At The Wall Street Journal, Holman W. Jenkins at the bizarre case of Tesla, the auto industry, and how politicians’ efforts to combat emissions have created an actual deterrent to EV startups. He writes:
Until the media starts doing its job, this slide toward policy idiocy will only accelerate. Such government interventions always tend to cartelize the industry they take aim at. That’s the drift here. Mandates that result in electric vehicles being dumped on the market are a deterrent to new EV entrants. Tesla wants to shelter behind these barriers too, though you would never get Mr. Musk to admit it.
Not that these arrangements are ever likely to prove stable. In Europe, the scheme already is unraveling as the previous diesel fetish did. Governments are pumping out desperate amounts of money to make electric vehicles free to some buyers in hopes of relieving their auto companies of enormous fines they will soon face for missing government-imposed EV targets.
This silliness has nothing to with climate gains and everything to do with politicians trying to stop their deranged artifices from blowing up on their companies and auto workers. Only two developments in history have made a discretely detectable impact on global emissions: the invention of fracking and the collapse of Soviet heavy industry. Both imparted a one-time boost to the steady, consistent decline in global GDP energy intensity as manufacturing has given way to service-based and then digitally based economies.
Even greens now admit as much: These trends, unless interrupted by terrible policy mistakes, virtually guarantee that emissions over the next century will fall far short of the worst-case scenario (known as RCP 8.5).
In the meantime, we lie to ourselves histrionically that electric cars will have any impact at all. Take the big electric SUVs now flooding the market because, with their high price points, manufacturers hope to recoup more of their losses. These vehicles are actually worse for the environment, so energy-intensive is production of their large batteries.
So what about Tesla’s stock price? The company is plainly valued as if tomorrow’s expected profits won’t be coming from the car business but from some Musk magic yet to be revealed. And that’s fine. Investors are entitled to bet, God bless them, that Mr. Musk is creating the next Apple, not the next GM.
This column supported Mr. Musk in his battle with the SEC. It urged him to raise capital in the middle of the fight to show he still had investor support. Let technology and consumer tastes, rather than regulatory actions, determine the outcome.
But a bizarre sidelight is that Tesla’s market capitalization is now greater than GM, Ford, Daimler, VW and Fiat Chrysler’s combined. Tesla is worth more than most of the industry that it relies on for the subsidies that are the only reason it was able to report three consecutive quarters of profit.
Read more here.