by Kevin Killough
Since electric vehicles require far fewer parts to assemble and auto makers are losing money on the EVs they sell, the EPA standards could result in a “bloodbath” for the American auto worker.
At a rally in Ohio Saturday, former former President Donald Trump discussed trade policies he’d enact if elected and how they’d benefit American autoworkers. He also warned that a failure to elect him would be a “bloodbath” for the industry, which the legacy media widely reported out of context.
The Environmental Protection Agency released its final tailpipe emissions standards Wednesday, and while the EPA eased off the proposed standards for their initial rollout, they still end up in the same place as the proposed rule.
Automakers will still need to retool a lot of their lines for electric vehicles to meet the standards, and since electric vehicles require far fewer parts to assemble, the standards could result in a “bloodbath” for the American auto worker.
Slight adjustment
Rep. Tim Walberg, R-Mich., called the final rule a “slight adjustment” over the proposed rule, and said it will cost American jobs. “The finalization of this rule is devastating news for Michigan, the auto industry, and American families. After its initial proposal, less than a year ago, thousands in the auto industry have spoken in opposition to this rule because it is unattainable, unaffordable and unrealistic,” Walberg said in a statement.
The rule doesn’t mandate anyone buy an EV, but it does place limits on the total emissions from vehicles that automakers produce. The portion of their lines that need to be electric to meet the standards depends on the total emissions of their non-electric lines. If much of the fleet are low-emission hybrid vehicles, which combine aspects of gas-powered and electric motors, then the manufacturer will need fewer electric vehicles to meet the EPA’s demands.
If an automaker, such as Ford, for example, produces many gas-powered pickup trucks that American consumers love, it will have to produce a lot of EVs to satisfy the EPA, whether consumers buy them or not.
The EPA anticipates that for model years 2030 to 2032, automakers will have 30% to 56% of their new light-duty vehicle sales electric, which are light trucks and passenger cars. For medium-duty vehicles, the EPA estimates automakers will make 20% to 32% of their new vehicle sales electric.
Well before the EPA released its proposed tailpipe standards in April 2023, the UAW was eying the potential impacts of what was then a shift in consumer interests. A 2020 UAW report recognized the vehicles would result in less labor and displaced workers.
Not buying it
Consumer interest stalled over the past year, and unless it picks up the pace, the rate of voluntary, consumer-driven EV adoption will not keep pace with the Biden administration’s demands. The New York Times reports that EVs made up 7.6% of new car sales in 2023, up from 5.9% in 2020.
Reason Magazine's Jon Lancaster points out that, even with that increase, it won’t meet the Biden administration’s targets. S&P Global estimates that by 2030, only 25% of vehicles sold will be an EV.
The Biden administration’s mandates, however, place requirements on manufacturers, regardless of consumer interest. More than 4,000 dealerships in November organized a campaign to communicate to President Joe Biden that their lots were filling up with electric cars they couldn't sell. That list has by some accounts, swollen to 5,000 dealerships.
While the final rules go easier on manufacturers for the next eight years, the dealerships’ campaign website states they still require automakers to produce more cars than people are willing to buy.
“The regulations still would require an increase in sales of electric vehicles that is far beyond the consumer interest we are experiencing at our dealerships. Despite generous government, manufacturer and dealer incentives, our customers continue to bypass EVs over concerns about affordability, charging infrastructure, performance in cold weather, and resale value,” the website states.
"Sadly the regulation stubbornly hangs on to an EV mandate that is clearly disconnected from the realities of the marketplace and the voice of the customer," the auto dealers say.
Labor studies
Research has continued looking at the impacts of the mandates on automakers and their employees.
In November, the Congressional Research Service (CRS) examined how the growth of electric vehicles would factor into the United Auto Workers (UAW) negotiations, after the union went on strike against Ford, General Motors, and Stellantis the previous month.
Quoting Ford CEO Jim Farley, the CRS said that it requires 40% less labor to make an electric car.
In February 2019, the CRS did a deep dive into how electrification of transportation would disrupt the automotive supply chain. Whereas electric vehicles contain four main components, gas-powered cars contain ten.
“Workers who today manufacture parts for gasoline or diesel engines could be retrained to make parts for electric vehicle motors and the lithium-ion batteries that power them, although there may be significantly fewer such jobs than exist in automotive supply chains today,” the study concluded.
Other studies have predicted similar outcomes for the industry. Based on the original proposed EPA tailpipe standards, which estimated 66% of new car sales would be electric by 2032, the American First Policy Institute estimated in July 2023 that the EPA would eliminate 117,000 auto manufacturing jobs.
Company losses
While the nature of EV manufacturing will place downward pressure on auto workers jobs, the mandates could also impact the profitability of the companies. On Wednesday, the Boston Consulting Group released a report that found that across 12 automotive manufacturers, the average loss on each EV sold is $6,000.
“At some point, it will become untenable for [car makers] to lose money on every vehicle they sell,” the report notes.
Energy expert Robert Bryce calculated that Ford lost $64,731 on each EV it sold in 2023, based on the company’s earnings report.
Should these losses continue and expand to a larger portion of the manufacturers’ business as they expand their EV lines to meet EPA requirements, it could eventually impact their labor force.
Rep. Jim Banks, R-Ind., in a letter to the editor in The Wall Street Journal, said that EVs are vulnerable to cheap foreign imports, and he’s asking Commerce Secretary Gina Raimondo to implement tariffs to protect the American auto industry.
“It’s comforting to suppose that tax credits will preserve our auto industry, but reality tells a different story. Auto workers’ jobs and our nation’s security depend on policy makers confronting hard truths,” Banks wrote.
Despite these risks to the nation’s automotive workforce, the UAW expressed support for the EPA’s final rule. “By taking seriously the concerns of workers and communities, the EPA has created a more feasible emissions rule that protects workers building ICE vehicles,” the UAW said in a statement released by the EPA.
The union also said it rejects the belief that tackling what the union calls a “climate crisis” will result in a loss of union jobs.
It’s unlikely that automakers will be able to maintain profitability unless consumers begin to show enthusiasm for EVs, and EPA mandates can’t make that happen. If car buyers choose to leave the EVs rusting on the sales lots, it may result in a “bloodbath” for the entire industry.
Kevin Killough
Source: https://justthenews.com/politics-policy/energy/epas-final-ev-rule-may-set-stage-bloodbath-american-auto-worker
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