EVs, Tariffs and the Latino Vote

EVs, Tariffs and the Latino Vote

The EV industry is in trouble. There are at least 15 US companies that are in danger of failing although you would not know it driving around west Knoxville where you see a Lucid, at least three Rivians, a Hummer EV, three Tesla super trucks, two Mercedes EVs, a bunch of BMWs, a whole host of Teslas and who knows what else running around. Nationwide, not so much as Rivian was thrown a $9 billion lifeline by the Biden Administration to build a plant in Georgia. However, there is no guarantee that Rivian will even build the plant. Currently, its sales are down and it cannot sell the vehicles that it is already making. It was losing $100,000 on each truck it sells – now down to “only” $32,000 per vehicle. Rational decision makers would not build the new plant unless Rivian becomes profitable because you cannot make up losses by increased volume. If Trump takes away all the EV subsidies and the $7,500 credit, expect most of the industry to collapse leaving only Tesla. Maybe that is why Elon Musk favors eliminating the subsidy. When Denmark removed its subsidy, the sales of EVs fell 60 percent.

A stark illustration of the plight of the EV industry is that Cadillac is advertising a $339 per month lease on its Lyriq EV. Mind you, Honda wants $399 a month for its gas powered Pilot SUV. I repeat: a Cadillac Lyriq will cost you less than a Honda Pilot.

Trump first put tariffs on Chinese EVs. Then Biden upped the tariff to 100%. BYD is exploring building a plant in Mexico with an eye on the American market. Trump says that he will increase the tariff to 200% if they try to bring their cars into the US. Would it surprise you to know that the largest manufacturer of electric trucks and buses in the US is none other than BYD? Its factory is in Lancaster, California. I wonder what would happen if they started making cars at that facility?

I am not quite clear why Biden kept and then increased the tariffs on Chinese EVs. Musk has stated that it is virtually impossible for him and other manufacturers to profitably build a $20,000 EV. This is in the province of the Chinese car companies. Since Biden and his administration were so fixated on the climate as the existential threat, then why didn’t they exempt all vehicles under say $30,000 from the tariffs and give that market to the Chinese? Otherwise, with the price of EVs averaging around $60,000 only the well heeled can buy them. But again, they could lease a Lyriq.

Maybe we should call this electric dysfunction?

All the estimates of the impact of the tariffs on US households assume that demand for products will not change when the prices of the goods increase. Of course this is unrealistic because the demand for these goods is elastic not inelastic. The empirical question is to what extent will Trump’s deregulations offset the tariff price increase.

Biden pardoned Hunter. If he had any sense, he would have also pardoned the J-6 folks too.

Will Trump continue to build on his Hispanic base? The Hispanics on the border voted for Trump because of illegal immigration. Rather than embracing the newcomers with “Bienvenidos as los Estados Unidos de mi hermanos”, the Latinos voted for Trump as the illegals flooded their towns and strained their social fabric. Even in towns not on the border, Latinos voted for Trump. In Dalton, GA (the carpet capital of the world) where Latinos make up 35% of the population, Trump got 72% of the vote. Here Trump got the Latino vote because of the democrats incessant harping on abortion. Most Latinos oppose abortion. They also hate the progressive term “Latinx.”

How does one vet the migrants at the border? I presume that most of the migrants turn themselves in requesting asylum. How do you know if that request is valid? Also how do you know if that person is a criminal – presuming that they don’t have facial tattoos and tats all over their bodies? What are you going to do about all the unaccompanied children showing up at the border? Obviously, the Biden Administration has just let them loose since there are over 350,000 children now missing.