The transition to electric vehicles comes with some serious challenges that
are worth discussing.
And one of the things I want to discuss is the inflation reduction act,
which included a provision that had Enhanced tax subsidies for
individuals who want to purchase electric vehicles now, it's supposed to
be an incentive to buy electric vehicles, I get the reasoning behind it.
There was a program that actually started back in 2008 that would provide
about $7,500 in time tax credits for people who purchase electric vehicles.
However, what this new inflation reduction act does is it expands it
by adding an additional $4000 again in the form of the tax credits.
So it'll be the $7500 plus an additional $4000.
But again there is a catch and that was that that's what I want to talk about.
So for years, prospective electric vehicle buyers could count on
federal federal vehicle tax credit which amounts to $7500.
And on a wide range of E V.
Models and as I said, this new bill adds an additional $4000.
Okay, so let's fast forward to what the exceptions are the final
assembly of any qualified vehicles must take place in north America.
And the credit will also hinge on the vehicle size.
Its total cost and potential buyers income starting before 2020 for
at least 40% of the critical minerals and at least half of the battery
components used to build the new eligible E V S will need to come from the US or
one of its free trade partners to access the full credit, okay?
If there's one thing that americans know about this country,
we've outsourced manufacturing jobs and we do not source the minerals necessary for
electric vehicle batteries here in the United States.
In fact many of those incredibly important minerals are sourced in other countries
and china's got a lot of control over a lot of those minerals because they decided
to actually take you know, electric vehicles, solar panels, renewable energy,
things like that a lot more seriously than the United States did.
So they kind of had a head start on all of that.
The critical minerals used in electric vehicle batteries are currently sourced
from all over the world.
The lion's share of cobalt comes from the Democratic Republic of Congo.
While lithium tends to come from south America and Australia, it's part of
the reason why the United States was behind an effort to do a coup in Bolivia
that luckily didn't work out and the people of Bolivia rose up and decided
to get rid of the right wing dictators who you know took part in that coup.
But nonetheless, I mean we need to think about the issues around
the the minerals necessary for the E V.
Batteries, US reserves of minerals like cobalt, lithium and nickel are just
a small fraction of the world's current supply, even stricter rules,
we Will eventually kick in by 2024 eligible vehicles can't incorporate any
battery components from China or other foreign entities of concern.
And in 2025,
they can't include any critical minerals from these countries either.
And China is responsible for more than 70% of the global battery cell production.
The country not only makes much of the world's battery components like
cathode materials, but is also home to the largest battery manufacturer,
Contemporary empirical technology Co.
And so I'll just give you one more stat that should concern you about whether
anyone's really going to qualify for the tax credits necessary to buy these
electric vehicles around 70% of the electric, hydrogen and
hybrid cars currently sold in the United States will not be eligible for
the credit according to the Alliance of automotive automotive innovation and jake.
I get the idea, I get that we're trying to persuade industry
to manufacture things here and to source minerals here,
but I just have a problem with how that's not guaranteed number one.
And the way that the inflation reduction act was advertised to
the american people made it seem like we're actually gonna
help ordinary people afford these insanely expensive electric vehicles.
And it looks like no, there are insanely strict rules that work against
ordinary people who might want to take advantage of that tax credit.
>> Yeah, here's what I'm really worried about all this hinges on.
Do democrats know what they're doing because I remember in the era of
competence in the government where they, if you're drawing up a bill like this,
you would take up a decent amount of time, writing it up because you would talk
to the experts and you would say, okay, is this realistic, is it possible?
How quickly can we get there?
And if they've done all the due diligence on it and they know that it's possible,
then it's a positive thing to have it produced here in America.
But if they haven't done the due diligence or
they're wrong about it, it'll become a totally pointless bill and then we'll have
all the negative parts of the bill and none of the positive parts of the bill.
And a couple of years from now, you'll start to see reports of them going well,
it was just poorly worded and there was nothing we could do and
the fossil fuel industry got everything they wanted and
we didn't get any positive developments on, on renewable energies.
Golly gee, there was nothing we could do.
Boy. I,
I don't know which one of those two things it is because you'd have to be
a deep expert in this field to know if this is realistic or not.
But are you sure you want to bet on democratic competence?
>> No, I don't.
I'm actually, I'm genuinely concerned.
Okay, I'm genuinely concerned with what's happening on a federal level,
but also what's happening at a state level here in California,
where Gavin Newsom has announced that California will be banning the sale
of new gas powered vehicles in the state, beginning in 2035.
Now, some people might think that sounds fantastic.
Great. That's that's wonderful.
Except I I don't know if we're really set up for this.
Okay, I'll tell you why.
So right now, California, Southern California is experiencing a severe
heat wave and a few days after announcing this plan to ban the sale of new gas
powered vehicles, he does another press conference where he's like, yeah,
so we're gonna need you because of like the blackouts that are happening due to
the heat wave and how our energy grid is just being overwhelmed right now,
we're just gonna ask you guys with electric vehicles to like,
don't plug in your electric vehicles.
Okay.
What?
So we've got a whole electric system that can't even handle a heat wave
at a time when yes, there's global warming, The climate is warming.
Maybe maybe we need to stop putting the cart before the horse and
make sure we have the infrastructure in place to
deal with this very bold thing that democrats in California are doing.
I'm not saying I'm against electric vehicles,
I'm just saying that everything seems to be done so haphazardly without
taking any real consideration about how much it's gonna cost.
Ordinary people who couldn't afford electric vehicles,
considering how much they cost today.
Right now, I get that the idea is eventually the,
like with any new technology, the price will come down.
Sure, great.
Except we're talking about California where the cost of living is already
incredibly high.
The federal subsidies seems shady as hell because most electric vehicles don't even
qualify.
We don't have the electric structure in California to handle a freaking heat wave.
I'm just really concerned about what, what this all means.
And right now in Castaic California, there is another wildfire.
So let's say you were a good environmentalist.
You know, you're environmentally conscious and you decide that you're going to
somehow scrape up the money to buy the electric vehicle, but
you're in Castaic and you just got an evacuation order, but
you're told not to charge your electric electric vehicle.
What happens then?
How do you get out of that situation?
I just, does anyone think about this stuff?
>> Yeah, well that's, that's what I'm worried about.
So look, if they've thought it through and it's possible,
then I think it's a great thing and California is really important
because it's so gigantic that if you have a good governor here and, and
solidly Democratic legislature and they passed good laws,
it'll force the market to react to it because you can't say, hey,
I'm not gonna sell cars in California because California is the fifth,
It was its own country would be the fifth largest economy in the world.
So it's a market mover.
And so it's a good idea to do something like this.
If you've got all your ducks in a row.
Now, what I'm worried about is corporate democrats.
A lot of politicians do, but corporate democrats are the king of this.
I love to do things where they go, okay,
I'm not going to help you in the short term.
Like Gavin Newsom recently said no, I I I don't want $18 minimum wage in California,
I'm gonna prevent it from going on the ballot.
So that would help you right now.
Today would be immeasurable help of the over $6000 worth of help for
five million California.
And he's like, no, the chamber of Commerce doesn't want that.
You're not getting that.
Okay, But I will pass something that might or might not happen in the year 2035
because I won't be governor, then I'll have moved on to other things and
if it falls apart because it was totally unrealistic, who cares.
I've already moved on with my career and I already got all the corporate cash and
I got your votes because it looked like I was doing something really positive.
So that's why this story in particular,
the devil is in the details, is it realistic, or is it not, You know,
in the state of Virginia had previously agreed to follow suit with what
California is doing with the ban of gas-powered vehicles by 2035,
but they have decided to renege on that agreement because they
realized that they would not have the infrastructure necessary to
support that influx of electric vehicles if they followed suit.
>> Right? So, again,
I don't know how this is all really going to play out.
I am worried that they will implement that ban, and in the end,
what will end up happening is people who can't afford electric vehicles are gonna
turn to gas powered vehicle, used gas powered vehicles.
There's gonna be increased demand for the gas powered used vehicles,
which will drive up the price, and people who are already living in the most
expensive state in this country are going to be squeezed even further.
It's just you gotta think ahead a little more.
And if we've got these vulnerabilities with our infrastructure,
maybe maybe fix that before you decide to do these like blanket bands.
But nonetheless, this is what we're dealing with.