GOP Push Weakens US EV Market: Bloomberg's Denning

Bloomberg

Watch GOP Push Weakens US EV Market: Bloomberg's Denning - Bloomberg on Dailymotion

Transcript

00:00So Liam, what exactly is in this House tax bill that you call maximalist assault on EV subsidies?

00:06Well, it really attacks it on two fronts. So if you think about it, the Inflation Reduction Act

00:11instituted two broad ways of encouraging EVs. One was a consumer tax credit. This is the

00:18up to $7,500 you get back from the government if you buy an EV. And the other were manufacturing

00:25credits, i.e., every battery you manufactured, every car you manufactured, the company would

00:32get a credit. And the new tax bill essentially takes away that consumer tax credit and it

00:38tightens restrictions on the manufacturing credits to the point where they kind of become

00:43unusable. And of course, it's a two-pronged assault because the other chamber, the Senate, is

00:48basically overturning the ban that California had on internal combustion engines. Can that

00:52be fought in the courts? Or is there any likelihood that that might be overturned in some way?

00:57Yeah, it's legalistic. It's legally problematic. The Senate parliamentarian basically ruled

01:03it a no-no, but the Republicans went ahead with it anyway. I mean, to be honest, that

01:07California waiver was problematic. The targets it had set, it didn't look like they were going

01:13to be met anyway. In some ways, I wonder if Governor Gavin Newsom of California kind of

01:18welcomes it because he can reframe that now as a fight with congressional Republicans.

01:24Well, and it's fascinating. Tesla is rising and has been, you know, for several weeks really

01:27now. And I guess some of that is on Elon Musk saying he's going to go back to the company

01:31and so on. But none of this is good for Tesla. Neither is the news out of China that BYD is

01:36going to be offering discounts on 22 of its models and the likes of Xiaomi and so on are getting

01:40into the space.

01:40No, I mean, the problem here is Tesla's core EV business is struggling. It's got a lot of

01:46competition. It doesn't really have a new model other than the Cybertruck, which has flopped.

01:51And the Republican moves kind of hit it in two ways. One is obviously it limits sales by taking

01:57away that tax credit. But by taking away the California waiver, Tesla relies on selling those

02:05credits that it generates through that system to other car companies. In fact, in its last

02:10quarter, that was the only way it earned a profit. And if you take away that, then there's

02:14less incentive for the Fords and the GMs of the world to buy those credits from Tesla and

02:19give it revenue that way.

02:20How much is there a political element to sales both here and in Europe? Elon Musk has said

02:25that what he's losing on the left, he's gaining on the right.

02:28I struggle to see that. I mean, clearly in the U.S., sales of EVs have skewed towards those

02:37blue states, urban centers, which tend to vote Democratic. And it's clear that the brand

02:42is suffering. Europe's the most extreme example. But we've also seen it in California, where

02:46Tesla sales have been coming down.

02:48Is there any case to be made that EV demand is just going away since we're not getting

02:54better battery infrastructure and there's lots of other problems? It's not just which

02:58car maker or what cars are bringing out.

03:00I mean, I think what you see is that globally, EVs are advancing, China being the obvious

03:06example where now EVs are regularly more than half of new sales. I think in the U.S., we have

03:11a couple of structural problems. We like to drive trucks. Those are hard to electrify. We

03:15tend to drive further. So people worry about range anxiety. But the fact is, other countries

03:21show that with the right policies in place and with a commitment to dealing with climate change,

03:27this can be done. The costs of the clean technology are coming down. It's just in the U.S., we struggle

03:32to put those frameworks in place. And now, obviously, we're talking about taking them away.

Category

Transcript

Be the first to comment

Recommended