The Biden administration’s Environmental Protection Agency (EPA) has revealed its ambition: to phase out gas-powered cars in favour of electric vehicles (EVs). Incredibly, this announcement comes as we are flooded with overwhelming evidence that EVs are a market loser.
Indeed, the artificial boom and then meltdown of the EV market is a modern industrial calamity. It was created by government, social media, wild disease frenzy, far-flung thinking, and the irrational chasing of utopia, followed by a rude awakening by facts and reality.
CEO Stephen Scherr of Hertz has been booted out due to a vast purchase of an EV fleet that consumers didn’t even want to rent. The company has now been forced to sell them at a deep discount in a market where consumers are not particularly interested.
Looking back, however, Scherr’s decision to bet everything on an EV boom was a disaster that was highly praised at the time. Only last year, the company bragged: “This morning, [Hertz] was recognised by The White House for our efforts to expand access to electric vehicles across the country. Demand for EV rentals is growing and we’re here to help our customers electrify their travels.”
Pleasing the Biden administration is not the same as pleasing consumers.
The demand turned south fast in a real-world test of drivers. But that’s not all. Hertz could not make their investment pay, no matter what they did.
The key issues with EVs are as follows:
The cost upfront is much higher.
Financing charges are higher.
They depreciate at a higher rate than internal combustion cars.
The insurance is more expensive, by at least 25 percent.
Repairs are much more expensive, if you can get them done at all, and they take longer.
Tyres are more expensive and don’t last as long because the car is so heavy.
Refuelling is not easy and missteps here can have nightmarish consequences.
They are more likely to catch fire.
Any motor vehicle accident that impacts the battery can lead to repairs higher than the value of the car, that is totaled with so much as a scratch.
To top it all over, there is no longer any financial advantage to the driver. It now costs slightly more to charge under many conditions than to refuel with gasoline.
The novelty of driving one for a day wears off after the first day. At first they seem like the greatest thing that ever happened, like an iPhone with wheels. That’s great but then the problems crop up and people start to realise that they are fine for urban commutes with home chargers and not much else.
They make truly terrible rentals. Obviously, under rental conditions, people have to use charging stations rather than a charger in the garage. That means spending part of your vacation figuring out where to find one.
Not all are superchargers, and if it is a regular charger, you are looking at an overnight wait. If you do find a station with fast chargers, you might have to wait in line. They might not work. You waste hours doing this. And you likely have to reroute your trip even to find a station without any certainty that you will get a spot with a functioning charger.
No one wants to do this. When you rent a car, all you want is a car that goes the distance. And typically car rentals are for going some distance else you would just take a taxi or a Lyft from the airport. You might need to drive several hours. And god forbid that this takes place in cold weather because that can reduce your mileage by half. Your whole trip will be ruined.
Why in the world would anyone want to rent one of these things rather than a gas-powered car? You might be better off with a horse and carriage.
Did Hertz think of any of this before they spent $250M on a fleet? Nope. They were just doing the fashionable thing.
Again, I’m not knocking some uses for EVs. If you think of them as enclosed and souped up golf carts, you get the idea. They can be wonderful for certain urban environments so long as you don’t overuse them and have to get them repaired. You also have to be in a financial position to afford the higher costs all around, from financing to insurance to repairs and tyres. And you have to be prepared to take a big loss on resale, if you can even manage to find a buyer.
There is money to be made in this market, as there is with any niche good or service. But that is covered with normal market conditions, not massive subsidies, mandates, and frenzies. The Hertz case proves it.
