chinese government in Beijing, can't believe their luck
00:13:25.960 that Western countries like Canada and the United States are planning to phase out one of our most
00:13:32.840 powerful industries and demand that people purchase an alternative product that is primarily sourced in
00:13:41.720 China. And it just gives China an enormous amount of power over our economy. And this a little bit of 0.73
00:13:50.760 recognition at this point that this may not be a good idea, given the fact that China is such an aggressive
00:13:56.900 and hostile entity in the world. But that's, that's what the government is doing. And so you're going to
00:14:05.280 start seeing all these contradictory policies where on the one hand, yeah, we really want EVs, and they only come from
00:14:10.440 China, but we don't want China sending us EVs. Professor Ross McKittrick, piece in the Financial
00:14:16.040 Post, EV mandates don't make economic sense. And if you want to dig in in a bit of a less readable,
00:14:21.480 but more comprehensive way for, for most folks, you can read his piece coming out in the journal,
00:14:26.840 Canadian Journal of Economics. Ross, good to talk to you. Thanks for coming on today and great work on this.
00:14:31.680 Thanks, Andrew. My pleasure. Thanks for listening to The Andrew Lawton Show.
00:14:35.080 Support the program by donating to True North at www.tnc.news.
00:14:40.440 www.tnc.news.at.gov
00:14:43.240 .
00:14:43.840 I was
00:14:45.280 going to start with you.
00:14:45.540 The Andrew Lawton equals word beÄźen