Democrats and Executive Orders

The Biden Administration has set a goal for 50% of all new passenger auto sales to be zero-emission Electric Vehicles by 2030.  He did this by Executive Order on August 5,2021. 

Congress passed no law that supports it.

First, it appears that Biden exceeded his Constitutional authority.  There are legal challenges in progress that will likely overturn this Order. 

The Courts have rejected several other Biden Orders for abuse of authority.  One example is the Order to cancel oil and gas leases on federal lands – overturned by the Courts

So, while Biden and his Party loudly claim they will preserve Democracy in the U.S., they continue to ignore the Constitution. 

The cover-up of Joe Biden’s true mental condition is another example of Democrats flaunting the voters right to know who they are electing.  The Democrats did not run a free and fair primary process.

Now, Biden plans to impose Federal Rent Controls, again without Congressional approval.  This policy is so flawed, it will take a separate post to cover it.  Suffice it to say that Rent and Price Controls distort markets, and hamper intelligent allocation of resources to an industry that needs more housing.  Rent Controls will have the opposite effect – it reduces incentive for new housing starts.   How Backwards can a President get it ?

Richard Nixon tried Price Controls and it ended badly.  The U.S. Economy is based on a Free-market System in which prices are determined by the simple Law of Supply and Demand. 

Any rules or regulations of the System should be minimal and carefully considered for the consequences they will produce. 

Summary

That gets us back to the EV mandate.  The problems are so obvious at the start that the policy can only fail. 

Buyers have no new incentive to Buy.   

Auto Companies are investing in EV’s, but not close to the rate needed to comply.

The cost to invest in potentially unneeded capacity is a brick barrier to the “Goal.”

The Biden/Democrat Order is untargeted and will not survive Judicial Review.

Outcome – the Order is meaningless and was generated for political purposes to express a policy to control Climate Change.

Support Data

Following are data and assumptions that support the Summary.  

I trust the detail will help give a more informed understanding.

Background Facts :

The Total number of new Vehicles sold in 2023:  15,600,000.

Breakdown of Vehicle Types sold in 2023:

• Internal Combustion Engine (ICE) Vehicles: Approximately 13,057,200 units

• Hybrid Vehicles: Approximately 1,542,800 units

• Electric Vehicles (EVs): 1,000,000 units ​

Biden Goal for EV Sales in Year 2030 is 7,800,000.

Without assuming any change in overall vehicle demand, an even ramp-up of EV Sales to meet the 50% Executive Order by 2030 looks like this:

Year	New EV's Sold Per Year	YOY Sales Increase
2024	1,000,000	0%
2025	1,260,000	26%
2026	1,715,000	36%
2027	2,625,000	53%
2028	3,925,000	50%
2029	5,810,000	48%
2030	7,800,000	34%

The cumulative number of EV’s sold by 2030 would be 24,135,000 Units.

The Goal in the Executive Order defies Reality without something radically different to change Consumer Demand and Manufacturing Supply.

Here are the problems:

• Consumer demand for EV’s has waned as early natural Buyers have made their purchases.

• Sales in 2024 will be approximately 1 Million Units.  This means an increase in production of 780% by 2030 to 7,800,000 units per year.

• The current capacity for production of EV’s in the U.S. is less than 2 Million per year.  This means investment for new plants with a capacity increase of over 380%.

• Tesla expects to spend over $10 Billion on its new Giga, Texas plant.  It will have capacity of 500,000 EV’s per year over time.

• Using that cost as a general assumption, the investment in annual capacity costs is $ 20,000 per unit.

• An auto industry capacity increase of 5,800,000 units per year to meet the Executive Order would require investment in plant, equipment, and tooling of approximately $116 Billion by the car industry.

• Lacking a solid forecast of sales to justify this massive investment, car companies are not planning new plants on this scale.  It makes no business sense, and would lead to a significant impact on income, or losses.

David Hollaender                                                                                                                           July 20, 2024

Cogport.com