The Peter Zeihan Podcast Series - Why EVs Aren't The GreenTech Panacea || Peter Zeihan

Episode Date: November 2, 2023

When the major auto manufacturers start changing their EV plans, it's probably a sign something's not quite right. For all those who think they're better than everyone else because they drive a Tesla, this video is for you... Full Newsletter: https://mailchi.mp/zeihan/why-evs-arent-the-greentech-panacea

Everybody, Peter Zion here coming to you from Colorado, where we've just had our first big winter storm and probably get a little bit more on top of the nine inches we got last night. Anywho, the news of the moment is that a lot of major auto manufacturers are scaling down their plans to make the electric vehicles. Ford and GM have both suspended, well, canceled plans to build a couple new facilities for battery and EV assembly. No changes to their internal combustion engine vehicle plans. Tesla has indicated a significant drawdown in their global production capacity, and in fact they're saying they're going to suspend and maybe even cancel the plans for the gigafactory that they were going to be building in Mexico, although that's very TBD. There are a lot of issues in play here, but let's start with the I told you so's.

This is something that was never going to work. From an environmental point of view, most EVs are at best questionable. The data that says there's slam dunk successes assumes that you're building the EVs with a relatively clean energy mix and then recharging it with 100% green energy. And that happens exactly nowhere. In the United States, the cleanest state is California. They are still 50% fossil fuel energy. And they lie about their statistics because they say they don't know what the mix is

for the power that they're importing from the rest of the country, which is something like a third of their total demand. And the stuff that comes, say, from the Phoenix area in Arizona to the LA basin, which is something like 10 gigawatts a day, which is more than most small countries is 100% fossil fuel but California claims to not know. More importantly, on the fabrication side,

because there are so many more exotic materials and because energy processes to make those materials is so much more energy intensive, all of this work is done in China and in most places it's done with either soft coal or lignite. So you're talking about an order of magnitude more carbon generated just to make these things in the first place

compared to an ICE. And that means that these things don't break even on the carbon scale within a year. For most, you're talking about approaching 10 years or more, and that assumes you buy the Chinese data, which is... Right. Okay, so that's kind of number one. Number two is materials. These vehicles require an order of magnitude more stuff,

more copper, more molybdenum, more lithium, obviously, the graphite. And the energy content required to put those into process is where most of the energy cost comes from. but the more important thing is, is if we're going to convert the world's vehicle fleets to these things, there's just not enough of this stuff on the planet. I'm not saying that we can't build on time,

but that time is measured in decades. Humanity has never doubled the production of any industrial material at any time in history within a 10-year period if it was something we were using before. And supposedly we need, you know, 10 times as much nickel and all the rest. So the stuff just isn't there.

So even if this was an environmental panacea, which it's not, we would never be able to do it in a very short time frame. You're talking to a century plus most likely. Third, cost. Your typical EV, if you want to compare it to something that's an internal combustion, it really depends upon the model. The cheapest ones are going to still cost about 10,000 more than their equivalent. The more expensive ones can be upwards of 70,000. And so this is not a vehicle who's for most people. And that's before you consider little things like range anxiety, and I've rented an EV. It's real. There just aren't enough charging stations. So in order to build out the electrical system that we need in order to have a

nationwide EV program, we need to basically increase low-end the amount of electricity generation and throughput of our system by about half. Now, there's only been one year since the 1960s where the United States has ever increased the amount of electricity generated by more than 3%. And that was the year we came back from COVID, and so we didn't have to install any new infrastructure for that. We would have to generate the sort of build-out that we did back in the 50s when the country was electrifying for the first time. And that's going to require an order of magnitude more, almost two orders of magnitude. Well, let's call it 20 times more equipment when it comes to things like transformers and cables than we have done in 75 years. And if we started building

out the facilities necessary to build those things today, they will not be ready at scale within four years. And then you can begin the build out in four years and it'll still take another decade. So no, no, no. But finally, I mean, the EV manufacturers really don't pay any attention to any of this. The real issue is that sales are down. For these reasons and more, people just aren't interested in EVs at the current time. They're not as reliable. They don't have the range. People are a little nervous about the technology in general. And perhaps most importantly, if you've got a new style of EV that comes out. These are new technologies. Not a lot of people want to play today's prices for yesterday's EV. And so what we're seeing is cars building up on the lots, not internal

combustion cars, those lots are empty. But EVs are building up on the lots and people just aren't buying them without absolutely massive discounts. And the discounts are now to the point that the whole industry is no longer profitable even with the subsidies that came in from the inflation reduction Act. Ultimately, if people don't want them, these are not going to be sold. And so we have now converted 1% of the American vehicle fleet to EVs, and it looks like we may be very close to the peak. But for me, agreeing who can do math, this couldn't come soon enough. We have limited capital. We have limited resources. We have limited material inputs, and we have limited labor. And we really need to focus on the technologies of the green transition that work. And this isn't one of them.

Thank you.