Elon Musk is now supposedly the richest man in the world. Although he is the market leader, he is not the only manufacturer of electric cars, nor is that his only line of business. But it would be interesting to know how much of his wealth is due to regulatory requirements, subsidies for electric cars, and proposed bans on other types of vehicles. If governments weren’t pushing some of his products and undermining competing products, would he perhaps be a bit poorer?
If you buy into Mr Musk are you also buying into the promises of the British prime minister, Boris Johnson, to ban the sale of new internal combustion engines from 2030? Are you further buying into the expectation that the new American president, Joe Biden, will step up demands for more and more vehicles to be powered by electricity?
Are you banking on similar demands being made by governments belonging to the European Union (EU)? Some of these have indeed already promised to phase out traditional engines. Are you assuming that United Nations officials will chivvy more and more governments to promote electric cars as one means of combating the “climate emergency” that is said to be threatening Planet Earth?
According to a study published in 2017 by Strata, a policy research group, American subsidies for electric vehicles (EVs) at federal, state, and local level could end up costing between $15 billion and $20 billion. Some were targeted at consumers, others at producers, while EV infrastructure was also subsidised. Last year one of Mr Musk’s colleagues conceded that much of the company’s success was due to its regulatory credits business.
According to the Economist Intelligence Unit, “generous incentives and subsidies on offer in the EU” will push up the EU’s share of the global EV market from 22% in 2019 to 31% in 2021, partly because Chinese subsidies for EVs are slowly being cut. In Germany EV buyers will get 9 000 Euros towards their car this year, benefiting BMW and Volkswagen as well as Mr Musk’s Tesla vehicles. France will pay 6 000 Euros.
The British government will not only give grants to EV buyers, but also invest in charging points and battery “gigafactories”. It may have to do so on a massive scale, since the scarcity of charging infrastructure and the high cost of installing it are holding back demand for EVs, which currently account for only 5% of vehicle sales in the United Kingdom.