On April 26, 2023, Ashley Nunes testified before Congress about electric vehicles, saying that just because EVs “can lower emissions doesn’t mean that they necessarily will.” In this episode, Nunes, who in addition to his position with the Breakthrough Institute is also a researcher at Harvard Law School, explains why EV prices are rising, why EV makers haven’t demonstrated a “viable path to profitability,” and why the federal government’s lavish support and mandates for EVs are an “unworkable policy.” (Recorded May 2, 2023.)
Robert Bryce 0:05
Hi, everyone. Welcome to the power hungry Podcast. I’m Robert Bryce. On this podcast we talk about energy, power, innovation and politics. And I’m pleased to welcome Ashley Nunez. He is the director of federal policy, climate and energy at the breakthrough Institute. Ashley, welcome to the power hungry podcast.
Ashley Nunes 0:21
Thank you so much for having me. Now,
Robert Bryce 0:23
I didn’t warn you. I want some guests that didn’t warn you. Guests on this podcast introduce themselves. I’ve given your title at the breakthrough Institute. But imagine you’ve arrived somewhere you have a minute or so to introduce yourself. Please introduce yourself.
Ashley Nunes 0:36
I’m Ashley Nunez. I am the Director for federal policy, climate and energy at the breakthrough Institute, and also a researcher at Harvard Law School and economics lecturer in the Department of Economics at Harvard College.
Robert Bryce 0:51
And you’re so are you a you’re a lawyer? I’m just curious, you said you’re teaching at the law school. Are you a lawyer? You would tell them? Oh, no,
Ashley Nunes 0:59
I’m a researcher at the Law School. I teach in the economics department. Or I have at least for the past couple of years, mostly on climate economics. But my formal appointment at Harvard is the Law School.
Robert Bryce 1:12
Gotcha. Okay, so you, you then you live in Boston, but breakthroughs in Berkeley or Oakland now?
Ashley Nunes 1:18
Yeah, that’s right. Well, we have two offices now our central offices in Berkeley, California, and the second office, we just opened up a DC office. So I’m really based out of the DC office.
Robert Bryce 1:28
Gotcha. Okay. So you testified you’ve written a lot about electric vehicles. And that’s what I want to talk about today. And you testified before Congress on April 26. To a House committee, could you you make four points about emissions about cost about minerals? And and then about? What are the possible better ways forward? You know, giving a brief summary of what you said to Congress? Could you walk us through those different parts of what you discussed with? Or what your testimony to Congress? What what your key points were there?
Ashley Nunes 2:05
Sure, right. Well, I think you know, that the first point was that, you know, people often think of electric cars as being a means of lowering emissions. And much of our work has demonstrated that just because this technology, indeed any technology can deliver a benefit, doesn’t necessarily mean that it will. So that’s the first point. The second point, which I think is something that people often overlook in the public policy space, is the notion of price, and specifically what the upfront price is to consumers for purchasing an electric car. So historically, the idea has been that as technology gets better, and as you know, production, volume increases, prices drop. But that’s not what we are seeing in the market, at least, in fact, what we demonstrate is that inflation adjusted dollars, the price of electric cars is actually going up, not down. The third point we make, which I think is something that many Republicans have been quite concerned about is the shortage of critical minerals that are associated with building electric vehicle batteries. And even amongst Democrats, you know, I think there there is a concern, certainly that this is something that warrants attention. So if we think about, you know, critical minerals like lithium and cobalt, nickel and manganese, you know, there’s only so much of that we can find domestically. And what that does is it increases our reliance on foreign markets, of course, the most notable being China, which is responsible for processing the majority of these minerals. And the fourth point, you know, to me, at least is this notion of, of launching what I call a Sputnik race of sorts for a cheap electric car. Just that there’s so much focus on bringing electric cards to the market, without really understanding what the needs of American consumers actually are. I think what we need to do is we need to incentivize firms to come up with really novel ways of constructing the types of electric cars Americans are willing to buy.
Robert Bryce 4:09
Yeah, well, let’s walk through those. And maybe we’ll start with the emissions part of this because this is the part that I know, some researchers at Cal Berkeley have done this, I think the Haas Energy Center at Berkeley have done and made this point and you make it in your, in your testimony, you point out that for many households that own EVs, I’m just finding printed out your testimony here that, that in fact, EVs are often in many households, the second or even the third vehicle. So the assumption that they’re going to be driven a lot of miles doesn’t necessarily result or because they aren’t driven as much as expected. The emissions reductions aren’t what aren’t as large as expected or projected. Is that a fair summary of your how you’ve calculated this?
Ashley Nunes 4:56
Well, I think there are two separate issues here. You mentioned Haas, of course. So UC Berkeley has Lukas Davis, who does some amazing work on examining the economics of electric vehicles, as does Fiona Berlin at the University of Chicago, and David Rapson at the University of California, Irvine, excuse me, Davis, there are two separate issues that I think worn scrutiny when we think about the emissions profile of electric cars. The first is, what would you do in the absence of purchasing that car. So most people assume that in the absence of purchasing an electric car, you will go out and purchase a internal combustion engine or a gasoline powered car. And if that’s the comparison, then yeah, maybe there’s some emissions benefit to driving the Eevee. But we’ll get to that in just a second. However, if without the electric car, you would have either used public transit, right to make those trips, or you would have never made those trips at all, because this is what we refer to as induced demand, then you’re not better off driving the electric car, regardless of how clean that car is. Because public transit, right, um, those trips are gonna go regardless, the bus is still gonna run, you might as well, you know, lower your emissions footprint even lower by just riding the bus, right or not making those trips at all. So, you know, when we look at data for mature markets, like Norway, which we hear a lot about, you know, we generally see that electric cars serve as secondary or tertiary vehicles. This is very consistent with data that, you know, more analysis, excuse me that researchers like Lucas Davis, for example, at Berkeley have found. Now, assuming it’s the case, you do, in fact, drive an electric car. Because the emissions footprint of building the vehicle itself is usually about it tends to be well, it’s about eight tonnes versus about 13.8 tonnes, a factor of two effectively. And that mostly comes from the battery manufacturing.
Robert Bryce 7:05
I’m sorry to interrupt. I’m sorry to interrupt. You lost me on the eight tons 13. You’re comparing ICE and ICE vehicles versus EVs? What?
Ashley Nunes 7:15
Yeah, so usually it will, it will be about eight tonnes of co2, if I recall correctly, please forgive me, it’s usually about eight tonnes of co2 is typically what it would take in terms of the, the the emissions footprint to construct an internal combustion engine. Right. Okay. And then the emissions footprint for for constructing for manufacturing, an electric vehicle is about it’s close to about 14 tonnes. Assuming of course, you build a similarly sized vehicle that also has comparable range. And this is very important to understand, you need to compare two vehicles that have similar range. And the reason why is because if you you know, because producing the battery for an Eevee is so mineral intensive, you can dramatically lower the emissions footprint of the Eevee if you just use a smaller battery, right. And this is what we see, interestingly enough, in many analysis today, they’ll say, Oh, well, yeah, you know, manufacturing, and Evie has a higher, you know, emissions footprint, but it’s not that much higher. And of course, then you start digging through the details, and you realize they’ve used very small batteries, offering consumers the type of range that they would never never put up with at least the average American household.
Robert Bryce 8:35
Sure. And that’s the trend, isn’t it an EVs to try and pack in more range to give? Give the consumer less range anxiety? Right, that that’s one of at least that’s, you know, when I see advertised is, oh, look at our range of our vehicles, you know, 200 miles, 300 Miles right there. I don’t see very many vehicles advertised saying, Oh, our range is only 30 miles or something like that. range anxiety is a real concern for drivers. No,
Ashley Nunes 8:59
it certainly is. I mean, you know, I think the Department of Energy released some data a few months ago, in which they were looking at what the average range was of an internal combustion engine. That to an Eevee, right. If you were to go out and you were to buy an internal combustion engine powered vehicle today, you will typically get a range of upwards of about 405 miles, you go out and you try to buy an Eevee today, and on average, you will get a range of about 230 miles, right. It’s a pretty significant difference between the two. Sure. And, you know, for better or worse, so we as Americans have gotten used to the idea of having a vehicle that can in fact travel upwards of 400 miles, right. So
Robert Bryce 9:49
well, and that means that also means that if you’re having to stop to re recharge or refuel as it as the case may be, the shorter the range, the more time you have to spend charging right I saw this when I I drove to Oklahoma and back over the weekend, right. And I stopped and refueled. But there were but really the travel time is we as I put it, we think about our travel not in miles and how rather we think about it in time we have time, time budgets, not necessarily, we don’t really care how far something is, right, whether you care about how long it takes to get there. So that range is directly tied to the recharging, and then also that that need to sit and reef recharge Is that Is that a fair way to think about it?
Ashley Nunes 10:29
I think what you’re alluding to correctly, is what we call the opportunity cost of charging your battery. Uh huh. Okay, it’s okay. So today, if you go out and you try to top of your tank, it’ll take you, you know, at most, maybe five or 10 minutes, right, you pull off to the side, you stop at a gas station, you can, you know, gas up your tank in less than five or 10 minutes, and you’re on the road again, right, you think 400 miles, you don’t have that opportunity for an electric car, of course, because the time it takes to charge the vehicle is much, much longer. And when it takes much, much longer, of course, what that does is it increases the amount of time any trip is going to take, regardless of how convenient charging stations are. Right. So this is something this is something that people often don’t necessarily think about right is you know, is that if you know it, it may well be the case that you do in fact have access to easy charging, which most Americans don’t let’s be very clear about this, it may well be the case that you do have access to easy charging, but the time it takes to charge that vehicle to bring it up to an 80% charge or 90% Charge is the type of time that people simply don’t actually want to spend Sure.
Robert Bryce 11:45
Well, and I saw that, you know, there’s a big chain here in Texas and Bucky is right. You know, I like you say, you know, I got five or 10 minutes, I’m gonna fuel up, I’m gonna pee, I’m gonna buy some beef jerky. Are we back on the road? But let’s get back to the emissions because you made a key point in your testimony before the House Committee on April 26. You said that we estimate you and your colleagues that in many American households, EVS must remain in service for upwards of at least 10 years to deliver an emissions benefit. Compared to ice vehicles. There is little evidence that suggests this outcome is being realized today. I mean, you’re what you’re saying is that too, if if EVs are going to I’m going to read it back to you of EVs are going to make a significant reduction in emissions, you have to drive them a lot. And that’s one of the problems they’re not drinking being driven as much because they’re secondary or tertiary vehicles. Is that a fair summary?
Ashley Nunes 12:41
I think that we want to distinguish between how many miles and Evie travels versus how many years you have to hold on to the vehicle for Okay, fair enough. Right? Okay. So the more miles you travel, of course, the fewer years you have to hold on to that vehicle for for it to deliver what we would call its green lead, right. Okay, internal combustion engine. The problem is that any vehicle, any vehicle that is purchased as a secondary or tertiary vehicle will by default cover fewer miles than the primary car. Gotcha. Because typically, when you you know, if you have a wife and you have kids, etc, and you decide to get a second car, that second car is usually covering a small fraction of the overall number of miles in a household. Right? Right. It might just be so the kids can go to soccer practice while your partner is going to get groceries, etc, etc, etc. Sure. And what that means usually is that if we look at data, for example, from the Department of Transportation, it’s a pretty consistent trend. You know, I think the primary car will usually cover about 10,000 or 11,000 miles, the secondary car will cover about 6000 miles a tertiary car will cover about 3000 miles. So just keeps going down. For every single additional car you have. And where the Eevee is concerned. The fewer miles you travel in that vehicle, the longer in yours you have to hold on to that car for right. So this is the study you are alluding to is a study we had done last year with my colleague Philip Rosetti at the R street Institute. And Lukas Woodley at Harvard, in which we found that yes, there are certainly instances where an Eevee has to stay on the road for upwards of 10 years, before we begin to see an emissions benefit for driving the vehicle. And what I often tell people is, I don’t know too many people driving a 10 year old electric car to you.
Robert Bryce 14:37
Right? Well, and then you start to run into the degradation of the battery as well, which is another kind of unknown at this point. I you know, I don’t know what those lives of those batteries are in the recycling thing is a whole other set a set of issues. But let’s talk about cost, because this is one of the things that I’ve written a lot about, and it’s one of the things that I’d say, you know, EVs are not these are not Volkswagens. These are not good cars for the man says the average as I recall, the average household income for an Eevee buyer is between 120 $140,000. That’s 2x. The national average. And you point this out in your in your in your congressional testimony, you said EVs, your first line on it talking about cost barriers, you said EVs are expensive average price of a new Evie was at least $20,000 More than a similarly sized Ice Vehicle. Why is it? Well, I want to ask about that cost issue. But I look at a lot of the climate issues in class terms. And this is very much a class issue I think about who can buy who can afford EVs and the charging stations, which the cost of which are largely being socialized? Do you think about it in class terms? Or why isn’t this issue of affordability getting more play when the Biden administration is making such a big push for electric vehicles?
Ashley Nunes 15:54
Well, I don’t you know, I don’t want to speak for the administration. Of course. I think, in fact, I think there was a funny excerpt during the hearing where I was asked why the Biden administration doesn’t look at alternative technologies like hybrids, for example. And I said, I think I said something to the effect of Well, I’m not authorized to speak for the administration. You know, I think there are two separate issues here. It is certainly true that if you look at data from you know, for example, the Congressional Research Service, what they will generally find is that most people who are buying EVs today are in fact, middle to upper income Americans. There are two reasons for why that’s the case. The first, of course, certainly is because of the price of these cars. The second is because historically, the tax benefits that the government would afford to an individual, for purchasing an electric car was structured as credits, not refunds. And when you structure a government program, or a government benefit as a credit and not a refund, it will by consequence benefit upper income Americans, right, because they are the only households that have sufficient tax liability to offset, you know, you know, they’re, or rather they have sufficient tax liability, excuse me to claim those types of credits. When you make those credits available as refunds, which is something that IRA effectively does, by you know, sort of converting a credit into a refund at the point of sale at the dealership, you should see a change in the types of households that actually go out now and buy electric cars. My suspicion is that that will be very difficult still, because as we have pointed out, the price of these cars is still relatively high. Right. I think in the testimony, as you point out, you know, we were saying it was at least a $20,000 difference. In fact, our actual estimate is that the average price of an electric car in, you know, in 20, in 2022, was upwards of $70,000. You know, so I’m sorry, I
Robert Bryce 17:59
want to I want to, I want you to follow up on that. Because I’ve seen various numbers, right? I’ve seen as low as 55,000 years is some some 66 year saying it was upwards of 70,000. And how did you get to that number?
Ashley Nunes 18:12
Well, what we do is we take every electric car that’s sold on the market, right? And then what we do is we just say, Okay, what’s the median price? What is the average price? I know, I sympathize with your with your position, which is that and we know we found similar numbers. And the reason why they arrive at those numbers very often is they will either use a sales weighted average. So they look to see how many cars are selling, right. So if you have more cheaper electric cars that are selling, it pulls the sales weighted average down, right? Alternatively, what they will do, in some instances is they will either exclude certain vehicles, or when they compute the average for those cars, the average price, they will only look at a given month. And that’s what what ends up happening is you sort of you end up with numbers that are just all over the place. Right. So what we felt as though, you know, was that, you know, suggesting that the average price of an electric car was at least $20,000 Higher insulated us from claims that, you know, we were exaggerating what the true price differential actually was, at least the upfront price differential.
Robert Bryce 19:17
Well, if it’s 70 grand, I mean, this has been in beamer territory, right? This is not this is not the Chevy Impala or something like that. So again, it goes to these who’s going to be able to afford that it’s the upper income Americans, not the average average motorist, is that fair? Well, that’s
Ashley Nunes 19:35
fair. I mean, look, the top selling electric car from 2022 was the model Y. The model Y starts at I think it’s upwards of $65,000. It’s hard to imagine that, you know, someone walks into a showroom and purchases a model Y at $65,000 Without any add ons. Right? I think it’s I think it’s less likely than not, to the extent that that is true. Drew immediately, even without tax, etc, you have a price upwards of $70,000.70 $1,000 is more right or as close to the median family income in the United States, right? People can’t afford these cars. And I think this is a, this is a real problem that the board this administration and previous administrations have failed to consider. Because, again, if you look at what’s happening with pricing, in the auto market, prices are going up, right. In fact, the price of everything is going up in any market, right? The question isn’t our prices going up? It’s our prices going up at a rate that outpaces inflation, which is worrying in and of itself. But it’s also whether these price increases are outpacing price increases, increases, excuse me, that we see for internal combustion engines, right? And that is exactly what is happening. So you can offer someone all the tax credits or tax rebates you want. You know, I think I argued this in a Chicago Tribune piece a few months ago, you know, when you offer $7,500, off to someone for purchasing a $75,000 car or an $80,000 car, and that household makes $60,000. They don’t care what the size of the credit is, they’re not going to buy the car regardless.
Robert Bryce 21:28
So I just want to repeat what you said, if you don’t mind. I’m going to make sure I get it right. Yeah. So you what you’re saying is what you have seen what you are, your numbers are showing the inflation rate for EVs is fast is greater than the inflation rate for ice V’s or internal combustion engine vehicles.
Ashley Nunes 21:45
The inflation adjusted price for EVs is rising faster than the inflation adjusted price that we see for internal combustion engines.
Robert Bryce 21:55
Right? So isn’t it also I mean, so you’re talking about cost here. So we’re talking about the idea of adoption, right of EVs. One of the other trends, macro trends in the auto sector, as well as that Americans are keeping their vehicles longer. I mean, I’m evidence of that I just put a new vehicle a new crate engine in my 2005 Ford runner, right, I, you know, spent $13,000 on a new engine rather than 40 or $50,000. On a used vehicle that would be comparable or 60,000. For a new one, right. But just the average age of vehicles on American roads is increasing, as well as if it were 12 or 13 years average for the age of the average car on the American roadways. Is that the case?
Ashley Nunes 22:36
That is a fair assessment. I think, you know, Department of Transportation data consistently shows a steady uptick in how old I think what you’re alluding to is what the ages of the national vehicle stock, right? The average age of a vehicle on our roads today. Yes, it’s going up. There’s a question as to why it’s going up. I think many economists would argue that part of the reason why certainly is that the price of cars is going up, right? And if the price of cars goes up, you’re more inclined to drive the vehicle you currently own.
Robert Bryce 23:05
Right? So the inflation, the cost inflation across the economy, right. And people when people dispose people’s disposable income, they’re less inclined to buy a new car because new cars are expensive. So they’re going to keep the old one longer.
Ashley Nunes 23:19
That’s certainly one reason I think for while we see that it doesn’t necessarily help that interest rates are relatively high. And, you know, as you know, you know, purchasing a vehicle is the second most cash intense, I think endeavor that most households will engage in. And because of that, the the, I think the case for buying a new vehicle versus holding on to the vehicle you currently own is quite strong. Right?
Robert Bryce 23:46
Why did Chevrolet just announced GM just announced that killing the Chevy Bolt, this was one of the Chevy. That’s right, the Chevy Bolt. This was one of the inexpensive EVs. Can you comment on that? You know why they’re killing that vehicle? That was one of the ones that was the kind of their flagship in terms of EVs and one of the lower cost EVs on the road? Can you talk about?
Ashley Nunes 24:10
Well, they like money as to why, and when I see an asset that doesn’t make money, I question what the purpose of the asset actually is. I mean, look, you know, the, when they kill the ball, this actually occurred the night before we, you know, my colleagues and I testified before the House of Representatives. And when we came in that morning, we had a, you know, a very productive conversation with members across the aisle, you know, who had the exact same question what’s going on? And what’s going on is that EVs are a venture that are yet to, you know, to demonstrate a viable path to profitability. Right. It’s very cash intensive. The margins are very, very slim, unless you are selling very high end vehicles and and currently all, you know, you know, all indicators show that the place where you can make money is by marketing vehicles to high income Americans not to middle and low income Americans. And when those are the economics that you are confronted with, why would you have a vehicle on the market that sells for, you know, 26 or $27,000?
Robert Bryce 25:23
Those aren’t they want to sell Escalades? Not, not? You know what, Chevy Vegas, I’m pulling? Again, the wayback time machine.
Ashley Nunes 25:35
But you know, look, a low margin, enterprise can work and can deliver very, very large returns in aggregate, if it scales, right. So you can make one cent on every single car that you sell. But if you can sell billions of cars, sure, you’re making a ton of money, right? The problem is, they’re they’re not selling billions of cars. They’re not selling millions of those cars, not even, you know, hundreds of 1000s of those cars, those are cars that they’re selling in the 1000s. The economic model simply doesn’t make sense for that vehicle profile, at least currently.
Robert Bryce 26:14
Right? Well, that’s an interesting point that you make, and I did a short video on this. But if it was Ford Motor Company, you know whether they lose more than a billion dollars on their Evie business, they were losing my calculation $34,000 On every Eevee they made last year you you don’t make that it’ll make up for that in volume. Right. So that is, is Tesla actually making money? Because you said there the EVs are a venture yet to demonstrate a viable path to profitability is Tesla the only company that is actually making money?
Ashley Nunes 26:45
Well, you know, one of the one of the auto analysts I certainly respect as Colin Langdon, and he’s a Tesla analyst at Wells Fargo. And, you know, if you look at his investor notes, he’s, he and his colleagues are very upfront about even companies like Tesla, and how challenging the path to profitability actually looks for these companies. I think there’s a question as to what that path looks like, and where the margins actually are. Right? So Tesla, for example, doesn’t really spend a lot of money in the way of advertising, as you know, because it’s its head is a is a is a very eccentric individual. So you know, there are some cost savings there there are some cost savings to be realized, for example, through economies of scale, etc, etc, etc. Can there be a path to profitability? Sure, there can. The question is, Who are you trying to sell that product to, because if you are trying to sell that product to high income individuals, the path to profitability is much, much easier, right? The minute you try to get, you know, penetration in the middle and low income segment of the distribution, it becomes much, much more challenging.
Robert Bryce 27:58
Because the margin, the margin per unit is lower.
Ashley Nunes 28:03
I think it’s more accurate to say, because the willingness and the ability to pay for these for this particular demographic for the average American, etc, is lower. And by virtue of the willingness to pay being lower, your margin shrinks considerably. If that’s the market, you want to to, to penetrate.
Robert Bryce 28:23
I see. Okay, so then we’ll let me read that back to you. If you’re going to try and hit that market, they you, they may have to spend more, they may not have the money to spend more, they’re not going to be able to buy a premium vehicle that would be more profitable to the maker or the automaker, is that, is that what I’m hearing you say? Or is it?
Ashley Nunes 28:42
Well, you know, let’s imagine, for example, that you have a $60,000 car, right, let’s let’s assume just for a second that the manufacturing costs all in a $60,000. And you want to make $10,000 in profit, right? So that puts the sticker price up to $70,000. A high income household presumably has no problem with paying that right. So you get the totality of the aggregate margin that you’re looking for $10,000. Now, if you have a car that you are trying to sell to middle income Americans, and let’s assume that the manufacturing cost is $30,000, you still want your $10,000. Right? You tack that on you now you’re now at $40,000. But guess what many American households don’t want to pay $40,000 You know that your manufacturing costs, the cost you have to recover, to run a viable enterprise is at least 30,000. So the only way you can lower your price is by dipping into your own margin, right? You have to lower how much you are willing to accept. And this gets to a very classic supply and demand right? It’s, you know, what is the equilibrium price as we say in economics, but it’s really the the maximum price that consumers are willing to pay for that product balanced against the minimum price in this case the automaker, Are you willing to accept? Gotcha. Let me
Robert Bryce 30:04
stop for a second, I want to talk about minerals and metals and magnets here in just a second. But the one of the questions I wrote down is, why is there such an aura around EVs? Right? There’s a halo around them. And I’ve written about electric vehicles. This is not a new technology. Edison, you know, drove an electric vehicle is more than 100 years ago, we’ve heard the promises. And I can cite you, you know, quotes from the Los Angeles Times for 120 years ago, talking about the potential value of the Evie, why today, is there such an aura around them? Why are the policymakers so enamored with EVs?
Ashley Nunes 30:44
Well, you know, again, I cannot speak to speak for what, you know, what policymakers actually think and why that’s the case. You know, my my, my sense is that this is a technology that offers a means of emissions reductions at a time that we need those reductions more than ever. Right. However, just because we need those reductions doesn’t necessarily make this technology, the best way of going about that. I think that when you’ve invested a significant amount of public funds in a solution, or a potential solution, it’s very, very difficult to walk it back. Right. So if we look at electric vehicle subsidies in the United States, just as an example, I mean, these subsidies laid back I mean, this, you know, predates the Biden administration, the Trump administration, the Obama administration, you know, I think the first real subsidies that we see for electric cars go back to the second Bush administration 2006 2007. And back then they were actually subsidizing hybrid electric vehicles as well. So you know, these are long standing subsidies. It’s a policy that the government bought into for, you know, over many, many years. And we’ve seen similar policies in countries like Norway, which we often hear quite a lot about, right. And Norway, I think, you know, the parliament in Norway first adopted electric vehicle subsidies as a policy in 1990. The first policies actually went into effect in 1992. So, you know, the, there is a bit of momentum, I think, currently to do something about climate change. And if you can just tell people, hey, look, we’re all in for this technology that can deliver emissions reductions. The hope, I guess, in some ways is that no one will actually take the time to look under the hood to figure out if the policy is actually working.
Robert Bryce 32:36
And that’s what you’re doing?
Ashley Nunes 32:38
Well, I think it’s something that many people are doing, there are some very gifted and talented researchers who are trying to understand this not because we don’t believe in electric cars. You know, let me be very clear, I don’t have a position on electric cars one way or the other. I don’t drive a car. I use public transit. Okay.
Robert Bryce 32:56
But I do have a driver, do you have a driver’s license?
Ashley Nunes 33:00
I do. I used to drive. And I give up driving about 12 years ago. So
Robert Bryce 33:05
really, so you’d never use or you don’t you haven’t owned a vehicle for a dozen years?
Ashley Nunes 33:09
That’s correct. I sold my I sold my I had a Mercedes initially, I sold it in 2011, I believe 2012. And so you
Robert Bryce 33:18
Uber, or you take the bus or you take the bus and
Ashley Nunes 33:21
I walk I Uber if, if it’s or take a taxi if it’s absolutely necessary. But if
Robert Bryce 33:28
you want to go to the beach, if you live in the DC area, and you want to go to the barrier islands in North Carolina, how do you get there?
Ashley Nunes 33:37
I haven’t been to the beach at the beach. If you think about that. Yeah, no, I mean, listen, the single largest predictor of economic mobility for households today is auto ownership. This is a well documented phenomenon, that if you give people access to a car, they are able to increase their wages, which increases their standard of living, whether we like it or not, you know, people need to own cars, at least when it comes to moving up the economic ladder. Right. The question is, how do we do that in a way that does not also penalize us? Because of climate related, you know, externalities. And and this is where good people can disagree. You know, like, the one thing I can honestly tell you is having worked in this space for a while. Everybody thinks they have the right answer. Right. Everybody thinks their model is the best model, that what they’re saying is absolutely true. All I can tell you is our assessment of the electric vehicle market is based on what we currently see. It’s based on our inland these are you know, these are numbers that don’t really lie. You know, you can walk into a Tesla showroom today, you can figure out what is the the cost of a model Y, you can look at what the cost was of a model by last year the year before that the year before that. You can adjust it for inflation and say okay, what’s happening with prices? Right? What I cannot say is what prices will look like next year. are well the year after that?
Robert Bryce 35:01
Sure. Well, that brings us to the other part that you talked about in your congressional testimony. And by the way, my guest again, as Ashley Nunez is the director of federal policy, climate and energy at the breakthrough Institute, you can find his work at the breakthrough.org on the web, the breakthrough.org. You critical minerals, minerals, minerals, metals, and magnets, this is the other these are the key inputs. And as everyone well knows, I think the material inputs for EVs are far higher than those for internal combustion engines. And I live in Austin, Texas, and I flew over the new Tesla factory here the other day when I was flying out of town. And I when I think when I fly over that, and I’ve driven past it as well, I think that is a massive structure one, and it is just an incredibly big building. But I look at it as an as a very long bet on a few commodities, including lithium, cobalt, and battery, you know, the things that go into batteries, you know, those other commodities, is that ultimately what the Evie business is about the bet on that these commodities are going to remain relatively low cost for a long time. And in particular, lithium and the other components that go into lithium ion batteries.
Ashley Nunes 36:20
I think it’s difficult to say whether they are whether whether many of these companies are betting on the current pricing structure, because if they were they would be losing that bet, right? If you look at if you look at the commodities market, if we look at mineral prices, for example, there is a significant amount of volatility in the commodities market, right. But what we can say is that over the past 10 or 15 years, my colleague Lorena Hayward, MIT has done some great work on this. You know, if you look at mineral prices, in general, the prices are ticking upwards, even after you adjust for inflation, right. So again, this is one of the reasons that we suspect why electric vehicle prices are going up might is because the the inputs are just quite expensive, and they are not getting any cheaper. There certainly is some work that’s currently going on on trying to come up with new types of technologies, you know, battery, you know, sodium ion batteries, for example, or lithium ion phosphate batteries. But the viability of many of these technologies is unclear at best. Currently. Even if you could get these technologies to be a viable enterprise, or at least to work, that doesn’t necessarily mean they are the most cost effective solution for emissions reductions. And I think this is where I disagree with some of my colleagues who work in this space, who are you know, sort of very big Evie proponents, they’ll say, Well, you’re talking about these cases where the Evie isn’t necessarily the best means of lowering emissions. But as long as it lowers emissions, that’s all that matters. It might be that, you know, all that matters if you didn’t have a small problem. And that problem is the government only has so much money, right? So you need to invest that money on a program that maximizes emissions reductions per dollar spent. And if we look at the way the program currently works, it’s simply not doing that.
Robert Bryce 38:17
Well, that’s, well, that’s a hard Well, it’s not a hard assessment. It’s a very clear assessment. If I read it back to you this way. Let me see if you agree, what you’re saying is that the government is spending a lot of money on EVs, and it’s not getting much bang for its buck in terms of co2 emission reduction. Is that Is that a fair read back?
Ashley Nunes 38:38
It is, you know, I mean, Chris Liddell is a, he’s an economist at the Sloan School at MIT, you know, some of his work has shown that I think it’s upwards of, you know, I think it’s upwards of 60% of people would have bought the Eevee regardless of whether or not you offered them a subsidy. So why are we offering them a subsidy? Is that really the best way we can spend our public funds when it comes to lowering emissions? And I think this is, you know, again, this is a, this is a difficult problem. And let’s be you know, upfront and, you know, generous to the people who disagree with us, they are not happy about this any more than we are. Right. But again, when a policy does not work, or at least does not work in the way in which it was intended, it is important for people to be upfront about it and change course appropriately. And unfortunately, unfortunately, in today’s political dialogue, dialogue, at least I think that’s often seen as a sign of weakness, unfortunately.
Robert Bryce 39:38
When you say that about me reminds me of something Sam Harris says about belief and he was talking about religious belief but these are there certain amount of sunk costs, right that when people invest in this one radiology for so long, they’re very reluctant to give it up. Is that what we’re seeing here? There’s political sunk costs and EVS and to course correct and say, well, we didn’t mean it or we didn’t. We made a mistake. It would be then to admit they were wrong. And that’s one of the reasons why we’re seeing. Even the Secretary Secretary Granholm, saying the US DoD should electrify their vehicles. Is that is that evidence of this kind of sunk cost mentality?
Ashley Nunes 40:14
I think there is there is certainly a fair amount of sunk cost mentality, I want to be very clear, there actually are a number of instances where it does in fact, make sense to electrify vehicles. So, you know, for electrifying school buses, for example, I’m a proponent of that, I think it’s a great idea of electrifying the taxi fleet. I think that’s a great idea. You know, taxis typically put on far more miles sure that, you know, conventional autos that you and I drive, and, you know, they’re and
Robert Bryce 40:41
they’re returning back to a car barn or at the same location, so, so that infrastructure is going to be in place, and they’re going to go back to that same spot for refueling recharging. Absolutely.
Ashley Nunes 40:51
And then the third area where it makes sense to electrify, you know, you know, to me at least is the trucking industry that, again, covers very, very long miles. And very often remember, these are vehicles that need to be parked, right to conform to conform to the rest requirements for truck drivers. So they are in fact instances where it does make sense to electrify the given transportation medium. But that hardly means we should electrify every single thing on the road today, right as a pathway towards emissions reductions, particularly and this goes to your point earlier, particularly when you don’t have a plan to source the raw materials required for these vehicles in a manner that is ethical, or that also conforms I think, to many of the human rights concerns that have been raised over some of these technologies.
Robert Bryce 41:40
Well, so let’s talk about that for a minute. You don’t mention cobalt, or at least I’m not seeing it in your congressional testimony. And you didn’t mention that you and Ted Nordhaus who’s the director of the breakthrough Institute had a piece in The Wall Street Journal on April 13. But Cobalt is a key component in these batteries, right? That gives them higher energy density better, a better power performance. LFP lithium phosphate are lithium iron phosphate batteries are good, but they don’t have that same punch. Right? They don’t have as much energy density. Yes. Cobalt is a very problematic metal, is it not? And can you talk about that a little bit?
Ashley Nunes 42:21
Well, the bulk of cobalt, of course, comes from the Democratic Republic of the Congo, where there was a fair bit of, you know, artisanal mining, I think is the is the phrase that’s used effectively, it’s, it’s child labor at its worst. These are, this is a country that has some of the worst atrocities when it comes to the exploitation of children, etc. You know, also that I think we can, you know, drive around in our electric cars and feel good about ourselves. Let me be very clear, that doesn’t necessarily mean that I agree with the the working conditions that surround the sourcing of fossil fuels, right? I think that very often people say oh, look at how bad it is to source cobalt. And because of that we should keep fossil fuels. That’s not what I think. However, I do think that there are some supply chain considerations, where Evie batteries in particular are concerned that need to be addressed. Now, in recent years, we have seen automakers for example, try to address this by reducing our dependence on cobalt, and increasing the amount of nickel that we have in batteries. So historically, you know, you effectively add what we call an NMC, 111, right? Equal parts, you know, equal parts lithium equal, or equal parts, nickel equal parts, manganese, equal parts cobalt, and over time, we have changed those chemistry, chemistry is to NMC, 532 and MC 811, etc, were effectively the the amount, the absolute amount of manganese and cobalt in the battery is going down significantly, and the amount of nickel is going up. And of course, we get a lot of our nickel from Indonesia, which generally poses fewer problems. But we still require for better or worse cobalt and manganese. And if you look at the administration’s, you know, targets to electrify, as you as I’m sure you’re aware, the EPA just released its new tailpipe standard two weeks ago, it is it is a de facto mandate to electrify up to 67% of the fleet. If you look at the congressional testimony, I think on the second to last page, we have an outline that shows whether or not we can sell or we can source a sufficient amount of critical minerals to meet that electrification target. And the answer is no. At least from you know, the United States and from our allies. So where are you finding all that? You know, all the cobalt and all that manganese and all that lithium?
Robert Bryce 44:48
Right. I’m looking at it here. This is on page 10 of your congressional testimony which I just simply Googled Ashley Nunez and congressional testimony and it came up your sheet you’re showing the thought 1000s of metric tons particularly of copper, which would be required to meet these, these mandates, but you also go through graphite, lithium, manganese nickel phosphate, you don’t mention rare earth elements, which of course is part of this and what is included in the, in the, in the magnets in the vehicles, the neodymium iron boron magnets, but these are just staggering mining numbers. And again, mining is not a popular industry either. So, again, this just seems there several parts of this policy that don’t seem to be very well thought out. And it why is the mind, I know that the mining issue is getting more attention. But I still see a massive disconnect between what is in the physical world and what’s in the policy world. Do you think about it those in those terms, this kind of how the policymakers or not, then they are seemingly ignorant or want to ignore the physical constraints of the network that you’re you’ve, you’ve talked about this about the in your your section on the minerals that this is? This is the key constraint? How do you typify that? How do you think about it?
Ashley Nunes 46:08
Oh, well, I would I would certainly I certainly would not call policymakers ignorant. What I would say, what I would say is that the public likes white sugar, right? People want an easy solution that can be condensed in a few words that you can invariably, you know, gravitate towards, in an in a campaign during an election of some sort. Nobody wants to hear that the road to decarbonisation is not easy. It’s not pretty. And it’s going to require a lot of sacrifice from all of us. Technology certainly can help us alleviate some of the suffering, if you will, that is associated with it. But there is a price to be paid. And very often the people who pay the those, that particular price, at least tend to be middle and low income households. And I think the question then becomes how do you reconcile what you believe, you know, when it comes to decarbonisation against the externalities are the consequences, the negative consequences associated with such a policy? So for example, if you say we want people to buy electric cars, okay, some people can’t afford them. Well, guess what, we’re going to give everyone a subsidy. Well, the subsidies and nowhere or nearly enough to cover their costs. Oh, okay. And guess what the electric cars require all these minerals? Well, what are we going to do about that? And of course, as you know, permitting reform is currently a hot topic in Congress. What we need to do is you mean, we need to make it easier to mined for minerals? Well, we don’t want to do that, because that also destroys the environment. Okay, well, where are you going to find the minerals from? Well, we’ll just work with our allies. Well, guess what our allies have electrification needs of their own, right, they have their own goals for electrification. Australia isn’t just going to hand over all its lithium to us, just because we say so. There are other countries that are also after Australia’s lithium deposits, sure. And right, and what that’s going to create effectively is a bidding war in the free market. And if you believe in the tenants of a free market, right, so it’s gonna be a bidding war, that’s going to push commodity prices up. And when prices rise, of course, the price of the electric car is going to go up even more. So I don’t see what the pathway currently is towards selling lots of these vehicles. Meeting, you know, the the emissions targets that we actually have, and ensuring that the price point doesn’t effectively price out or bankrupt large numbers of Americans. I don’t know what that currently looks like. I don’t see what the pathway is.
Robert Bryce 48:54
Well, I agree with you. I mean, I see the same thing. I just don’t see how this massive turnover. You know, I took I put something on Twitter the other day, just that, you know, I passed a lot of electric vehicle charging stations between here and Tulsa. And there was not one of them was there was not one vehicle being charged at the at the stops where we stopped to refuel. And I thought, Well, where are we building all this stuff? Then who’s going to charge this? Who’s going to use this? But let’s talk about the automakers themselves. Because as I look at this, and GM has said we’re going all in on EVs. Is it possible that in a few years, GM is going to be on the precipice and that taxpayers will have to bail them out because of all this malinvestment in EVs at the expense of them building internal combustion engine vehicles that people actually want to buy.
Ashley Nunes 49:42
Well, I would be very cautious about suggesting the GM or indeed any automaker is going all in on TVs, if you look at the marketing language, and that this is very, very important that you need to look at the language that they use, what they will often say as well by 2030, or by 2035, we envision only selling electric cars, or we aspire to. We aspire to aspire to only sell electric cars, I aspire to do many things in my life, right? That doesn’t mean that I’m actually going to do it. Mercedes, arguably, I think, is one of the more interesting automakers, in large part, because I think, you know, they came out and they said, we’re only going to sell electric cars. And there was when they released their press release, there was a little asterix by it. And if you go all the way down to the bottom, it says, Only in markets where conditions are low. Right. So again, I think you have to be very, very cautious when you hear automakers say we’re going to go completely electric. Right, because invariably, they are there to make a profit and to provide the type of technology that consumers want to buy, not the type of technology that government wants consumers to buy.
Robert Bryce 51:04
So well, then let me interrupt because you made this point about that 67, the EPA mandates on tailpipes, said a de facto mandate to electrify 67% of the fleet. Two thirds? Well, let me let me so you know, testing you here actually are pushing you a little bit. We don’t go quick. If you’re if you’re gonna bet $100 That that, would you bet $100? If that is going to happen by by 2032? Is that right? The target date? What? What would our let me put it this way? What are the odds that that will actually happen?
Ashley Nunes 51:38
Um, well, I would say two things. The first is that that is less a, given what public policy currently looks like, I think on balance, it is less likely that that’s it is unlikely that’s going to happen. That’s the first thing I would say. Okay, more importantly, I think even if you hit that sales target, it’s irrelevant from the perspective of emissions reductions, because this particular target is only targeting the sale of electric cars, right. And remember that if what you care about is emissions reductions, it’s not about selling the electric car, it’s about getting someone to trade in their current gasoline powered vehicle for the electric car. And that’s not what we are seeing in the market. Last year, let’s just take 2022. In 2022, Norway’s have if we look at new vehicle sales, electric cars accounted for 80% of new vehicle sales in Norway last year, right, which is remarkable. It’s actually not that remarkable when you consider how much money the Norwegian government is throwing at subsidizing these cars. But we’ll put that off to the side for a second. So everyone keeps saying, Look at Norway, look at how much electric be how many electric cars they’re selling. What they won’t point you to is government data that shows that if you track the number of vehicles on Norway’s roads, over the last 40 years, which is at the same time, the government was pumping large volumes of money into electric cars, the number of vehicles on Norway’s roads is going up, which tells you that people are not replacing gasoline powered cars. They’re just going out and buying additional cars, which as we have demonstrated isn’t really a meaningful or the best way of lowering emissions. You’re paying people to just buy additional cars and keep them in their driveways. How is that a sustainable policy? Right. So if the Biden administration says, Hey, we want 67% Evie sales, I don’t think you’ll hit that. But even if you did, that hardly is a pathway to emissions reductions in every single household across America. You just have more and more cars in the driveway.
Robert Bryce 53:51
I hadn’t thought about it those ways. So we’ll read it back to you. So we’ve just be adding cars to the fleet, not necessarily decarbonizing.
Ashley Nunes 54:00
That’s a fair assessment. Yes.
Robert Bryce 54:04
was similar in some ways to the growth of solar and wind, right? It’s not necessarily that we’re reducing a whole lot of hydrocarbon consumption. We’re just adding more electric to what’s what the existing fleet is already doing.
Ashley Nunes 54:17
Absolutely. And to me, this is an unworkable policy. I just don’t, you know, I don’t understand why there’s this emphasis on sales versus an emphasis on looking at the replacement of internal combustion engines, right? That’s what we really care about, you know, something like a Cash for Clunkers program or something to that effect, right, where we take all these more polluting cars off the roads in their entirety. We don’t just keep them on the road and also add an electric car.
Robert Bryce 54:44
Right? But that is, in fact what’s happening and so that these EVs are becoming the secondary or you point out the tertiary tertiary vehicles. So let’s look at the last part of your testimony. And it’s one that I think jives with, or matches what I heard some Toyota executives talking about Just a few months ago in Dallas, what I want to read back or paraphrase what I hear what I think you’re saying here, the better investment in terms of decarbonisation for a transportation would be in hybrids, not in full electric vehicles. Is that a fair way to read back? What your, your outlook on this?
Ashley Nunes 55:19
I think it depends on from whose perspective you’re, you’re looking at this. Okay. However, generally, if you look both for automakers and for consumers, yes, hybrids are a cost effective means of emissions reduction, or, arguably, to me at least the most cost effective means of emissions reductions. In fact, I guess you could, you know, you could, you could, one could make the case that they are a cost effective means of emissions reductions for the government as well, right, because you don’t have to worry as much about spending all these billions and billions of dollars on charging infrastructure, etc.
Robert Bryce 55:58
Well, I’ll read back what you said. That’s an interesting point, because it’s not just in the vehicles themselves or the rebates, but it’s you don’t have to build the recharging might take his benefit comes with a plug. I don’t want it I don’t know what to do with the plug. But you said breakthrough was work finds ATVs hybrid electric vehicles or a more climate friendly alternative to an Eevee. If the Evie covers less than approximately 96,000 miles across its lifetime, and an ATV covers 180,000 miles. And you said because ATVs cost less. The magnitude of Evie cost penalties relative penalties relative to their emission reductions, benefits makes ATVs and more promising near term emission reduction pathway. It’s interesting thing about the emissions part of the presentation I heard the Toyota guys making was saying if you look at the minerals required, or better to use those minerals in hybrids, because you get a more reduction over the life of all of those hybrids than you do over a fewer number of EVs, which I was a was an explanation I had not heard before, but that was quite interesting.
Ashley Nunes 56:58
Yeah, I mean, you know, if you look at representative Kathy Rogers, for example, from Washington State, you know, she, I think that was one of the points she was making during last week’s hearing, which is, and that’s exactly correct, you can just build, you can manufacture more batteries from the same volume of minerals, then you can, you know, for a hybrid than you can for an Eevee. Right, what effectively means is that you can just surface more vehicles. Now, the counter argument will be well, yeah, you can do that. However, you know, an Eevee is cleaner than an internal than a hybrid electric car. Yeah. Yes, it is. But that doesn’t necessarily make it the cost of the most cost effective solution. Right. I think this is really what we’re trying to get at what is the most cost effective means of emissions reduction. And, I mean, hybrids have a very strong value proposition. But particularly, and I can’t emphasize this enough, particularly for low income Americans, who often do not have a garage where they can charge their vehicle, right, you simply could not get sufficient charging infrastructure in place to give middle and low income Americans access to the same ease of charging that upper income Americans have not everyone has a driveway to, you know, to keep three or four cars.
Robert Bryce 58:18
Right. Yeah, I that’s a really good point. And one that I think, you know, goes back to the class issue, right, you know, you’re not, you know, I was in New Orleans last year, and I was speaking at an event and I walked around the area around the Superdome. And New Orleans is one of the poorest big cities in America. And you know, and the neighborhood around the Superdome is not fashionable. And there were no there were no Tesla’s in that neighborhood. There are no Tesla’s in the body awareness, you know, in the hood, they’re just not. And so, I think that those are key points. And it’s not just that they are unaffordable, they don’t have the charging infrastructure to make them work, even if they were affordable, which I think is a key. Another key point. My guest, again, is Ashley Nunes. He’s the director of federal policy, climate and energy at Breakthrough Institute. Two last questions. Ashley, we’ve been talking for about an hour. I like to ask every guest, what are you reading? What are the books that are on top of your book pile these days? Who do you dig? Who are the authors you’d like?
Ashley Nunes 59:10
Oh, what am I reading? Well, I read the financial claims a lot. That’s, you know, I’m actually rereading pale blue dot, you know, some of Carl Sagan ‘s work. I’m a big fan of Carl Sagan. And I’m also doing, I’m doing a little bit of reading from a little bit of fiction, reading, etc. You know, I mean, one of my favorite books that I often recommend to students, is the carbon footprint of everything. Hmm, okay. And, you know, I think it’s a healthy way for people to understand the Old Milton Friedman line, there is no free lunch. Right? There are often consequences to any action that we take. And I think where climate change particularly is concerned, you know, we are not necessarily heading in a good direction? And the answer isn’t necessarily what many politicians want to hear. You know? Again, you know, people can debate whether or not you can have your cake and eat it too. I tend to be a little bit more skeptical. I think there certainly are ways that technology can deliver remarkable solutions. But that doesn’t necessarily mean we should be in the tank for every solution that someone proposes
Robert Bryce 1:00:27
in the tank. I like, nice, nice play on the carbon footprint of everything who wrote that? That’s a book I have not heard
Ashley Nunes 1:00:35
of, oh, I looked it up. They’re very, they’re very specific sections of that, of that particular book that appealed to me. So
Robert Bryce 1:00:45
no problem. So last question, then actually, what would we’ve talked about a lot of things you said, you’ve talked about, and we’ve talked about unworkable policy and some of these issues and challenges in the policy realm. And you’ve worked in policy and economics for Well, what gives you hope?
Ashley Nunes 1:01:02
What gives me hope. It all like, you know, I think if we look at the history of human innovation, we’ve always, we’ve always found a way to, I think, to put our best foot forward and come up with with means of addressing some of the most pressing issues of our time. Certainly the the rollout of the COVID vaccine was one of them, right? We’re in a record amount of time, you know, we were, you know, people were able to bring that technology to market now. You know, let’s set off to the side, whether or not you know, how effective you think the technology was, etc. But I think generally speaking, people are quite good at coming up with novel solutions. But it also means that we have to be willing to cast off to the side the solutions that don’t work, regardless of how badly we want them to. And I think I don’t think electric cars is one of those solutions. I certainly don’t think it’s a solution that needs to be cast off to the side. I do think that it is a solution that has niche applications, when you consider the transportation sector as a whole. So yeah,
Robert Bryce 1:02:14
okay, good. Well, we’ll stop there, my guest has been Ashley Nunes, from the breakthrough Institute. You can find out more about him at the breakthrough.org Ashley, thanks for coming on the power hungry podcast. So it’s been been fun to talk about these issues, ones that I’ve been following for a while and appreciate your perspective and thoughts on it. Thanks for having me. And thanks to all you out there and all you folks out there in podcast land if you are so inclined, give us a five or 12 or 15 star rating on whatever writing platform you care to. And while you’re at it, follow me on substack Robert rice.substack.com Until next time, see you