The automotive industry is shifting towards electric vehicles. And the Biden administration has rolled out a range of initiatives aimed at promoting EV adoption as part of its broader climate and energy policy.
However, “Shark Tank” star Kevin O’Leary is not a fan of the government’s involvement in this transition.
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“The real problem with the EV mandate was that it was just that; it was government trying to mandate a conversion,” he said in a recent interview with Fox Business.
He’s not alone in being critical of the president’s EV initiatives. Donald Trump has vowed to reverse the policies if elected. Bob Lutz, former executive at General Motors, Ford and Chrysler, has said there’s isn’t enough electricity-generating infrastructure or demand.
O’Leary also expanded the discussion from the automotive industry shift to the broader topic of replacing hydrocarbons.
“It was the same problem that came up at the Global Climate Change Conference, when finally most countries admitted, ‘Look, there’s no such thing as replacing hydrocarbons,’” he stated.
The entrepreneur and investor argued that although countries can diversify away from hydrocarbons, there is “no path to energy security for any country,” including in the U.S., that involves replacing hydrocarbons entirely.
“So everybody has to suck it up now and realize this is going to take a lot longer than people thought, including the EV conversion,” he remarked.
The Biden administration recently highlighted the significant progress made in the EV sector.
“Since the President took office, EV sales have more than quadrupled, with more than four and a half million EVs on the road,” the White House said in a statement.
However, the government’s regulatory stance may soon soften.
The New York Times recently reported that the Biden administration plans to slow the pace of limits on tailpipe emissions. The move is intended as a concession to automakers and labor unions, said unnamed sources.
“The change in pacing is in response to automakers who say that more time is needed to build a national network of charging stations and to bring down the cost of electric vehicles, and to labor unions that want more time to try to unionize new electric car plants that are opening around the country, particularly in the South,” said the news report.
‘Too expensive’
There are many reasons why people may hesitate to switch from internal combustion engine (ICE) vehicles to electric ones. According to O’Leary, the primary issue is the price.
“The basic problem with EVs is that the mid market, where the majority of cars are sold, is they’re too expensive,” he said.
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O’Leary was not alone in highlighting the costly nature of the EV transition.
Last year, Tesla CEO Elon Musk mentioned that cost is “more of an issue” for EVs than range, emphasizing that “a long-range car needs to be affordable.”
But this pricing gap is closing. At the end of last year, the average transaction price for a new EV was $50,798, compared to $48,759 for a new gas-powered vehicle, according to Cox Automotive.
‘Memory loss’
O’Leary identified another factor that may deter people from going electric: as EVs age, their mileage might decline.
“There’s a memory loss aspect to batteries,” he explained. “This happens with any lithium battery. And it’s starting to manifest itself because some of these cars are getting into older age — past seven years — and people are starting to see the drop off in their ability, their capacity to store electricity. So the overall mileage goes down.”
The degradation of lithium-ion batteries is influenced by several key factors, including temperature, charge/discharge cycles, and time. The rate at which EV batteries degrade also varies based on the battery’s design, the vehicle’s usage patterns and operating conditions.
Telematics and fleet management solutions provider Geotab conducted a study analyzing the battery health of 6,300 fleet EVs and found that the average battery degradation was around 2.3% per year. The study described this loss as “arguably minor.”
This is one of the factors influencing pricing, however. “Battery-powered vehicles retain just 38.4% of their initial value on trade-in after 36 months and 60,000 kilometers (37,200 miles), compared to 53.3% of the original value for all fuel-types,” wrote Bloomberg columnist Chris Bryant, citing UK data compiled by Autovista24.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
