Junk Science Week — Ross McKitrick: EV mandates don't make economic sense

financialpost.com:

According to “energy transition” and “net-zero” enthusiasts, the future looks bright for electric vehicles (EVs). Though not so bright, it seems, that the federal and some provincial governments haven’t had to offer at least $15 billion in subsidies to prompt carmakers to develop Canadian production facilities, as well as lavish subsidies to get people to buy EVs. And since even that isn’t enough to bring consumers around, a Trudeau government mandate now requires that all new light-duty vehicles sold in Canada must be electric or plug-in hybrid by 2035. In other words, the government is traditional internal combustion engine vehicles (ICEVs).

The fundamental problem is that EVs cost more to make and operate than most consumers are willing to pay. In a 2016 submission to the Quebec government, which was then considering an EV mandate of its own, the Canadian Vehicle Manufacturing Association warned that its members were then losing between $12,000 and $20,000 per EV sold. Since then, the situation has only gotten worse, with Ford Motor Co. reporting first quarter 2024 losses of US$132,000 per EV.

What will be the economic consequences of a national EV mandate in Canada? In a new paper forthcoming in the peer-reviewed Canadian Journal of Economics, I develop and run a detailed inter-provincial model of the Canadian economy, including the auto sector. I argue that during the phase-in period the sector will raise the price of ICEVs and earn above-market rents on them, but that won’t cover the losses on the EV side so the industry will go into overall losses by the late-2020s. The losses will be permanent unless and until EV production costs fall enough that a mandate is unnecessary. In short, the 2035 mandate is affordable