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Three years ago, the global auto
industry was gripped by a 

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collective hallucination. 
Mesmerized by Tesla's trillion 

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dollar valuation, traditional 
car makers convinced themselves 

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and their investors that they 
were just one battery factory 

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away from their stocks. 
Trading at similar multiples, 

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Volkswagen promised that 70% of 
its European sales would be 

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electric by 20-30, a figure they
later bumped up to 80%. 

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Stelantis went further, pledging
a 100% transition. 

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Even General Motors, a company 
not historically known for rash 

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technological bets, set a 2035 
deadline to abandon the eternal 

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combustion engine entirely. 
Those promises were easy to make

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a few years ago, when interest 
rates were zero and politicians 

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were writing checks. 
They're much harder to keep 

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today. 
The reality check arrived this 

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autumn with brutal clarity. 
In September, Donald Trump 

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abruptly withdrew the $7500 
consumer tax credit, a subsidy 

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that often tipped the economic 
scales in favour of going 

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electric. 
Combined with his rollback of 

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emissions regulations, the 
artificial floor supporting the 

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US electric vehicle market has 
effectively collapsed across the

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Atlantic. 
The retreat is different in 

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mechanism but identical in 
direction. 

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The European Commission, bowing 
to intense pressure from its 

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auto manufacturers, unveiled 
plans to dilute its 2035 ban on 

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new combustion engine cars, the 
single biggest walk back of 

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green policy in the block's 
history, by replacing a hard 

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with a 90% target. 
Brussels has quietly conceded 

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that its flagship industrial 
policy was colliding with 

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economic reality. 
We're witnessing the end of the 

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Field of Dreams era in EV 
manufacturing. 

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Governments and CE OS spent the 
last half decade operating on 

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the assumption that if they 
built the EVs, the buyers would 

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come. 
The buyers, however, have 

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refused to follow the script. 
The revolution has simply 

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followed the money but was sold 
as global inevitability has 

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dissolved into a patchwork of 
regional markets defined 

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entirely by who's writing the 
biggest checks. 

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While global EV sales are up, 
driven almost entirely by a 

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booming subsidized Chinese 
market, the Western consumer has

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proven far more skeptical. 
In North America, EV sales have 

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actually contracted by 1% this 
year. 

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Far from the exponential pace 
promised in PowerPoint decks, 

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the industry is grinding out a 
messy, fragmented reality where 

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geography defines adoption. 
The industry priced itself for a

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global takeover over. 
What they got instead was a 

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standoff in the West and a price
war in the East. 

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Consumers have proven stubbornly
resistant to purchasing vehicles

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that often cost more, depreciate
faster and require more planning

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to refuel than the cars they 
already own. 

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While the E US timeline to end 
petrol's dominance once looked 

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ambitious, it now looks like a 
relic of a different economic 

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era. 
The industry is waking up to a 

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hard truth. 
The transition to 

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electrification was priced for 
perfection, but the customer 

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experience has been anything 
bad. 

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For most households, a vehicle 
is the second largest purchase 

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they'll ever make. 
They accept that it'll lose 

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value the moment it leaves a 
dealer's lot, but they rely on 

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that depreciation being 
predictable and gradual. 

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The electric vehicle industry 
broke this unwritten social 

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contract. 
Buying a new EV in 2022 turned 

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out to be the financial 
equivalent of setting a pile of 

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cash on fire to verify that it 
was flammable. 

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It worked, but it was an 
expensive lesson. 

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Buyers have painfully discovered
that these machines age less 

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like a vintage Porsche and more 
like an iPhone because the 

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technology moves so fast. 
Today's cutting edge EV is 

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tomorrow's obsolete gadget. 
We saw this play out brutally in

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the UK used car market, where 
Car Wow showed last year that a 

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one year old Audi E Tron was 
trading for 27% less than a 

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comparable 1 year old model did 
just a year earlier, while its 

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diesel equivalent held its 
value. 

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This financial pain is not 
limited to the sticker price, 

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it's compounded by long term 
reliability fears. 

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Consumer Reports recently ranked
Tesla as the least reliable used

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car brand in America, 
identifying the very vehicles 

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hitting the second hand market 
now as frequent visitors to the 

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repair shop. 
A used Tesla might look like a 

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bargain at current prices, but 
that discount isn't a gift. 

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It's the market accurately 
pricing in the headache of 

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owning the least reliable used 
car on the road. 

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Hertz, the rental giant, worked 
this out the hard way. 

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They dumped 20,000 EV's from 
their fleet, explicitly citing 

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high repair costs and a lack of 
customer interest. 

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When the professionals whose 
entire business model relies on 

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managing fleet costs and 
residual values flee the asset 

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class, it's a warning sign that 
the retail buyer should probably

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heed. 
The manufacturers are now 

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admitting that the map doesn't 
work for them either. 

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This week, Ford announced A 
staggering 19 1/2 billion dollar

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write down as it scrapped plans 
for its flagship all electric 

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F-150 pickup truck. 
In 2021, CEO Jim Farley hailed 

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the Lightning as the truck of 
the future. 

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Four years later, it's been 
consigned to the past, a victim 

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of sales that collapsed by 72% 
year on year. 

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Ford is not alone in its 
expensive retreat. 

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General Motors recently booked a
$1.6 billion charge to scale 

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back its own EV production, 
while Volkswagen is preparing to

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close a German plant for the 
first time in its 88 year 

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history. 
We should call these moves what 

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they are capitulations. 
Traditional automakers have 

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realized that without massive 
subsidies to mask the steep 

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depreciation and higher running 
costs, the truck of the future 

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is a product that very few 
people will want to buy today. 

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Even the high priest of the EV 
revolution, Elon Musk, has 

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quietly rewritten his own 
gospel. 

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For years, the foundational myth
of Tesla's valuation was the 

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promise that it would be selling
20 million cars a year by 20-30,

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twice what Toyota sells today. 
But with sales hovering below 2 

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million units following two 
consecutive years of decline, 

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that ambition has quietly 
evaporated. 

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Even the most bullish analysts 
have stopped defending a target 

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that would require the company 
to grow tenfold in just four 

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years. 
The exponential growth story is 

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now dead, and faced with a 
shrinking car business, the 

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company has done what any corner
tech firm would do. 

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It pivoted to science fiction. 
The narrative has shifted 

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entirely from shipping cars to 
developing humanoid robots, many

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of which will be shipped to Mars
to working colonies and full 

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self driving software products 
that are perpetually coming next

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year but conveniently don't need
to be reported on a monthly 

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sales Ledger today. 
By promising a future of space 

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robots, flying cars and robo 
taxis that don't jet exist, 

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Tesla's managed to distract 
investors from the uncomfortable

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presence. 
They are a car company that is 

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selling fewer and fewer cars in 
the modern stock market. 

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A robot in the Bush is worth 
significantly more than two cars

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in the hand. 
Investors famously prefer a 

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great story about the future to 
a spreadsheet showing declining 

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margins in the present. 
The financial carnage at Ford 

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was not limited to the headline 
grabbing $19.5 billion write 

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down. 
That figure is essentially an 

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accounting adjustment, A belated
acknowledgement of capital 

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wasted on tooling and factories 
for vehicles that will never be 

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built. 
But on top of that, Ford's 

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electric vehicle division, Model
E, has been incinerating actual 

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cash on the vehicles it did 
build. 

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The division recorded a $5.1 
billion our operating loss in 

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2024 and lost another $3.6 
billion in the 1st 3/4 of 2025. 

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These losses are symptoms of a 
business model that 

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fundamentally conflicts with the
American consumers non 

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negotiable demand for size. 
In the United States, the 

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passenger car is practically 
extinct. 

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Trucks and SUVs now make up 80% 
of new vehicle sales. 

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For decades, this preference was
a goldmine for Detroit. 

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In the internal combustion era, 
the manufacturing math was 

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compelling. 
Big cars cost only marginally 

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more to stamp out than small 
cars, but they could be sold for

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significantly higher prices. 
As Ford CEO Jim Farley 

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explained, in the gas powered 
world, the bigger the vehicle, 

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the higher the margin. 
Electrification inverts this 

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logic. 
In the EV world, the bigger the 

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vehicle, the bigger the battery.
You need to move it. 

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Since the battery is the single 
most expensive component, 

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scaling up doesn't increase your
margin, it destroys it. 

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As Farley noted, customers will 
not pay a premium sufficient to 

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cover the cost of massive 
batteries required to haul a 

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three ton truck across a state 
line. 

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The The result is a product that
pleases no one. 

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To achieve a respectable range, 
an electric truck needs a 

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battery so heavy that it erodes 
the vehicle's payload capacity 

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and efficiency. 
To keep the price affordable, 

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the manufacturer has to eat a 
loss on every unit. 

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The electric pickup truck once 
heralded as the killer app that 

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would win over Middle America 
has turned out to be an 

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engineering contradiction. 
Recognizing this, Detroit is 

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pivoting to a compromise that 
engineers love and purists hate 

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the extended range electric 
vehicle. 

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Ford has confirmed that the next
iteration of the F-150 Lightning

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will not be fully electric, but 
will carry a small internal 

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combustion engine solely to 
recharge the battery. 

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This is a tacit admission that 
for the heavy aerodynamic bricks

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that Americans insist on 
driving, the battery only 

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solution is currently a dead 
end. 

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The fundamental problem facing 
Western automakers is that 

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manufacturers are losing money 
on almost every single vehicle 

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while consumers remain reluctant
to buy them. 

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Even at the height of the 
subsidy era, the economics of 

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building EVs in the West were 
disastrous. 

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Boston Consulting Group reported
earlier this year that 

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automakers generally lose around
$6000 on every EV sold in 

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America. 
For pureplay EV stardom, the 

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numbers are equally terrifying, 
though the picture is diverging.

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While Rivian finally posted a 
positive gross profit this 

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quarter, meaning they make money
on the car itself before paying 

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overheads, they still posted a 
net loss of billions for the 

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year. 
Lucid, meanwhile, continues to 

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report staggering losses, which 
Bloomberg estimated at over 

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$300,000 per vehicle in late 
2023, though that figure has 

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improved slightly as volumes 
crawl upward. 

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These entities operate less like
businesses and more like 

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charities for wealthy early 
adopters. 

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In the United States, automakers
have at least been operating in 

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a protected environment, 
shielded from the brutal 

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efficiency of Chinese 
competition by high tariffs. 

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Yet even in this walled garden, 
they've failed to turn a profit.

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Ford's Model E division, as I 
mentioned, last $5.1 billion in 

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2024 alone, proving that even 
without having to fight a price 

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war against BYD, the cost of 
manufacturing batteries in the 

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West is simply too high to 
generate a return. 

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The industry has also become 
dangerously addicted to 

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government handouts to move 
metal. 

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We've seen repeatedly the demand
for EVs is not organic. 

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It's purchased in Germany, the 
continent's largest auto market.

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00:13:08,600 --> 00:13:13,320
EV sales collapsed by nearly 40%
when the government withdrew its

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00:13:13,320 --> 00:13:17,080
purchase subsidies. 
Sales picked back up when new 

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00:13:17,080 --> 00:13:20,600
subsidies were provided. 
When Italy introduced a new 

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00:13:20,600 --> 00:13:24,480
incentive scheme offering up to 
€20,000 euros in buyer 

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subsidies, which is over 
$23,000, it ran out of funds 

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almost immediately. 
This stop start dynamic makes 

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industrial planning impossible. 
Manufacturers are being asked to

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invest billions in multi decade 
factory projects based on demand

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00:13:43,000 --> 00:13:46,600
that can evaporate overnight if 
a finance minister tightens a 

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budget or if a new president 
signs an executive order. 

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The data seems to show that when
the free money stops, the car 

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stops selling. 
To understand why the transition

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has stalled, you have to 
understand who was buying these 

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00:14:01,480 --> 00:14:04,760
cars in the 1st place. 
For the last five years, the 

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00:14:04,760 --> 00:14:08,360
industry hasn't been selling to 
the general public, it's been 

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selling to a niche demographic 
of wealthy, tech obsessed early 

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00:14:12,680 --> 00:14:15,800
adopters. 
According to Bloomberg, electric

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vehicles remain overwhelmingly 
popular among the wealthiest 

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Americans, while interest drops 
off a Cliff as you move down and

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the income brackets. 
The first wave of buyers treated

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their EVs like the latest 
iPhone, a status symbol and a 

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00:14:31,320 --> 00:14:35,320
piece of cool technology. 
Crucially, they were forgiving 

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if the panel gaps were uneven, 
the software had problems, or 

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the doors wouldn't open. 
They shrugged it off as the 

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00:14:41,760 --> 00:14:43,840
price of being on the cutting 
edge. 

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These are people who view a car 
door that doesn't quite close, 

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not as a manufacturing defect, 
but as a quirky conversation 

232
00:14:51,680 --> 00:14:53,920
starter. 
They treat their vehicles with 

233
00:14:53,920 --> 00:14:57,200
the same forgiving attitude that
a parent reserves for a 

234
00:14:57,200 --> 00:15:02,360
toddler's terrible drawing. 
Importantly, 84% of early 

235
00:15:02,360 --> 00:15:06,960
adopters had access to home 
charging and most owned a second

236
00:15:06,960 --> 00:15:11,520
gas powered car for long trips. 
The industry assumed that the 

237
00:15:11,520 --> 00:15:15,240
next wave of buyers, the 
mainstream, would behave the 

238
00:15:15,240 --> 00:15:19,880
same way, and they were wrong. 
The mainstream buyer is not a 

239
00:15:19,880 --> 00:15:23,040
tech enthusiast looking for a 
conversation starter. 

240
00:15:23,320 --> 00:15:25,680
There are pragmatist looking for
a tool. 

241
00:15:25,920 --> 00:15:29,320
They are cost conscious, 
skeptical of tech for the sake 

242
00:15:29,320 --> 00:15:32,320
of tech, and unforgiving of 
inconvenience. 

243
00:15:32,600 --> 00:15:36,400
They generally own only one 
vehicle, park it on the street, 

244
00:15:36,560 --> 00:15:39,680
and expect it to work seamlessly
for 15 years. 

245
00:15:40,320 --> 00:15:45,120
When this buyer sees a $58,000 
car that takes 40 minutes to 

246
00:15:45,120 --> 00:15:49,880
refuel and might lose 30% of its
range in the winter, they don't 

247
00:15:49,880 --> 00:15:54,000
see the future. 
They see a downgrade because the

248
00:15:54,000 --> 00:15:57,960
early adopters were so 
enthusiastic, automakers fooled 

249
00:15:57,960 --> 00:16:01,080
themselves into thinking that 
they'd solved the puzzle. 

250
00:16:01,320 --> 00:16:04,760
In reality, they had just picked
the low hanging fruit. 

251
00:16:05,040 --> 00:16:08,760
Crossing the chasm to the 
skeptical majority requires a 

252
00:16:08,760 --> 00:16:11,720
product that's cheaper and more 
convenient than what they're 

253
00:16:11,720 --> 00:16:14,920
already driving. 
Right now, the electric vehicle 

254
00:16:14,920 --> 00:16:18,320
is neither. 
Nowhere is the disconnect 

255
00:16:18,320 --> 00:16:22,240
between policy fantasy and 
industrial reality more glaring 

256
00:16:22,240 --> 00:16:25,240
than in Europe. 
On the surface, the transition 

257
00:16:25,240 --> 00:16:29,280
looks like it's going well. 
This year, one in five car sold 

258
00:16:29,280 --> 00:16:33,800
in the EU was purely electric, a
figure that dwarfs the adoption 

259
00:16:33,800 --> 00:16:38,360
rate in the United States, where
EVs account for around one in 10

260
00:16:38,360 --> 00:16:41,160
sales. 
In almost any other industry, 

261
00:16:41,160 --> 00:16:45,400
capturing 20% of a market in a 
decade would be a triumph. 

262
00:16:45,720 --> 00:16:49,960
But for European regulators, it 
was a failure that required an 

263
00:16:49,960 --> 00:16:54,400
emergency intervention because 
the emissions targets were set 

264
00:16:54,520 --> 00:16:58,880
to ratcher tighter every year, 
regardless of consumer demand. 

265
00:16:59,120 --> 00:17:02,560
Even this healthy sales volume 
wasn't enough to save the 

266
00:17:02,560 --> 00:17:05,200
industry from billions in 
penalties. 

267
00:17:05,680 --> 00:17:10,040
The cracks in the system became 
obvious in May when EU lawmakers

268
00:17:10,040 --> 00:17:14,119
were forced to pass an amendment
allowing manufacturers to skirt 

269
00:17:14,119 --> 00:17:18,520
immediate fines for missing 
their 2025 targets, letting them

270
00:17:18,520 --> 00:17:21,400
make up the difference over the 
next two years. 

271
00:17:21,839 --> 00:17:25,720
It was the first clear signal 
that the regulatory architecture

272
00:17:25,720 --> 00:17:29,440
was structurally unsound. 
If the greenest continent on 

273
00:17:29,440 --> 00:17:32,400
Earth couldn't hit its own 
interim targets without 

274
00:17:32,400 --> 00:17:36,840
bankrupting its national 
champions, the 2035 ban was 

275
00:17:36,840 --> 00:17:40,560
already looking shaky. 
To survive the regulatory 

276
00:17:40,560 --> 00:17:43,920
minefield, Europe's automakers 
have been forced into a 

277
00:17:43,920 --> 00:17:47,880
humiliating ritual, buying 
carbon credits from their 

278
00:17:47,880 --> 00:17:51,200
competitors who avoid paying 
fines to Brussels. 

279
00:17:51,440 --> 00:17:55,280
Companies like Volkswagen and 
Stelantis have sent millions of 

280
00:17:55,280 --> 00:17:59,760
euros to pureplay EV makers like
Tesla and Volvo to pool their 

281
00:17:59,760 --> 00:18:02,920
emissions data. 
From a strategic perspective, 

282
00:18:03,120 --> 00:18:06,120
this is madness. 
European incumbents are 

283
00:18:06,120 --> 00:18:09,760
effectively subsidizing the very
companies trying to put them out

284
00:18:09,760 --> 00:18:13,320
of business. 
Every euro paid to Tesla for a 

285
00:18:13,320 --> 00:18:17,280
carbon credit is a euro that 
strengthens a foreign competitor

286
00:18:17,440 --> 00:18:19,840
while weakening the European 
balance sheet. 

287
00:18:20,120 --> 00:18:24,240
It's a system that punishes 
established manufacturers for 

288
00:18:24,240 --> 00:18:27,760
struggling with the transition 
while directly funding the war 

289
00:18:27,760 --> 00:18:31,320
chess of their rivals. 
It's the corporate equivalent of

290
00:18:31,320 --> 00:18:34,480
paying your bully to stop 
punching you, only to watch him 

291
00:18:34,480 --> 00:18:36,520
use the money to buy a baseball 
bat. 

292
00:18:37,200 --> 00:18:41,800
Having realized that the 2035 
ban was unrealistic, Brussels 

293
00:18:41,800 --> 00:18:44,960
has now decided to redefine what
ban means. 

294
00:18:45,200 --> 00:18:48,960
In a classic example of EU 
bureaucratic gymnastics, the 

295
00:18:48,960 --> 00:18:53,720
Commission has unveiled a plan 
to drop the target from a 100% 

296
00:18:53,720 --> 00:18:58,640
reduction in emissions to 90%. 
The new rules create a complex 

297
00:18:58,640 --> 00:19:02,280
system of offsets. 
Automakers can continue to sell 

298
00:19:02,280 --> 00:19:06,080
combustion engine cars, provided
that they compensate for the 

299
00:19:06,080 --> 00:19:10,400
emissions by using green steel 
in their manufacturing or by 

300
00:19:10,400 --> 00:19:13,960
proving the vehicles run on 
synthetic E fuels. 

301
00:19:14,240 --> 00:19:17,920
This essentially turns the 
petrol car from a mass market 

302
00:19:17,920 --> 00:19:22,640
commodity into a luxury good. 
As automotive analyst Mathias 

303
00:19:22,640 --> 00:19:27,200
Schmidt noted, petrol cars will 
become the haute couture Swiss 

304
00:19:27,200 --> 00:19:31,760
watches of the motor industry, 
Expensive, complex, and sold 

305
00:19:31,760 --> 00:19:35,240
only to those wealthy enough to 
pay for the regulatory 

306
00:19:35,240 --> 00:19:39,000
compliance. 
This compromise pleases no one, 

307
00:19:39,200 --> 00:19:42,360
but it saves face. 
It allows politicians to claim 

308
00:19:42,360 --> 00:19:45,000
that they're still 
decarbonizing, while allowing 

309
00:19:45,000 --> 00:19:48,120
the German auto lobby to keep 
its engine plants running. 

310
00:19:48,400 --> 00:19:52,480
It transforms a clear industrial
directive into a maze of 

311
00:19:52,480 --> 00:19:55,760
loopholes, ensuring that the 
future of the European auto 

312
00:19:55,760 --> 00:20:00,240
industry will be decided not by 
engineers or consumers, but by 

313
00:20:00,240 --> 00:20:04,040
compliance officers navigating 
the definition of sustainable 

314
00:20:04,040 --> 00:20:06,480
steel. 
The disconnect, however, is 

315
00:20:06,480 --> 00:20:09,400
palpable. 
While EU commissioners hailed 

316
00:20:09,400 --> 00:20:13,320
the move as a pragmatic 
compromise that still delivers a

317
00:20:13,320 --> 00:20:18,320
90% emissions cut, the industry 
views it merely as a first step.

318
00:20:18,640 --> 00:20:22,720
French automakers notably 
described the rollback not as a 

319
00:20:22,720 --> 00:20:27,000
solution, but as an initial 
response to urgent challenges. 

320
00:20:27,240 --> 00:20:30,320
Diplomatic code 4. 
We need much more. 

321
00:20:30,640 --> 00:20:33,400
This creates a dangerous game of
chicken. 

322
00:20:33,680 --> 00:20:38,240
The European auto sector employs
nearly 13 million people and 

323
00:20:38,240 --> 00:20:41,200
accounts for 7% of the blocks 
GDP. 

324
00:20:41,440 --> 00:20:45,400
It's politically too big to 
fail, yet commercially too weak 

325
00:20:45,400 --> 00:20:49,200
to survive the current rules. 
Governments are betting that the

326
00:20:49,200 --> 00:20:52,480
industry will adapt. 
The industry is betting that 

327
00:20:52,480 --> 00:20:56,200
when push comes to shove, 
Brussels will blink again rather

328
00:20:56,200 --> 00:20:59,320
than watch its historic 
manufacturing base migrate to 

329
00:20:59,320 --> 00:21:02,000
China. 
While the West spends the next 

330
00:21:02,000 --> 00:21:06,960
decade negotiating loopholes and
refining hybrid trucks, China is

331
00:21:06,960 --> 00:21:10,720
finalizing its stranglehold on 
the only component that actually

332
00:21:10,720 --> 00:21:15,640
matters, the battery. 
China currently controls 85% of 

333
00:21:15,640 --> 00:21:19,280
global lithium ion cell 
manufacturing capacity. 

334
00:21:19,520 --> 00:21:22,840
For critical minerals like 
graphite and processed lithium, 

335
00:21:23,040 --> 00:21:27,520
their dominance is nearly total.
This is not a supply chain gap 

336
00:21:27,520 --> 00:21:30,960
that can be closed with a few 
tax credits or a new factory in 

337
00:21:30,960 --> 00:21:33,880
Tennessee. 
It's a structural monopoly. 

338
00:21:34,600 --> 00:21:37,720
This really forces an 
uncomfortable question for 

339
00:21:37,720 --> 00:21:42,040
Western industrial policy. 
Is a German electric car really 

340
00:21:42,040 --> 00:21:45,840
German if it's most valuable and
complex component? 

341
00:21:46,040 --> 00:21:48,560
The battery is imported from 
China. 

342
00:21:49,040 --> 00:21:53,360
When the battery pack accounts 
for 40% of the vehicles cost and

343
00:21:53,360 --> 00:21:57,400
determines its performance, the 
legacy automaker is reduced to 

344
00:21:57,400 --> 00:22:01,920
the status of a final assembly 
plant for Chinese technology. 

345
00:22:02,600 --> 00:22:05,920
Western governments are trying 
to wall off their market with 

346
00:22:05,920 --> 00:22:08,960
tariffs, but Chinese 
manufacturers are simply 

347
00:22:08,960 --> 00:22:12,960
climbing over the wall. 
Companies like BYD are already 

348
00:22:12,960 --> 00:22:16,080
scouting locations to build 
factories inside Europe and 

349
00:22:16,080 --> 00:22:18,480
Mexico. 
They're bringing their supply 

350
00:22:18,480 --> 00:22:22,280
chains with them, meaning that 
they can build electric vehicles

351
00:22:22,280 --> 00:22:26,280
profitably at prices that 
Western legacy automakers still 

352
00:22:26,280 --> 00:22:29,280
can't match, even in their own 
backyards. 

353
00:22:29,920 --> 00:22:34,200
Europe's pivot to green steel 
offsets might buy its automakers

354
00:22:34,200 --> 00:22:37,400
a few more years of 
profitability from their piston 

355
00:22:37,400 --> 00:22:41,600
engines, but it does nothing to 
address the fundamental reality 

356
00:22:41,800 --> 00:22:43,640
that they've lost the battery 
war. 

357
00:22:44,480 --> 00:22:47,840
Well, European politicians like 
to frame their decisions as 

358
00:22:47,840 --> 00:22:51,280
independent. 
The reality is that Donald Trump

359
00:22:51,280 --> 00:22:54,600
has acted as a potent accelerant
for their retreat. 

360
00:22:54,920 --> 00:22:58,760
By slashing US fuel economy 
standards and removing tax 

361
00:22:58,760 --> 00:23:02,720
credits, Trump gave Detroit 
permission to build gas trucks 

362
00:23:02,720 --> 00:23:07,120
again, which US buyers like, 
inadvertently turning Europe 

363
00:23:07,120 --> 00:23:10,760
into the primary battleground 
for the global EV war. 

364
00:23:11,320 --> 00:23:14,920
As the US market walls itself 
off behind tariffs and 

365
00:23:14,920 --> 00:23:19,320
regulatory apathy, the massive 
industrial capacity built up by 

366
00:23:19,320 --> 00:23:23,280
Chinese and Korean battery 
makers need somewhere to go. 

367
00:23:23,600 --> 00:23:27,040
They can't sell their surplus 
EVs to Americans, so they'll 

368
00:23:27,040 --> 00:23:30,280
flood the only remaining open 
market Europe. 

369
00:23:30,640 --> 00:23:35,000
As the Financial Times noted, by
slowing the transition in the 

370
00:23:35,080 --> 00:23:38,560
US, Trump has effectively 
accelerated that future for 

371
00:23:38,560 --> 00:23:42,480
Europe, forcing the continent to
face the competitive onslaught 

372
00:23:42,480 --> 00:23:46,200
years earlier than expected. 
While Europe is worried about 

373
00:23:46,200 --> 00:23:49,960
the inflow of cheap Chinese 
cars, which could cause mass 

374
00:23:49,960 --> 00:23:53,920
layoffs at auto plants, other 
countries like Australia who 

375
00:23:53,920 --> 00:23:58,040
don't have an auto industry, are
just happy to be getting cheaper

376
00:23:58,040 --> 00:24:00,560
cars. 
This leads to the central 

377
00:24:00,560 --> 00:24:02,920
question haunting Western 
boardrooms. 

378
00:24:03,200 --> 00:24:06,520
Is this retreat a catastrophic 
strategic error? 

379
00:24:06,800 --> 00:24:10,560
Financial journalists and 
climate think tanks argue that 

380
00:24:10,560 --> 00:24:14,400
by taking their foot off the 
pedal now, Western automakers 

381
00:24:14,400 --> 00:24:18,400
are ceding the technology of the
future to China, guaranteeing 

382
00:24:18,400 --> 00:24:22,800
their eventual obsolescence. 
They view the pivot to hybrids 

383
00:24:22,800 --> 00:24:27,360
as a Kodak moment, a desperate 
cling to a dying business model.

384
00:24:27,680 --> 00:24:31,080
But there is a more cynical and 
perhaps more accurate 

385
00:24:31,080 --> 00:24:34,320
interpretation. 
You can only fall behind in a 

386
00:24:34,320 --> 00:24:37,680
race if everyone is running 
towards the same finish line. 

387
00:24:38,000 --> 00:24:41,840
For the last five years, the EV 
race was propelled not by 

388
00:24:41,840 --> 00:24:44,520
consumer demand but by 
government push. 

389
00:24:44,800 --> 00:24:48,160
The moment the subsidies were 
removed in Germany, sales 

390
00:24:48,160 --> 00:24:50,480
collapsed. 
The moment the tax credits 

391
00:24:50,480 --> 00:24:55,040
vanished in the US, inventory 
started piling up rather than 

392
00:24:55,040 --> 00:24:58,720
falling behind. 
Western Automate are likely just

393
00:24:58,720 --> 00:25:02,240
realigning with reality. 
They're pivoting from building 

394
00:25:02,240 --> 00:25:05,920
the cars regulators wanted them 
to build back to building the 

395
00:25:05,920 --> 00:25:08,560
cars their customers actually 
want to buy. 

396
00:25:09,120 --> 00:25:13,720
The events of late 2025 marked 
the end of the inevitability 

397
00:25:13,720 --> 00:25:17,440
narrative, even if the physics 
of battery efficiency and the 

398
00:25:17,440 --> 00:25:19,800
imperative of climate change 
remain. 

399
00:25:20,240 --> 00:25:24,280
For five years, the global auto 
industry operated on a timeline 

400
00:25:24,280 --> 00:25:28,480
dictated by politicians rather 
than their customers, engineers 

401
00:25:28,480 --> 00:25:31,240
or economists. 
They tried to force a 

402
00:25:31,240 --> 00:25:35,280
technological transition to 
happen overnight by flooding the

403
00:25:35,280 --> 00:25:39,000
market with subsidized capital 
and banning the competition. 

404
00:25:39,440 --> 00:25:43,360
That accelerationist experiment 
appears to be stalling. 

405
00:25:44,040 --> 00:25:46,920
The economics have simply become
undeniable. 

406
00:25:47,200 --> 00:25:53,600
In 2019, the average new car in 
the United States cost $39,000. 

407
00:25:53,840 --> 00:25:58,560
Today, it costs over $50,000, 
meaning that consumers are 

408
00:25:58,560 --> 00:26:02,440
already feeling squeezed. 
Even with the federal tax 

409
00:26:02,440 --> 00:26:06,600
credit, the average EV still 
commanded a premium that 

410
00:26:06,600 --> 00:26:08,760
mainstream buyers were 
rejecting. 

411
00:26:09,040 --> 00:26:13,000
A looming threat to the EV 
industry is the cost of fuel. 

412
00:26:13,320 --> 00:26:16,840
Big Tech has entered the energy 
market with an appetite that 

413
00:26:16,840 --> 00:26:19,120
makes the auto industry look 
small. 

414
00:26:19,400 --> 00:26:23,160
With open AI planning to build 
data centers that will consume 

415
00:26:23,160 --> 00:26:28,280
23 gigawatts of power in the 
next five years, or the output 

416
00:26:28,280 --> 00:26:32,920
of 23 nuclear power stations and
other AI providers planning 

417
00:26:32,920 --> 00:26:35,920
similar build out. 
The electric vehicle is about to

418
00:26:35,920 --> 00:26:39,680
enter a bidding war for 
electricity against the world's 

419
00:26:39,680 --> 00:26:43,720
best funded companies. 
If EVs have to compete with data

420
00:26:43,720 --> 00:26:46,920
centers Centers for grid 
capacity, the error of cheap 

421
00:26:46,920 --> 00:26:51,000
home charging may come to an 
end, dismantling the last 

422
00:26:51,000 --> 00:26:54,160
remaining economic argument for 
going electric. 

423
00:26:54,760 --> 00:26:59,160
The transition to Net 0 has been
indefinitely rescheduled. 

424
00:26:59,360 --> 00:27:02,360
The world is now backing away 
from the edge of the electric 

425
00:27:02,360 --> 00:27:05,200
Cliff. 
According to Bloomberg, plug in 

426
00:27:05,200 --> 00:27:09,920
car sales in the US are expected
to plunge 30% in the final 

427
00:27:09,920 --> 00:27:13,560
quarter of this year to the 
lowest since 2022. 

428
00:27:13,920 --> 00:27:17,240
For next year, they're 
projecting little or no growth 

429
00:27:17,240 --> 00:27:21,680
due to the removal of federal EV
tax credits and the weakening of

430
00:27:21,840 --> 00:27:24,440
US fuel economy and emission 
standards. 

431
00:27:25,240 --> 00:27:29,040
The British government has 
insisted that it will not dilute

432
00:27:29,040 --> 00:27:32,960
plans to shift all new car sales
to electric vehicles starting in

433
00:27:32,960 --> 00:27:36,240
2035. 
I think we can expect to see 

434
00:27:36,400 --> 00:27:39,960
more shake UPS in Europe in the 
coming years as more and more 

435
00:27:39,960 --> 00:27:44,600
EVs flood in from China. 
Ford told the FT that they 

436
00:27:44,600 --> 00:27:48,320
reject the idea that they 
botched their EV transition, 

437
00:27:48,520 --> 00:27:52,560
saying that the losses were 
driven primarily by unrealistic 

438
00:27:52,560 --> 00:27:57,520
optimism across the industry 
about consumer demand for EVs. 

439
00:27:57,880 --> 00:28:01,760
Andrew Frick, the head of Ford's
petrol, engine and electric 

440
00:28:01,760 --> 00:28:05,320
businesses, told the reporters 
that they are looking at the 

441
00:28:05,320 --> 00:28:09,720
market as it is today, not as 
everyone predicted it to be 5 

442
00:28:09,720 --> 00:28:12,480
years ago. 
Thanks for tuning into this 

443
00:28:12,480 --> 00:28:15,520
week's podcast, which is 
entirely supported by viewers 

444
00:28:15,520 --> 00:28:18,520
like you on Patreon. 
If you'd like to sign up to 

445
00:28:18,520 --> 00:28:21,600
support the podcast, there's a 
link in the show notes. 

446
00:28:21,720 --> 00:28:24,040
Have a great week and talk to 
you again soon. 

447
00:28:24,200 --> 00:28:24,560
Bye.