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Posted May 14, 2020

Jim Amrhein

By Jim Amrhein

Car Wars: The Spark Plug Strikes Back

After my article last month about the furiously patriotic performance, value, and innovation of the new 2020 Chevrolet Corvette, it should be pretty obvious to you that Im passionate about cars.

Especially those of the increasingly maligned species internus combustus.

Today, Im getting another opportunity to talk cars with you plus make a bold prediction about their future here in America.

Thats because the coronavirus has suddenly made the discussion of vehicles and the engines (or motors) that propel them more relevant than ever.

The crux of my prediction is that fundamental behavioral shifts this pandemic is causing will spur a road-trip renaissance thatll exceed anything America has ever seen before. And this shift will trigger an epic series of Car Wars thatll play out for the next 20 years or more, in both the marketplace and the hallowed halls of power.

The combatants in these wars will be conventional, proven automotive technologies Americans know and love vs. new, poorly supported, and expensive car-tech thats increasingly being forced on us by a heavy-handed government. And sorry, Elon

But I believe the old-school ways are going to win, at least for a long while to come.

Now let me get about proving that to you.

Coronavirus spurs a new boom of American motoring

Some consider the 1920s and 30s to be the Golden Age of American motoring. During this time, car ownership became truly democratized via manufacturing innovation, plunging costs, competition, an oil boom, and government policies that fostered road development and petro-infrastructure.

But the post-WWII era saw another major boom in cars, too, as the U.S. economy switched from wartime production to consumer goods manufacturing, including tens of millions of automobiles. By the end of 1959, one in six American workers was employed in the auto industry, directly or indirectly.

These periods of explosive growth in the creation and use of cars in America were brought on by economic prosperity. But the new American road renaissance I see coming will be brought on by fear and systemic change.

A recent study showed that 40% of Americans plan to avoid public places of any kind unless absolutely necessary, even long after the coronavirus pandemic has run its course (assuming it does). One in seven U.S. adults say they may never be at ease in public again.

I cant imagine any public space thats more potentially terrifying to these folks than planes, trains, busses, and subways stuffed with strangers. Or the airports, train stations, metro terminals, etc. that facilitate them. And the numbers plainly reveal this mass fear.

U.S. air travel is down more than 90% right now, according to TSA data. The CEO of Boeing recently predicted that it could take at least three years to get back to pre-coronavirus airline demand and up to five years before that industry sees the same level of growth it saw before the pandemic.

Public transportation and train ridership in the New York area is down by as much as 48%. This seems to be the same story in many major metropolitan areas across the country. Washington D.C. metro ridership, for example, was down 95% as of late April. Not all of this decline can be attributed to lost jobs. Clearly, much of it has to do with fear of infection.

Again, my point is that when it comes to transportation, Americans are radically changing their behavior because of coronavirus fears. Much evidence suggests that this is not a short-term trend, but a long-term (perhaps permanent) condition. And it all points to a major and sustained boom in automobile transit within the continental U.S. especially for vacations and tourism

In other words: The great American road trip is coming back with a vengeance.

And thats not good news for plug-in cars.

Coronavirus could stall (or kill) electric cars in the U.S.

Rodney Dangerfield once famous joked, I was so ugly my parents had to hang a pork chop around my neck to get the dog to play with me.

If Im right, thats going to be what electric cars aimed at the mass consumer market are going to feel like here in the U.S. for the next five years or more, at least.

There are four main reasons why I believe this:

#1) Reasonably cheap gas Fracking and other technological leaps have added stability to the domestic oil market, and increased estimates of our recoverable reserves of crude oil to the point where we could totally self-sustain for decades.

That means Americas got the threat of out-of-control gas prices pretty much licked. Compare this to the major nations of Europe, where petrol averaged $6.29 a gallon before the pandemic took hold. At those prices, the limitations and extra expense of electric cars might make sense. But not at $2.50 - $3.00 a gallon.

#2) Reduced reliance on China Right now, China is the worlds top producer of batteries for electric vehicles (EVs). Just eight years from now, theyre projected to make around nine times as much EV battery capacity as all of North America.

Thats why Senator Lisa Murkowski (R-Alaska) says, Chinas dominance over the critical minerals supply chain and the EV battery market presents both commercial and security-related concerns.With massive backlash against U.S. dependency on the PRC rising among voters and officials of both parties, Americans could shun EVs with Chinese batteries in them in the future. Washington could ban them, too, if theres any justice.

#3) Expiration of federal subsidies Obama-administration tax credits of up to $7,500 designed to incentivize Americans to purchase pricey EVs disappear for a carmaker once theyve sold 200,000 such units in the United States. Tesla and GM have already passed this mark, with Nissan and Ford closing in on it.

A recent effort to expand this incentive failed in Congress. Thats too bad, because its pretty clear that these tax breaks were the pork chop that convinced early plug-in EV buyers to play with these rolling dogs. See here

#4) Few Americans really seem to want EVs Plug-in vehicle sales in the U.S. peaked in 2018, and have been declining ever since. Not coincidentally, both Teslas and Chevrolets tax credits for EV buyers began phasing out in early 2019.

Beyond this, a recent J.D. Power survey shows declining confidence in EVs among North Americans as a whole, even before the pandemic hit. Since the coronavirus arrived on these shores, domestic EV sales have fallen off a cliff. Meanwhile, SUVs and pickups remain the dominant choice of U.S. motorists, representing 70% of new vehicle sales in 2019, an all-time high.

As usual, Washington will pick the winners (and it wont be you)

The bottom line is this: Leaving aside the debatable benefits to the planet of driving an electric vehicle (thats a whole nother article, amigo)

Americans are only willing to spend so much extra money on their principles. Thats especially true when the economy is crashing, theyre losing their jobs and living in fear, and their definition of normal is changing by the day.

In times like these, cheap, proven, capable, and familiar will rule the day. So will the ability to pile the whole family and all their gear into the SUV and drive 700 miles to a distant campground without stopping for anything but potty breaks

Contrast this to an EV thats more expensive, holds half as much people and stuff, and that you have to stop and charge up for several hours every couple hundred miles. If you can find a fast-charging station with an open slot, that is.

Thats just ludicrous, to throw down a bit of cheap wordplay at Teslas expense.

In the absence of air travel as a safe option (or one thats perceived as safe), this is whats going to be happening more and more, all across the fruited plain, starting right now. And its not going to be happening in electric cars, by and large. Unlike Europeans, Americans are simply too wide-ranging, autonomous, and freedom-loving to tolerate the compromises that come with EVs, for the most part.

The X Factor in all this is the government. Washingtons ever-more-stringent CAFE standards and emissions measures have already forced major automakers to add EVs and hybrids to their model lines for fleet mileage compliance (they never would have done it otherwise)

And moving forward, they could impose a bunch of new Green Screw Deal mandates thatll force Americans to drive vehicles they dont want that rely on technology and infrastructure we dont have.

If you think Im exaggerating about this, take a look at The Biden Plan for a Clean Energy Revolution and Environmental Justice. Especially the part about ratcheting up fuel economy standards to the point where American consumers only options will be electric vehicles!

In other words: The forced extinction of internal combustion engines in the United States. Yeah, thats free-market, laissez-faire capitalism, right?

The most laughable part of all is that this wont save the planet

But it will increase our reliance on China, disadvantage core U.S. industries, stress our antiquated electricity grid, and hobble huge swaths of the travel and tourism businesses in this country.

Road-trippingly Yours,

Jim Amrhein

Jim Amrhein

Freedoms Editor, Whiskey & Gunpowder

WhiskeyAndGunpowderFeedback@StPaulResearch.com

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