The Rise of Electric Vehicles Signals the End of Globalism

12 mins. to read
The Rise of Electric Vehicles Signals the End of Globalism

What Arnie’s Electric Hummer Tells Us About American ‘Greenwashing’

I am a huge fan of Arnold Schwarzenegger. He is the ultimate achiever. He put modern bodybuilding on the map. He starred in some of the most successful movies of all time – and made a ton of money, which he invested sagely. He became governor of California, America’s richest state. He helped to modernise the Republican party – and he defied Donald Trump. He took the federal government to the Supreme Court on the issue of whether carbon dioxide is a pollutant or not. He was passionately pro-business, but also pro-green – something European politicians do not do well.

I was therefore interested to hear his thoughts on the way the green agenda is evolving, when he was interviewed by Tom Heap, the BBC’s environment correspondent, on the BBC Radio Four programme, 39 Ways to Save the Planet. As governor of California, Arnie introduced legislation to limit exhaust pollution from cars, given that the ‘Golden State’ has more cars than any other. He now fronts the Schwarzenegger Climate Initiative which seeks to develop “workable solutions” to climate change, including technology to facilitate carbon capture. He is keen on nuclear power, especially in the form of molten-salt reactors.

But I was most interested in his remarks about the electrification of vehicular transport. He thinks electrification will generate huge numbers of ‘green’ jobs. He points out that California has the toughest anti-pollution laws in the US but is also the richest state in the Union, with total economic output of $3.3trn. If California were a separate country it would rank as number five globally in GDP terms. He is adamant that we do not have to sacrifice our standard of living to go green. In support of this, he refers to having replaced his 300-horse-power diesel-powered Hummer pickup (manufactured by General Motors) with a 480-horse-power electric version.

Coincidentally, President Joe Biden was photographed test driving a gigantic electric Hummer in Detroit last week as part of his administration’s initiative to promote EVs: “On my watch, the great American road trip is going to be fully electrified,” the president said. This message was underlined in his State of the Union address in Washington on Tuesday evening (7 February) where he boasted of having created 12 million new jobs in the green economy.

According to a report published last summer by the American Council for an Energy-Efficient Economy (ACEEE), however, supplying sufficient power to propel a four-tonne electric car generates more carbon emissions than a petrol-powered Chevrolet Malibu would emit, because of the size and weight of the battery required. As vehicles get bigger, so the proportion of their total weight comprised by the battery grows exponentially. That is why no one is talking about electric cargo ships − they would require a second ship floating behind which would be entirely taken up by a battery unit. Rather, there is increasing interest on the part of shipbuilders such as South Korea’s HD Hyundai, in nuclear power – as well as in ships powered by liquified natural gas (LNG), methanol and even ammonia.

The efficiency of an EV, much like the efficiency of petrol or diesel-powered vehicles, is largely affected by the efficiency of the motor and drivetrain as well as the weight and aerodynamics of the vehicle. Energy is lost as it is transmitted from the battery to the motor and then to the wheels. The amount lost varies according to the type of vehicle and its weight.

Smaller vehicles tend to be more efficient. In my childhood, electric-powered milk floats manufactured by Shrewsbury Plastics & Engineering Ltd (now SPEL Products) from 1964 were ubiquitous across the UK. They provided a highly efficient delivery platform and were sadly only discontinued because of the rise in popularity of supermarket shopping.

Efficiency, normally measured in kilowatt-hours (kWh) per 100 kilometres or miles driven, can be only improved either by engineering advancements (better electric motors) or through reducing vehicle weight and size. It is true that EVs benefit from regenerative braking, by means of which energy is captured from the brakes and returned to the battery, greatly increasing efficiency. That is one reason electric drive systems are about twice as efficient as standard internal combustion engines (ICEs).

Battery-powered vehicles like the Hummer get their power from the electric grid and currently, in the US, 60 percent of electricity is produced by burning fossil fuels, according to ACEEE. Moreover, the emissions generated in the production of these vehicles, including the manufacture of the batteries, are considerably more than for conventional vehicles. EVs will therefore still be responsible for ‘upstream’ emissions until the entire grid is completely carbon zero. That is not even in prospect.

Sorry, Arnie, but an electric-powered Hummer is an ecological absurdity. In George Orwell’s Animal Farm the animals subordinated by the pigs were instructed to chant: “Four legs good: two legs bad”. Arnie’s electric Hummer reminds us that there is now a prevailing green mantra of “electric-powered good: oil and gas-powered bad.” This mentality is now distorting policy across the world.

Protecting The EV Industry

Both the US and the EU have moved of late to protect their nascent EV industries. Ironically, while Donald Trump was labelled a protectionist for his “America first” rhetoric and his calls to repatriate production to the US, it is Biden who is actually implementing a post-globalist industrial policy – focused on the US, of course.

US Trade Representative Katherine Tai told the luminaries of Davos last month that: “We need a new world economic order, with a global trading system that is worker-centered”. As a member of the president’s Cabinet, Tai is the principal trade advisor, negotiator and spokesperson on US trade policy. She opined that the model of global capitalism advanced for many years by the World Economic Forum had fermented a “populist backlash that threatened liberal democracy itself”.

Washington told the World Trade Organisation (WTO) in early December that the US would “not cede decision-making over its essential security to WTO panels”. And indeed, the US Inflation Reduction Act (IRA) which was passed by Congress last October, contained a “buy American” clause.

The IRA is less about inflation and much more about industrial strategy. It involves a $370bn package of subsidies and tax credits for green technology. It entails that all electric cars made in the US benefit from a $7,500 subsidy, while those imported from Europe do not. Moreover, the IRA provides for 50-60 percent refunds on capital invested in green hydrogen. The Biden administration apparently wants to turn the US into the dominant ‘green power’ of the world.

Viewed from Europe, Biden’s “worker-centered” policy looks like a cover for old-fashioned protectionism. Many European industrialists now think that Europe needs its own IRA in response. On 18 January at Davos, German Chancellor Olaf Scholz threatened a full-scale trade war with the US, articulating a chorus of complaints from European leaders. Scholz also told his audience that “Protectionism hinders competition and innovation and is detrimental to climate change mitigation.”

Since then, Europe has even launched its own CHIPS Act, pouring more than €40bn into building a European semiconductor industry. EU Competition Commissioner Margrethe Vestager has proposed suspending competition rules to allow member states to subsidise their national champions.

The global green lobby likes the IRA because they think it acts as a catalyst for global decarbonisation and will quicken the demise of fossil fuels: “From a sustainability perspective, a climate perspective, I like this competition,” said Mark Carney, former governor of the Bank of England, who is now chief UN climate envoy.

At least the Europeans are becoming aware that the race is on. Carlos Tavares, chief executive of Stellantis (which embraces the Peugeot, Citroen and Vauxhall brands) recently warned that:

“Regulation in Europe ensures that electric cars built in Europe are about 40 percent more expensive than comparable vehicles made in China…If nothing is changed in the current situation, middle class European customers will increasingly turn to Chinese models.

That sounds to me like a call for a European version of the IRA. Watch this space.

The Canary In The Lithium Mine

All EVs require batteries that are dependent on certain key metals such as lithium, nickel, cobalt and copper as well as the 17 more esoteric rare-earth elements. Therefore, the supposed transition to net zero depends on the mining sector, which is not known for its eco-friendly credentials. It often has a devastating effect on the landscape and the people who live in it.

One example was mining company Rio Tinto’s destruction of a 46,000-year-old heritage rock shelter in Western Australia’s Juukan Gorge, which was sacred to aboriginals. Another was the dam collapse in Brumadhino, Brazil in 2019 when a slag heap of millions of cubic metres of mining waste slid into the town below. About 270 people were killed and rivers were polluted for miles around.

If all ICE-powered cars are to be replaced by EVs over the next 20 years – and let’s recall that it will not be permitted to buy a new petrol-powered car in the UK from 2030 onwards – then the volume of these metals that will need to be mined is going to increase massively relative to current levels. No doubt we shall become more efficient and proficient in recycling − but that will not be enough to plug the gap. It seems inevitable that the cost of these metals will go up as demand increases.

About 11 percent of the world’s total nickel output comes from Russia, where Norilsk Nickel is the leading producer. The price of nickel spiked after Russia’s invasion of Ukraine but has since stabilised.

The UK’s Capacity To Produce EVs At Scale Is In Doubt

I am concerned that the UK might never be able to become a volume producer of EVs unless it has its own battery gigafactory.

The US has Tesla – and, far behind it, Rivian Automotive. But, even if Tesla is now the leading EV brand, the Americans fear that the Chinese are on their tail. China’s BYD might well overtake Tesla as the largest EV manufacturer in the world this year. Germany’s Volkswagen is investing huge sums on EV development and will most likely announce an EV-battery gigafactory soon.

As it stands this week, the UK’s chances of a getting an EV-battery gigafactory now depend on a little-known Australian player called Recharge Industries which reportedly has interests in lithium mining in the Antipodes. This outfit might buy Britishvolt, currently in receivership under E&Y with exceedingly large liabilities. Or maybe it won’t.

China has dozens of EV-battery factories in the pipeline. The EU will probably have 27 EV-battery gigafactories by the end of the decade. Thus far, the UK has one – adjacent to the Nissan factory in Sunderland – which is owned by the Chinese.

Last year, the UK car industry produced 716,000 cars – down from 1,300,00 cars the year before. That decline was partly blamed on the shortage of microprocessors (computer chips) which also afflicts Germany. Britain’s car industry has survived despite decades of forecasts of terminal decline. But now it is crunch time, especially because the industry is in a state of transition.

The case for EVs on purely climate-change grounds still doesn’t stack up. EVs harm as much as they heal. But that is not the real issue, which is that electrification is dividing the world into three monolithic blocs – the US, the EU and China. Other nations – with the possible exceptions of India and Brazil − will find it difficult to create a viable ecosystem for volume EV production.

Affordability will also become a salient issue at a time of declining disposable incomes. Paul Philpott, chief executive of Kia UK, which produces some of the most inexpensive EVs, has described small EVs as being “economically difficult” to bring to market. The cheapest petrol car available to buy new in the UK market is the Dacia Sandero, priced at £12,995. The cheapest EV is the Fiat 500e which, while slower, smaller and less versatile, costs at least £10,000 more. The price differential on the secondhand market is even more pronounced. In addition, the cost of charging EVs has risen along with household energy costs.

On the plus side, Stellantis will start manufacturing EVs at its Ellesmere Port plant later this year. It will focus on basic, lower-range EVs with smaller batteries and a commensurate price tag. MG, which is owned by the Chinese, state-owned conglomerate SAIC, has been selling entry-level EVs in the UK for some time. But more Chinese brands will follow. BYD and Nio, both little known in the UK, will be launching competitively priced EVs here during 2023.

If, as seems likely, the cost of purchasing and maintaining an EV continues to rise, then a lot of people might conclude that they cannot afford to run a car at all. Given that public transport, especially in rural areas, is inadequate, that could cause hardship.

Here’s a somewhat contrarian strategy proposal which not everyone will like. Why not position the UK as the leading manufacturer of ultra-high-efficiency ICE-powered vehicles, manufactured with minimum CO2 emissions, with all engines and vehicles to be made with recycled metal of assured provenance? That is what Sir Jim Ratcliffe should be doing with his new generation of Land Rovers.

For that to happen the government would have to relent and issue a stay of execution for more efficient ICE-powered cars after 2030. That, in my view, is probable. Remember that by the end of Animal Farm, the animals were instructed to chant: “Four legs good: two legs better.”


I watched President Zelenskyy’s address to parliament in Westminster Hall on Wednesday (8 February) live on TV. It was moving, especially as we recalled the late Queen Elizabeth’s recent lying in state there, and reflected on the momentous historic events enacted in that space, not least the trial of the lamented King Charles I. That Hall is the embodiment of a millennium of national history.

When Zelenskyy was elected as president of his country in May 2019, he was belittled by much of the UK media as a comedian. But now we know that Ukraine was lucky to have such a steadfast and empathetic leader. Without him, the country would probably have succumbed by now.

Do not underestimate Zelenskyy – as Putin did, and Boris didn’t.

Listed companies cited in this article which merit analysis:

  • General Motors (NYSE:GM)
  • HD Hyundai (KRX: 267250
  • Volkswagen (ETR:VOW)
  • Rio Tinto (ASX:RIO)
  • Norilsk Nickel (Moscow)
  • Tesla (NASDAQ:TSLA)
  • Rivian (NASDAQ:RIVN)
  • BYD (LON: 0HKY)
  • Stellantis (BIT:STLA) (numerous listings)
  • Nio (NYSE:NIO)

Victor will be appearing the Master Investor Show on the 18th of March. Get your free tickets here.

Comments (5)

  • John Andrew Morton says:

    Great stuff ! Keep it up. It is good general stuff to get a debate going, It is a big challenge to the climate change lobby who are anti most feasible economic solutions.

  • Douglas Battersby says:

    At least EVs have some merit. Heat pumps have little if any. A recent article in the Times estimated that a heat pump for the average household would cost £500 more per year than a gas boiler to run. So pay £14000 for a heat pump system and be £10/week poorer.
    During the cold spell in December over 50% of our electricity was generated from gas, solar was negligible, wind generation was lower than usual. There were small contributions from coal, imports, hydro and about 15% nuclear.
    Even with CCGT generation a lot of energy is wasted in the process. Far better to use the gas in our gas boilers, which actually do the job far better! The economics of the madhouse.

  • Lee Revell says:

    Always great to read the facts that everyone knows in politics but won’t raise their head above the parapet and shout out.
    Still amazing how hypocritical the rich are with their green agenda, one rule for the little people…

  • Lawman says:

    Modern ICE cars last over 10 years, so 2030 is not the end; more so if Mr Hill’s suggestion (UHE ICE) is adopted.

    What are the implications if:

    (I) we give up the idea of manufacture of EVs & batteries

    (II) we negotiate free trade relationships such as TPP or EFTA (necessary in any event for all our trade)

    (III) we identify ‘modern tech’ industries (bio-health et al?), and services (reform the monopolistic, inappropriately regulated Financial Services?) where UK could excel and export

    (IV) HMG & Local Govt sets taxes, planning, and other rules to encourage these businesses; AND agrees not to change them for 10 years?

    As you see, I am a naive optimist.

  • Richard says:

    Watch this space: Chinese EV companies will start to dominate in the next few years (they are already starting to set the groundwork via dealers); European car makers will be in (share price et-al) decline in parallel, and seriously so in 3-5 years. Chinese EV cars are of increasingly high quality and will likely become more so with far lower costs (unless there are tariffs and therefore serious trade war which will hurt us / Europe as much as if not more so than China. How can anyone else compete; they have the technology; many of the rarer minerals; can import almost all the other commodities they need; and (still) very low labour costs (and could easily ‘offshore’ for lower)?

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