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Regulations Support Car Incumbents and Undermine Tesla Profitability



(p. A13) . . . governments everywhere have decided, perversely, that electric cars will not be profitable. In every major market--the U.S., Europe, China--the same political dispensation now applies: Established auto makers effectively will be required to make and sell electric cars at a loss in order to continue profiting from gas-powered vehicles.

This has rapidly become the institutional structure of the electric-car industry world-wide, for the benefit of the incumbents, whether GM in the U.S. or Daimler in Germany. Let's face it, the political class always had a bigger investment in these incumbents than it ever did in Tesla.

Tesla has a great brand, great technology and great vehicles. To survive, it also needs to mate itself to a nonelectric pickup truck business. . . .

We'll save for another day the relating of this phenomenon to Mr. Musk's recently erratic behavior and pronouncements. . . . Keep your eye on the bigger picture--the bigger picture is the global regulatory capture of the electric car moment by the status quo. And note the irony that Tesla's home state of California was the original pioneer of this insiders' regulatory bargain with its so-called zero-emissions-vehicle mandate.

Electric cars were going to remain a niche in any case, but public policy is quickly ruling out the possibility (which Tesla needed) of them at least being a profitable niche.



For the full commentary, see:

Holman W. Jenkins, Jr. "BUSINESS WORLD; A Tesla Crackup Foretold; The real problem is that governments everywhere have ordained that electric cars will be sold at a loss." The Wall Street Journal (Saturday, June 23, 2018): A13.

(Note: ellipses added.)

(Note: the online version of the commentary has the date June 22, 2018.)







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