EV Swindle: Auto Industry Burns Investors To Appease Climate Activists

And it's not about saving the planet.

Appearing on CBS’s Face The Nation recently, transportation secretary Pete Buttigieg struggled to explain away a coffee-spitter fact about the failures of the Biden Administration's energy policy. After committing $7.5 billion to building electric vehicle (EV) charging stations in 2021, the government has built fewer than 10—a rate of progress that falls far short of its promise to produce half a million stations in the next six years.

“In order to build a charger, it’s more than just plunking a small device into the ground…This is really a new category of federal investment,” Buttigieg insisted. 

Incredulous, the show’s host Margaret Brennan could only chuckle at the secretary’s attempted spin. It’s laughable on the surface, but his prevarication masks a deeper motive for why automakers so enthusiastically wasted billions of dollars developing unreliable cars that Americans don’t want to drive: the auto industry is going all in on the EV scam to keep the spigot of federal subsidies flowing and woo ESG asset managers like BlackRock.  

Chasing federal handouts

The US auto industry has known for years that consumer interest in EVs is, at best, modest and that the vehicles themselves are not ready for prime time. Despite billions in government subsidies, the cars are obscenely expensive, pricing most Americans out of the market. The few consumers who can afford EVs aren’t buying them. Our overstrained power grid is ill-equipped to charge the millions of EVs that are supposed to replace gas-powered automobiles. Electric vehicles are also less safe and reliable than their combustion-engine counterparts. 

Despite these unresolved problems, manufacturers bet “their future on the idea that consumers are going to buy a bunch of these vehicles, even though right now they're a tiny fraction of sales,” NPR reported in 2021. The major manufacturers made good on this commitment in October 2022, pledging to invest nearly $1.2 trillion through 2030 in EV development. 

General Motors (GM), one of largest car makers in the world, even set a goal to produce only electric vehicles by 2035 despite critical problems with its EV offerings, including a massive battery recall for the Chevy Bolt and repeated safety issues with the now-defunct Chevy Volt. Retired GM Vice Chairman Bob Lutz called the second car a “financial loser” in 2019.

Across the industry manufacturers are subsidizing their failed foray into electric vehicles with gas-powered car sales, and dealerships stuck with inventory they can’t move have begged the government to reconsider its plans to get two-thirds of US drivers into electric vehicles by 2032.

What could possibly explain the industry’s seemingly suicidal behavior? Government handouts. It’s not a coincidence that automakers announced their trillion-dollar EV investment just a month after the Biden Administration declared that “the future of transportation is electric.” The White House added that it was the president’s “auto vision and leadership” driving this massive industry investment in EVs:

“Since President Biden took office, companies have invested nearly $85 billion in manufacturing of electric vehicles, batteries, and EV chargers in the United States. The pace of this investment is accelerating – just in 2022, companies have announced $13 billion in domestic EV manufacturing – more than triple the investment in 2020. Companies have also announced $24 billion in batteries – more than 28 times the investment in 2020 – and over $700 million to support EV charging.”

In other words, the auto industry was not trying to “change the world” with electric cars, as NPR claimed. Rather, manufacturers realized that the government was going to pay them to build EVs, charging stations and new production facilities, while effectively forcing Americans to give up their gas-powered cars. 

BlackRock strong arms industry

The blame doesn’t belong solely to the auto industry, however. Giant asset management firms led by BlackRock–which oversees some $10 trillion worth of investments for pension funds, endowments, governments, companies and individuals–told the private sector in 2022 that “companies must prepare for a scaleback of fossil fuels.” In fact, these firms “should work with governments” to facilitate the transition away from oil and gas, BlackRock CEO Larry Fink declared. 

As the Wall Street Journal reported at the time, Fink has used his position as a bully pulpit since 2012 “to prod, scold and push companies to disclose more about how they provide for workers, the environment and the community at large.” His firm has been intimately involved in shaping federal policy responses to emergencies including the 2008 housing crisis and the COVID-19 pandemic. 

When it comes to climate change, BlackRock and other asset managers use their clients’ money to push “their CEOs’ personal policy views,” as a pair of Republican senators observed in 2021. Fink said as much just a year earlier, writing in his annual letter to CEOs that “BlackRock would be disposed to vote against management and boards at companies that weren’t making progress on sustainability-related practices,” according to the Journal. Alongside BMW, Volkswagen and Ford, BlackRock has poured some $787 million into electric-car charging consortium Ionity GmbH. 

Reality hits

Vehicle manufacturers and asset managers can earn plaudits from the media and Washington by pledging their commitment to half-baked “sustainability” initiatives. But flaunting your concern about climate change isn’t profitable. Demand for EVs has so thoroughly cratered that CNN recently called electric vehicles “a massive disappointment.” And in March, the Biden EPA released significantly relaxed vehicle emissions standards designed to give the auto industry more time to develop a fleet of electric vehicles. 

A trade group representing the major automakers said the new rules "are essential if vehicle manufacturers are to have any possibility of demonstrating compliance with the GHG reduction targets." A lawsuit brought by 25 states against the EPA has stalled the proposal in federal court. 

BlackRock has faced similar obstacles to its progressive investment crusade. While the asset manager continues to back “clean-energy” projects, the Wall Street Journal reported in March that it has stopped “pushing for changes in corporate behavior, talking about hard-to-quantify social issues or actively promoting ESG investing criteria.” Disappointing returns have led investors to pull more than $8 billion from so-called “sustainable” funds. 

Conclusion

Automakers and investment firms should support new technologies if they are viable. But these companies jumped on the EV bandwagon because they were promised federal handouts and favorable regulations, all while cloaking their selfish intentions in the rhetoric of social responsibility. 

As the economist Milton Friedman pointed out more than 50 years ago, “Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.” It’s time these industry titans stop appeasing climate crusaders in Washington and on Wall Street and start serving their customers.