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Msg  501219 of 522381  at  6/1/2023 8:12:00 AM  by


 In response to msg 501214 by  Bearcatbob
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Re: Tesla’s Message to Biden - Text of Article


Tesla’s Message to Biden

A regulatory regime that rewards money-losing vehicles is a loser for America.

By Holman W. Jenkins, Jr. -  Wall St Journal

May 30, 2023


The vexed position of the electric car in the U.S. automotive marketplace makes moves like Elon Musk’s recent price cuts all the more discussable.

Mr. Musk’s daily regimen includes giving Tesla bulls something to cling to. So, in his telling, the cuts will be more than amply repaid by profits on software upgrades down the road. To a more disinterested party, Tesla is doing what car companies have done since time immemorial, trying to maintain volume in a largely fixed-cost, vertically integrated production system. In Mr. Musk’s case, the system became positively River Rouge-like when he added upstream battery production the way Henry Ford once added mining and steel production.

But a third interpretation views his price cuts as a reflection of his basic hostility toward our electric-vehicle policies, Mr. Musk’s purpose being to punish Washington and the traditional automakers for a fuel-economy regime that has them dumping EVs on the public at a loss.

The basic problem: Policy makers have adopted a view that electric vehicles are the future but haven’t invented the economics to go with it. As an Obama administration leaker explained way back amid the 2009 auto bailout, “At some point . . . the drive for profitability is likely to collide with [the government’s] fuel-efficiency and low-emission goals.”

In fact, this point is always coming. A collision has always been just around the next bend ever since Washington tweaked its original “fleet average” fuel-economy rules to require the big three to build their mandated fuel-sipping small cars in high-cost United Auto Workers factories even if it guaranteed losing money on every car.

Since President Obama, the deal has been modified: build electric cars and lose money on them in return for being allowed to sell large, gas-guzzling pickups. Joe Biden, under his hilariously titled Inflation Reduction Act, has merely quadrupled down, along with adding new UAW-protection elements. The result is an improbable plan by which 67% of new cars will be domestically-made EVs by 2032.

This is improbable because either the remaining 33% of gasoline car sales would have to be exorbitantly profitable to cover the EV losses, or a giant carbon tax would have to be enacted, pricing gasoline cars out of the market and turning consumers into willing buyers of electric vehicles.

Neither is going to happen. The historically guaranteed outcome is a large kludge down the road, midwifed by auto-industry lobbyists, the UAW and their beholden congressmen, to finesse Mr. Biden’s suicide mission so auto companies aren’t bankrupted all over again. The only question is when.

As my colleague Allysia Finley has pointed out, whatever else Mr. Musk’s price cuts on his popular Model 3 and Model Y accomplish, they accentuate the unworkability of the current incentives. Given Tesla’s dominance of the electric-vehicle market, their effect worsens the losses conventional car builders are racking up on their EV sales.

Mr. Musk’s dissent has long been clear to anyone who listens. He has loudly, and without success, lobbied Washington and California to tweak their rules to encourage other companies to buy fuel-economy credits from Tesla instead of building their own electric vehicles. He has deplored the Biden plan for a subsidized national charging network that would undercut the millions Tesla has spent building a private charging network for its customers.

I said back in 2010 that with its absence of in-house UAW clout, Tesla would be a loser in these regulatory bargains, but as a major U.S. player it can’t be left out altogether. Its very ability to report a profit recently is provided by fuel-economy credits that regulators have enabled it to sell to other automakers. Tesla itself is living off the pickup truck profits that support the domestic industry under the Obama kludge.

A carbon tax, of course, would be the efficient way to subsidize electric cars, along with every other carbon-reducing innovation, while genuinely reducing emissions. But a carbon tax is no longer popular with greens, who now see in our giant rent-seeking, cross-subsidy, EV-incentive machine something they are happy to confuse with their desired “green socialism.”

It’s impossible to overstate what a fraud the national fuel-economy regime has become, its lack of any real traction related to any national problem in return for its Rube Goldberg complexity and economic irrationality. The lesson should perhaps go with us into the 2024 voting booth. Americans need a 40-something president who has a real stake in the country’s future, not a Joe Biden who sees only short-term opportunities to milk today’s unstable governing charades for the benefit of his backers. Americans are not going to vote for somebody because he promises a more rational fuel-economy regime. They might vote for somebody who understands that things have gone wrong in America and exudes confidence that rational policies can fix them.


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501310 Re: Tesla Article pen2men 14 6/1/2023 3:12:28 PM

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