Alan Beattie in Financial Times (paywall):
Many in Congress dislike China and EVs more than they like technological advance. In an act of pure spite, the Senate recently attempted to stop the US Postal Service from using new state-of-the-art electric delivery trucks — a move that fortunately failed on a technicality.
The US’s record in squandering leads in green technology is now becoming embarrassing. Scientists at the University of Texas invented the lithium-iron-phosphate battery, which is becoming a standard for EVs, in 1996, but the US ceded the commercial advantage to Chinese companies, which were supported by lavish state subsidies. Elon Musk’s Tesla had a great start in EVs, but until very recently Musk actually opposed the US tax credits because they would have helped his competitors. He preferred consolidating his position in the US market to expanding it.
No rich-country car company except Tesla saw the EV revolution coming and got to the front of it the way China did. But at least European producers like Volkswagen have done their best to catch up with the help of official subsidies combined with temporary and calibrated EU anti-subsidy duties on imports. By contrast, the indigenous American manufacturers, which have for decades skulked behind the US 25 per cent tariff on pick-up trucks, have apparently forgotten how to innovate outside that part of the market.
Despite (or because of) being protected by 100 per cent tariffs on EVs imposed by Biden, Detroit has been slow to expand production and develop budget models. The US EV market remains much smaller than the EU one, let alone China, which will soon sell more EVs than the US sells all cars put together. In the meantime, tariff uncertainty is putting much battery and EV production on hold. The REPEAT Project at Princeton University, which evaluates federal energy and climate policy, says that withdrawing the credits will cause huge overcapacity in the US battery and EV market.
If you had to design an example of how interlocking political and economic pathologies among policymakers were weakening the US from within, its decision to give up on supporting the green transition and particularly EVs and batteries would be a great one. Climate change denial, mindless prejudice against a perceived elite, a nuance-free abhorrence of China and an addiction to protectionism have squandered its technological advantage.
Technology is the most important driver of economic growth, and its rapid progress allows political disputes to center on how best to distribute gains. That’s easy. What’s hard is when technology stagnates, growth slows and politics become zero-sum. The last few years have seen the promise of new technologies that could help us escape that trap — but the Trump administration is throwing that opportunity away.
Technological advances can make everyone better off. If you’re reading this, you have more access to information and medical care than the wealthiest and most powerful people on Earth did when your grandparents were born. These gains make reform easier by creating a surplus, which can be used to compensate interest groups hurt by the changes. When kerosene replaced whale oil for light, it devastated the whaling industry. But the benefits were so large that everyone, even (eventually) the communities that used to be supported by whaling, ended up better off. When that surplus goes away, people end up fighting much harder to avoid losses than they do to secure gains, making it difficult or even impossible to fix broken systems.