It’s hard to overstate the costs of this coerced EV transition. The Biden Administration, with California as its co-enforcer, is mandating that EVs make up an increasing share of auto-maker sales—two-thirds by 2032. California and other progressive states plan to ban all new gas-powered cars by 2035.
But last year EVs made up less than 3% of Detroit auto maker sales. Auto makers are increasingly steering profits from their popular gas-powered pickups and SUVs into cranking up EV production and subsidizing their sales to meet the government mandates.
GM and Stellantis in 2021 each committed to spending about $35 billion through 2025 on electric and “alternative” vehicles. Ford last year said it would invest $50 billion in EVs through 2026. Even with the Inflation Reduction Act’s generous subsidies for battery production and for EV buyers, the companies can’t accept the UAW’s demands without putting profitability at risk. Ford lost nearly $60,000 on each EV it sold in 2023’s first quarter.
The companies have already laid off thousands of salaried workers, including engineers, to finance the EV transition. Assembly-line workers so far have been largely spared. But Mr. Fain knows that auto makers will ultimately have to shut down union plants that produce gas-powered vehicles, as Stellantis did a Jeep Cherokee plant last December.
To put it bluntly, the numbers don’t add up. Automakers’ profits are very likely to be consumed by the costs of the forced switch to EVs. And car workers’ jobs are going to be consumed by the reality that it takes fewer of them to make EVs. If the Big Three are to be bribed or bullied into operating as if that reality can be dodged, then the job losses will, for a while, be more heavily concentrated among sub-contractors, but that won’t do the trick forever, especially if consumers do not buy EVs in the numbers that central planners expect. And then, as I noted in a recent Capital Letter:
[the situation] may be made worse by recession (should one come), and slower-than-expected uptake of EVs. And then factor in what might happen in Europe (which matters for both Ford and Stellantis) if a wave of imported Chinese EVs starts disrupting the auto markets there.
This is a class struggle that rarely speaks its name, but that does not mean that it’s not there, just below the surface.
As Noah Rothman wrote before the strike:
There have been few political costs associated with the Democratic Party’s addiction to throwing money at the green-energy sector, but the prospect of a UAW strike might finally impose some. An ugly intra-coalition dispute would highlight traditional blue-collar labor’s secondary role in a party dominated by highly educated, well-heeled, culturally progressive Americans.
The unions need to wise up.
In Europe, there are signs that they are.
The Daily Telegraph (September 15):
Thousands of workers at Britain’s biggest steel mill are facing redundancy under a taxpayer-funded net zero plan.
Tata Steel will be given £500m of taxpayer cash to fund its switch to net zero at its Port Talbot steelworks.
The Indian conglomerate is expected to invest £1.25bn, including the £500m of taxpayer money, in retooling the site to produce “greener” steel, which ministers said will reduce the UK’s entire carbon emissions by around 1.5pc.
However, the new processes will require fewer jobs and Tata will consult on a restructuring that could lead to 3,000 redundancies.
The Unite union described the plans as a “disgrace” and vowed to fight them. TUC general secretary Paul Nowak said it was a “devastating blow for workers at Port Talbot and the opposite of a just transition”.
And that is the green new deal in a nutshell: a huge bill for taxpayers, a huge blow for workers, impact on climate miniscule.
Kate Andrews in The Spectator (my emphasis added):
Last week there should have been a great victory for the British turbine industry. Auctions were held for offshore wind power, asking companies to bid for the right to supply electricity at £44 per megawatt hour – a third of the price offered eight years ago. The government and the renewables lobby hoped that a successful auction would show that wind power could compete with fossil fuels. Instead, developers worried that they couldn’t turn a profit on the amount they would be paid for energy. There wasn’t a single bid.
‘It was very embarrassing,’ says Gary Smith, leader of the GMB union. ‘Whitehall told us wind was getting cheaper and cheaper. Now there will be no bids for the next round of licences because the wind industry can’t afford to put up the projects.’ The auction flop was humiliating not only for the government but also for [Labour leader] Sir Keir Starmer, who has said he wants a net-zero carbon electricity system by 2030, along with no more licences for North Sea oil- and gas-drilling.
Starmer’s 2030 deadline is ‘impossible’, says Smith. ‘I don’t even worry about it. It can-not be done.’ No amount of enthusiasm can overcome these particular hurdles. ‘The National Grid can’t get [undersea] cables. There are four suppliers of cables in the globe, they’re all booked out to 2030.’
GMB is one of the biggest union donors to the Labour party, but when it comes to oil, Smith’s position is closer to the Tories. ‘There will be more drilling in the North Sea,’ he says. ‘What are we going to do? Put up the infrastructure and have nothing to plug in? It’ll look great, but we’ll be watching it in the dark.’
It’s a point you’re unlikely to hear made in the House of Commons. ‘The renewables lobby is very wealthy and powerful,’ says Smith. ‘I think people on the left, for good intentions, have got hoodwinked into a lot of this.’
Smith is too polite (he probably had to be). A large segment of the left possessed by climate fundamentalism, central planner’s hubris, and a desire to hijack a large part of the economy have recklessly pursued their climate agenda with no regard to the risks. Were their intentions ‘good’? No. And in Britain, they have been helped by the useful idiots who have become so prominent in a parliamentary Tory party that, for the most part, is just another part of the center-left.
Andrews (again, my emphasis added):
Smith has been a GMB member for his entire working life. He joined at 16 when he was a gas service engineer in Edinburgh. Since he became general secretary two years ago, he has made it his priority to point out the problems with Westminster’s net-zero targets. He believes the blind rush for a green revolution is harming those who can least afford it: ‘We’ve cut carbon emissions by decimating working-class communities.’
He describes the green levies that have added £170 a year to every household bill as a modern-day poll tax, ‘disproportionately paid for by the poorest’. ‘The poor pay the same as everybody else. It doesn’t matter if you’re in a leaky, freezing council house. You’re paying basically the same for renewables.’
These kinds of impositions might be tolerated, he says, if there were any sign of the ‘green jobs’ promised by every government since Tony Blair. ‘Communities up and down the east coast can see wind farms,’ says Smith. ‘But they can’t point to the jobs.’ Much of the green work seems to be either London-based lobbying, or clearing away the animal casualties of wind-farm blades: ‘It’s usually a man in a rowing boat, sweeping up the dead birds.’…
Smith also detects a kind of snobbery in the green agenda. ‘There’s a class dynamic to all this. Too many politicians, too many lobbyists, too many people from the City of London who mix in the same social circles. You’ve got an echo chamber around how virtuous all this stuff actually is.’ His advice to the Just Stop Oil protestors would be to ‘go and protest the energy companies who are exporting renewables work to China’.
As Smith sees it, net zero is ‘fundamentally quite a middle-class environmental debate. They say nice things about jobs and then do nothing about the delivery of jobs.’
Coming to America, soon (if it hasn’t already arrived).