Surely it is time that political heads started to roll for the catastrophe that is now unfolding. Policymakers, under pressure from industrial and climate change lobby groups, picked this “winner” and spent eye-watering amounts of taxpayer money on it.
In 2019, France’s President Macron grandly announced a Franco-German plan to dominate battery production, with €700m invested by France and another €1bn in Germany. The EU proudly boasts that €80bn has been invested in the “EV value chain” as part of its Green New Deal, but when the books are finally opened it is unlikely they will be good.
The situation is even worse in the US. The Biden administration recently awarded nearly $2bn in grants to help restart or expand EV manufacturing and assembly sites across eight states, which feels like throwing good money after bad. It has offered tens of billions in subsidies of more than $7,000 per vehicle sold, and even more in building the infrastructure, including one $7.5bn scheme to install chargers that ended up with only seven actually built (which works out at more than $1bn each for what is basically just a plug).
Even in this country, where our political class was largely too incompetent to back any projects, money was poured into the ill-fated Britishvolt project, and it remains to be seen how much is finally given to India’s Tata for its new EV battery factory in Somerset.
Economists have long warned that net zero provides a golden opportunity for waste and rent-seeking. But some elites chose not to listen. We should start holding them accountable. Lobbyists argued for the subsidies, civil servants supported them, and finance ministers enthusiastically virtue signalled with other people’s money.
But too much investment creates overcapacity. Markets are better at deciding which technologies work than politicians, and if there is a genuine demand for a product then no one has to receive a grant to manufacture it, since the potential profits to be made will be incentive enough.
The carnage in the EV industry is only just getting started and already it has cost billions.
