The District of Columbia and some major cities are joining the states in the lawsuit.
In March, the Trump administration issued final rules requiring 1.5 percent annual increases in efficiency through 2026 — far weaker than the 5 percent increases in the discarded Obama-era rules — but abandoned its August 2018 proposal to freeze requirements at 2020 levels through 2026.
Last week, a trade group representing General Motors, Fiat Chrysler Automobiles, Toyota Motor Corp. and others sided with the Trump administration on its plan and opposed a legal challenge to further weaken the requirements. Other automakers, including Ford Motor Co., are not backing the administration plan.
California Attorney General Xavier Becerra said the revised requirements “will increase costs to consumers and allow the emission of dangerous pollutants that directly threaten the health of our communities.”
EDITOR’S NOTE: This article comes to us courtesy of EVANNEX, which makes and sells aftermarket Tesla accessories. The opinions expressed therein are not necessarily our own at InsideEVs, nor have we been paid by EVANNEX to publish these articles. We find the company’s perspective as an aftermarket supplier of Tesla accessories interesting and are willing to share its content free of charge. Enjoy!
Posted on EVANNEX on May 27, 2020 by Charles Morris
Amid the financial fallout from the COVID-19 pandemic, most of us have hardly had time to consider the effects of another economic H-bomb that went off around the same time: the collapse of oil prices. Tough economic times seem likely to dampen demand for EVs, which remain considerably more expensive than comparable legacy cars. Will low gas prices be the last nail?
Above: Tesla Model S parked at s Supercharger station directly across from a gas station (Image: Tesla Road Trip Europe)
That’s the question ABC News asked in a recent article, and a couple of experts from the traditional auto world leaned toward a yes.
“If someone was trying to engineer the downfall of the electric car movement, they did a good job,” Karl Brauer, Executive Publisher of Kelley Blue Book and Autotrader, told ABC. “Every single American is thinking about finances and what risks they are willing to take, and that’s a terribly negative impact for EV sales.”
According to data from Cox Automotive, the average price of a pure EV in 2019 was $41,959, compared to $38,671 for a legacy SUV, or $29,795 for a sedan. There’s no question that EVs are more expensive to buy up front, but what’s the specific impact of gas prices? Are EV buyers counting on savings on fuel costs to make up the difference?
Mark Wakefield, an auto industry analyst with consulting firm AlixPartners, thinks so. “Gasoline prices are mainly the reason people buy EVs,” he told ABC News.
With all due respect, EV industry insiders have always considered this to be a myth. Back in the 1990s, Tesla co-founder Martin Eberhard noticed stylish performance cars parked next to what he called “dork-mobiles” such as the Prius in the wealthy driveways of Palo Alto, and realized that many shared his conflicting loves of speed and the environment. At the time, gas was selling close to inflation-adjusted all-time lows, so it was clear that something else was going on.
Longtime EV journalist John Voelcker told ABC that, historically, hybrid sales have proven responsive to gas prices, but plug-in vehicle sales have not. EV demand has heretofore been low because there aren’t enough options in the form factors Americans want—SUVs and pickups. Voelcker believes EV sales will suffer along with the overall auto market, but “are not going to be hurt any more than vehicles that have combustion engines.”
Experts from different segments of the industry may see things differently, but simple math belies the “people buy EVs to save gas” argument. There’s only one automaker that has sold any really substantial numbers of EVs to date, and for better or for worse, its products aren’t for price-sensitive consumers. (Tesla sold 192,200 vehicles in the US in 2019, compared to second-place Chevrolet’s 16,418.) Is it really plausible that someone who can afford to pay $48,690 for a Model Y is going to reconsider their purchase based on whether gas costs $2.50 or $1.50 a gallon?
Above: As COVID-19 restrictions are eased over the coming weeks, it’s likely gas prices could rise (YouTube: CBS Los Angeles)
There doesn’t seem to be much support on Wall Street for the “cheap gas kills EVs” thesis—TSLA shares are currently trading near their pre-COVID highs, while the valuations of legacy automakers are struggling to recover.
Alex Kimani writes that Tesla is now facing “a triple whammy” of low gas prices, weaker federal fuel-economy standards and a drop in demand due to the health crisis. However, he notes that cheap gas has not done much to hurt Tesla’s value proposition. “It’s still considerably cheaper to operate a Tesla than your average gas-powered vehicle,” he writes.
Citing figures from AAA and SolarReviews, he calculates that the average cost per mile of driving a Tesla is around 40 percent that of an ICE vehicle, even with today’s low gas prices. “Gas prices would have to fall below $10 per barrel…before gas-powered vehicles [could] start challenging EVs’ low operating costs,” writes Kimani.
Furthermore, this is all beside the point. As Eberhard, Voelcker, Wall Street and common sense are all trying to tell us, people don’t buy EVs—at least not Teslas—to save money. Oilman Kimani gets it. “It’s quite remarkable that EVs have continued to gain market shares at a torrid pace over the past decade despite gas prices generally remaining low and the US federal gas tax remaining unchanged since the 1990s,” he writes.
A commenter on Kimani’s article may have put it even more eloquently: “Tesla owners have lower operating costs, but that’s not what they talk about. They talk about performance, the kick in the pants. Electric vehicle sales will grow regardless of oil prices.”
UK supercar maker and Formula 1 team McLaren plans to cut more than a quarter of its workforce after the coronavirus crisis hit sales and advertising revenue.
The firm employs about 4,000 people, and of the 1,200 to be made redundant, the vast majority will be in the UK.
Formula 1 racing has been suspended, while orders for McLaren’s supercars have fallen because of the pandemic.
McLaren said it had been “severely affected” by the crisis.
The company said it had worked hard to cut costs and avoid layoffs.
“But we now have no other choice but to reduce the size of our workforce,” McLaren chairman Paul Walsh said in a statement.
“This is undoubtedly a challenging time for our company, and particularly our people, but we plan to emerge as an efficient, sustainable business with a clear course for returning to growth.”
The carmaker, which builds vehicles for racetracks and the road, operates from a facility at Woking, Surrey, that was designed by the architect Norman Foster’s company. McLaren also has a composites technology centre in Sheffield.
McLaren’s Formula 1 operation expects to lose about 70 people from its 800-strong workforce.
However, there will be a second phase of redundancies in 2021 once the team has taken a recent sport-wide budget cap agreement into account.
While the coronavirus crisis has driven the redundancies across the whole group, the cost-cap has been the biggest influence on the racing team.
Many other teams – especially the big ones such as Mercedes, Ferrari and Red Bull – will also have to cut head count but there may be other ways of doing it for some, such as redeployment in the wider group for the big car companies.
SAN FRANCISCO/SEATTLE — Amazon.com Inc. is in talks to buy driverless vehicle startup Zoox Inc., according to people familiar with the matter, a deal that would accelerate the e-commerce giant’s automation efforts.
Other companies in the automotive and chip industries have also held talks with Zoox about a potential investment, the people said. At least one other business besides Amazon has offered to buy the company, they added. Zoox is unlikely to sell for less than the $1 billion that it has already raised, according to the people, who asked not to be identified discussing private negotiations.
“Zoox has been receiving interest in a strategic transaction from multiple parties and has been working with Qatalyst Partners to evaluate such interest,” the startup said. It declined to comment on Amazon’s interest. A spokeswoman for Amazon declined to comment.
Zoox had outsized ambition and financial backing. The startup wanted to build a fully driverless car by this year. However, after a 2018 funding round that valued Zoox at $3.2 billion, the startup’s board voted to oust CEO Tim Kentley-Klay. The executive criticized the move, saying the directors were “optimizing for a little money in hand at the expense of profound progress.”
Analysts have speculated that the company, now run by Aicha Evans, could attract interest from Amazon or Apple.
The Wall Street Journal reported that Amazon is in advanced talks to buy Zoox for less than the $3.2 billion valuation from 2018.
Amazon is willing to spend heavily to automate its e-commerce business. The online retail giant purchased warehouse robot-maker Kiva Systems Inc. in 2012 for $775 million and now has tens of thousands of robots in warehouses around the world.
Paying drivers to deliver packages is still one of the biggest costs in the company’s operation, though. CEO Jeff Bezos announced plans for drone delivery in 2013, though they have yet to materialize at scale. Last year, Amazon revealed an experimental delivery robot called Scout in the Seattle area that rolls on sidewalks like a shopping cart.
Buying Zoox could help Amazon “manage rising shipping costs that we project will exceed $60 billion by 2025,” Bloomberg Intelligence analysts Jitendra Waral and April Kim wrote in a research note on Tuesday.
When news broke that Tesla had announced the finalists for its next Gigafactory, which actually could be called a Terafactory based on the expected cell production output from the facility, comparisons between Austin, Texas, and Tulsa, Oklahoma was rampant across social media. Each location has its own distinct advantage and disadvantage, which I’ll explore.
I will start with Austin, Texas, because of the location’s notoriety as the “favorite” of the two locations. Also, it is fairly evident that Elon seems to think highly of the Lone Star State based on his Tweets about the state and also the presence of his SpaceX business there.
Texas has a lot of available lands, and it’s very cheap. Houses and businesses can get the same amount of land in Texas that they can in California, but at a significantly cheaper price. Tesla could save a lot of money on the purchase price of the land and it could be using Tulsa as leverage to get an even better deal on the Texas property.
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One of my favorite reasons for a Texas Factory is the fact that the state has long been the heart of oil and gas, and the world’s largest electric automaker in the same region. I find that to hysterical to me. I feel that Tesla establishing its largest and most dominant production facility in that area would be a big “middle finger” to the pollution-causing gas and oil drillers who, for a long time, have called Texas home.
Texas also has a hearty history of automotive manufacturing and is ranked fourth out of all fifty U.S. states in the sector. Also, Tesla could provide a stable economic boost to the State. While this also applies to Tulsa, Texas already has a strong presence in automotive manufacturing, which could ease regulations and transition time in the state.
Texas is also home to SpaceX’s Boca Chica Launch Facility. This statement solidifies Musk’s presence in the state and makes it an already familiar option for the CEO’s other company.
However, Tulsa has its own array of advantages, a lot of which are similar to Texas but in a slightly different way.
Tulsa also offers a sizeable amount of affordable land that Tesla could use for its next production facility. Although the company has roots in Texas and not in Tulsa, local authorities are ready to make a strong push for Tesla, knowing that the electric automaker could provide a substantial positive economic injection into the state’s employment rate.
Tulsa is also slightly more centralized than Austin, as it is closer to the geographical center of the country. While it may not provide much of an advantage as far as location goes, it is slightly more centralized than Austin is.
I also feel like Tulsa may want the factory a little bit more than Austin. I could be wrong here, because what city wouldn’t want a manufacturing plant that will provide 12,000+ with jobs and provide a positive economic impact? But Tulsa took a statue of an oil driller and put Tesla’s logo on it, and I feel like that is pretty special in itself considering the city’s rich roots in oil drilling. It is especially impressive that the local figures in Tulsa are willing to sit there and modify a very notable statue in the area to woo Tesla in their direction.
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Simply enough, it’s pretty obvious that Texas is the favored choice. At least it is for me. While Tulsa does have its advantages, it just doesn’t seem like it would provide enough benefits that make it a clear favorite over Texas. Elon has also mentioned Texas on numerous occasions like I previously mentioned, and really, economically, I think it provides more benefits to Tesla as a company.
What do you think?
I’d also like to add that there were plenty of great emails last week that I received after sending out the Fremont piece. Thanks for being sure to send me messages. I really appreciate the feedback and I love the fact that whether you agree or disagree, you’re telling me your thoughts. Thanks again!