The Real Reason the Government Wants You to Drive an Electric Car

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By Jeff Brown

 

Editor’s Note: The world’s cars are going electric. By some estimates, 125 million electric vehicles will be on the road by 2030. And governments are going all in to convince Americans to make the switch. The usual reason given: To protect the environment. But that’s not the whole truth. Jeff Brown, Bill’s go-to tech expert, reveals the real reason governments and corporations want you to go electric.

 

“By now, most consumers are aware of the growing trend of electric vehicles (EVs). According to the Paris-based International Energy Agency (IEA), 125 million electric vehicles will be on the road by 2030. That’s up from an estimated 3.1 million in 2017. And according to a 2018 survey from the American Automobile Association (AAA), roughly 20% of Americans are considering going electric for their next car purchase. I’ve even outlined this growing trend to readers of my Near Future Report. [Subscribers can catch up here.]

 

And the adoption of this technology has been aggressively pushed by governments. In the U.S. alone, government subsidies for electric vehicles have been estimated as high as $20 billion. But the push to migrate from internal combustion engine (ICE) vehicles to electric vehicles isn’t what most think. There’s a deeper story here…

 

Popular Motivation: The most popular motivation used by both consumers and governments is a simple one… EVs are better for the environment. They produce less, or no, pollution. Sadly, this is a logical fallacy.

 

Taken out of context, yes, an electric vehicle produces less pollution than an ICE vehicle. Or does it? The answer lies in a simple question that is rarely ever asked… where does the electricity come from? Take a state like California. According to the California Energy Commission, 61.6% of energy used in the state comes from coal (fossil fuel), large hydro projects (damages natural habitats of freshwater rivers and lakes), natural gas (fossil fuel and California’s largest individual power source), and nuclear energy (radioactive waste). And only 29% comes from renewable sources, two-thirds of that being solar and wind. That means nearly 62% of the electricity used to power an EV in California comes from fossil fuels and energy sources that are highly destructive to the natural environment. Surprising, isn’t it? And California is one of the best states in the country for generating renewable energy due to its sunny and, in some places, also windy climate.

 

Look at a state on the other coast, New York. The New York Times reports that 94% of its energy comes from natural gas (37%), nuclear (33%), and large hydro projects (23%). That’s right, 70% of the electricity fueling an EV in the state of New York is “burning” carbon or a form of nuclear power. My point is that EVs are only as clean as the energy used to fuel them. So, if saving the environment isn’t the real motivation for the adoption of EVs, then what is?

 

Flooded Market: As I’ve shown Diary readers in the past, one of the main advantages is that EVs are less complex vehicles. Consider this: The average ICE car has 2,000 moving parts. The EV equivalent has just 20. That’s just 1% of an average ICE. Incredible right? As a result, EVs break down less often and are much cheaper to maintain. This makes them attractive to both automobile manufacturers and to consumers.

 

EVs also represent an attractive opportunity for automotive manufacturers because the market for ICE vehicles is so flooded. More specifically, carmakers hoping to sell a new automobile have to compete with used cars. After all, a well-maintained used car can still accomplish the principle task of getting you where you need to go. But it comes at a significant discount.

 

In the case of EVs, a fairly new market for cars, there just aren’t that many used cars on the market. The market for EVs is pretty much a greenfield opportunity. It is the opportunity for profit, not concern for the environment, that motivates automakers to pursue EVs. But what about government motivations for EVs? What has the incentive been to stimulate this industry?

 

Orwellian Possibility: Governments typically tell the public that the EV subsidies are for environmental reasons. It’s a simple explanation, but that’s not the whole truth… Many governments have offered economic incentives like discounted pricing or tax rebates to encourage consumers to buy these new EVs. There is certainly a hope that these kinds of incentives will become a catalyst for domestic corporations to invest in the technology, create new jobs, and hopefully manufacture these new EVs locally and thus stimulate the economy. And there is plenty of truth to that, especially in markets that have existing automobile manufacturing plants.

 

But what if we step back further, and think even bigger picture? Consider that the next evolution of EVs will be self-driving cars. EVs tend to be designed much more like upgradeable computers than traditional ICE vehicles. Tesla is a perfect example. Software updates are pushed out to Teslas around the world, several times a year, to “upgrade” the cars. Oftentimes, those software updates are new performance features for the car, like the self-driving functionality. Why would a government push for the mass adoption of remotely-connected, self-driving cars? There are some very Orwellian possibilities that many are not considering.

 

Real Motivations: Self-driving cars must always be connected to a network. Tesla’s EVs connect to its network over 4G wireless networks today, which will become 5G wireless networks beginning this year. The government will know the location of every self-driving car at all times. And with the right authority, a self-driving car could be rerouted to a government’s choice of location at any time. For example, what if someone suspected of a crime was trying to “drive” out of state? The local government could simply reroute the car to the nearest police station. And there’s something else…

Consider Waymo, the self-driving division of Alphabet, the parent company of Google. I always get a kick out of articles that claim Waymo’s motivation is to become a manufacturer of self-driving cars. Google’s motivation is simple: It wants to collect as much data as possible about consumers and sell that data to whoever will pay for it. Think about it. According to the U.S. Department of Transportation, the average American driver spends about an hour a day in a car. In a world where cars and taxis drive themselves, that frees up an hour of time to look at a screen, surf the internet, watch videos… and you guessed it… look at ads that are served to you.

 

Google is spending so much time and money on research and development on autonomous driving technology so that it can license that technology to car manufacturers in exchange for being able to retain, and sell, the data that it collects. Plain and simple.

 

Force for Good: Now, I don’t want to give you the impression that I’m negative on new technological developments. Far from it. As many of you know, I’ve devoted my entire adult life studying, working in, and investing in bleeding edge technology. And as I’ve told my readers time and time again, our lives are about to improve exponentially in the coming years thanks to new technology.

 

Self-driving electric vehicles are a tool. And like any tool, they can be used for good… or bad. Understanding the less obvious motivations in the world of technology is a critical part of my research process. It informs better investment recommendations to my readers. By looking beyond the “official reasons,” I’m able to better understand the direction of important technology trends. And now, so can you…”

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