The fan publications and websites covering the electric vehicle industry and green energy reported jubilantly last week that U.S. sales in May for General Motors' (GM) - Get General Motors Company (GM) Report Chevrolet Bolt EV reached an all-time high.
The news is accurate, though context and perspective are needed. Sales of the Bolt EV began six months ago. GM has concentrated initial distribution in western states but primarily in California, the birthplace of the zero-emission mandate that eventually gave rise to Bolt, to Nissan's (NSANY) Leaf and other plug-in models designed to fulfill eventual government mandates for vehicles that don't emit carbon dioxide, a byproduct of combustion.
The more relevant point is that Bolt sales totaled 1,566 for the month and fewer than 6,000 for the five months, and that's with a $7,500 federal credit sponsored by taxpayers and other discounts. Those numbers are minuscule compared to the nearly 7 million vehicles of all kind sold through the first five months of 2017.
Why aren't throngs of environmental activists beating down the doors of Chevrolet dealers across the nation to reserve their Bolts? Nearly 400,000 prospective buyers sent $1,000 to Tesla (TSLA) - Get Tesla Inc Report to reserve battery-powered Model 3s when production begins, though it's not clear how many will take delivery.
The inconvenient truth for regulators at the California Air Resources Board and supporters of groups like the Union of Concerned Scientists is that American car buyers have heard the arguments in favor of subsidizing and mandating battery-powered cars -- and they're yawning. Through May, the market share of EVs of all kinds stood at less than 0.4%. Europe isn't much better.
One person who understands this disconnect, even if he's light on the details, is Donald Trump. As long as gasoline remains affordable, EVs and gas electric hybrids will be a tough sell. Creating a government incentive to buy EVs -- or worse, a mandate to force the manufacture of EVs -- effectively takes money from the pockets of taxpayers to placate those who believe that a climate catastrophe is imminent.
Dropping out of the Paris climate accord won't necessarily slow the production of EVs or the research into batteries that could make them more economical than internal combustion engines in a couple of decades. Bolt is an excellent vehicle, designed with thought and skill by GM engineers and capable of a reasonable 238-mile range between charges. But it's by far not the most economically rational or convenient vehicle for the average voter whose priority is safe, reliable and affordable transportation.
Trump could deal the electric-vehicle business a blow if he and Congress decide to curtail federal subsidies. The biggest loser would be Tesla; and Elon Musk actually took a poke at the government by dramatically resigning from two White House business advisory panels last week in protest of the U.S.'s exit from the Paris accord. GM, whose near-term future is far more dependent on fossil fuels than electricity, significantly kept silent.
GM executives would be secretly thrilled to see EVs fade in the short term, but they are way too diplomatic to say anything negative about the global climate "church," as Wall Street Journal columnist Holman Jenkins has called the global environmental movement. Like most people in business, auto industry executives realize that a smart strategy almost always is to go along and get along, even if you don't really believe.
Read More Trending Articles:
- 'I Am Positioned Aggressively for a Stock Market Correction,' Says Doug Kass
- Almost Everyone Has Given Up on Ford, but This Chart Says a Surprising Reversal In Its Stock Is Near
- How to Use Technical Analysis to Make Money: Cramer's 'Mad Money' Recap (Monday 6/5/17)
- Here's Why There Is a Sea of Red Across Global Stock Markets Tuesday
Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.