EV Slowdown: Limits of ‘Technology Forcing’
The brilliance of the market economy is that the customer actually is the king, which has become obvious when it comes to electric vehicles. Like any product, EVs offer benefits and disadvantages that consumers can sort through on their own. Unfortunately, the EV market is being pushed beyond that natural demand by policymakers, who have other agendas — notably reducing carbon dioxide emissions as part of their war on climate change.
Despite an initial surge in consumer interest, the EV market is struggling. As CNN Business recently reported, EV sales are higher than at the same time last year, but demand is falling and remains well below predictions. Manufacturers, who had been pushed by federal and California lawmakers to shift toward electrified vehicles, are slashing prices and production.
“A subsidy-fueled boom helped build China into an electric-car giant but left weed-infested lots across the nation brimming with unwanted battery-powered vehicles,” Bloomberg reported in 2023. That was a preview of what’s to come in other markets. JD Power expects a glut of used EVs to hit the U.S. market in 2026. EVs are sitting on sitting on dealer lots for much longer than internal combustion engine vehicles, even though their sales are propped up by large federal tax credits.
This is what happens when policy makers rather than consumers and manufacturers make key decisions. It’s reminiscent to a small degree of the days in the Soviet Union when lots were filled with unused agricultural equipment while basic food stuffs were in short supply. Market mechanisms such as pricing are the only way to efficiently determine what manufacturers should produce.
With the EV glut, falling prices are getting tempting even for me. I write “even for me” not because I have anything against battery-powered cars per se, but because it’s hard to make them fit into my lifestyle. I take multiple long trips. I hate to plan my routes, as I’m often lured by some unexpected out-of-the-way destination. I can always find a gas station, but charging stations require planning and waiting. I’d be plagued by range anxiety.
Nevertheless, the $149 lease (with only $999 down) special announced recently for an electric Volkswagen SUV caught my attention. I couldn’t find any nearby for that price, but it goes to show what a low price will do. Plenty of other potential buyers also saw the value in that deal. EV prices are falling, but it seems unlikely that they will take the market by storm without rebates, government incentives, and spectacular price drops.
And the EV motorcycle market appears to be collapsing for reasons that seem obvious. In North America, motorcycles are a recreational activity rather than a basic form of transportation, so who wants to try to find a charging station during a leisurely ride in the mountains? And they lack the rumble that’s a key part of the riding experience.
Nevertheless, California continues down its ideologically driven path of banishing internal combustion vehicles from our marketplace. The state already has banned the sale of new gas-powered lawn equipment. When I lived on an acreage, that simply meant nursing along my aging lawn tractor. Good luck finding a reasonably priced electric mower that can handle a six-acre lot.
After I moved to the suburbs, I bought an electric push mower. To my surprise, it’s fabulous. It’s light, always starts, and doesn’t require gas cans, maintenance, and fussing with the carburetor after sitting. It reminds me that EV advocates would be far better off if they offered us compelling choices, rather than forcing us to buy these products by banning the alternatives.
California’s nationally high EV rate sits at 20 percent, with the state requiring that 35 percent of all new vehicle sales be EVs by 2026. How is that going to happen? Lawmakers will need to punt their deadlines or become increasingly draconian. New internal combustion vehicle sales are verboten as of 2035, with manufacturers facing the challenge of selling far more EVs to people who don’t really want them. Meanwhile, lawmakers continue issuing edicts.
Even if private industry and consumers do their part, it’s unlikely the state has the competence to fulfill its end of the bargain. “Despite expecting 12.5 million electric cars by 2035, California officials insist that the grid can provide enough electricity,” CalMatters reported. “But that’s based on multiple assumptions — including building solar and wind at almost five times the pace of the past decade — that may not be realistic.” A couple years ago, state officials warned EV owners to stop charging their cars to avoid potential blackouts. That’s a likely glimpse of our future.
Drivers also face a dearth of public chargers. “The energy commission reports 93,855 publicly accessible chargers are in place throughout the state, including 10,000 fast chargers,” according to a Los Angeles Times report last February. “That’s far short of the 250,000 chargers that the state has targeted by 2025. The state estimates that by 2035, 2.1 million chargers will be needed.”
California lawmakers have an almost child-like faith in the ability of government regulators to effect meaningful market change, even as those same officials fail spectacularly at dealing with their fundamental responsibilities (water storage, road infrastructure, crime fighting, basic utilities, creating rules that keep insurers from fleeing). They’ve gone all-in for something known as “technology forcing.”
As a state Senate floor analysis explains with regard to that gas lawnmower ban:
Technology forcing is a regulatory strategy that establishes currently unachievable and uneconomic performance standards to be met at some future point in time. The legislation or regulatory rules also set a defined time period for achieving these performance standards. Essentially, technology forcing sets regulatory standards and provides incentives for achieving the standards or disincentives for not achieving them.
That strategy isn’t disastrous when applied around the margins, such as mandating that car markers boost their miles-per-gallon averages a bit. It’s not a great idea, as it ignores the unforeseen and counterproductive consequences of those changes. For instance, one reason Americans buy so many large, gas-guzzling pickup trucks is because federal Corporate Average Fuel Economy (CAFE) standards applied to cars and not light trucks.
But California is using technology forcing in a far-reaching manner, by attempting to transform the entire vehicle industry (and our market is so large that California lawmakers figure our state’s standard will become the de facto national standard). As a result, the government is forcing us to buy EVs even though they meet the needs of only a limited segment of the population. In this case, the government — not the market — is king. And we’ll all suffer because of it.
Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.
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