EV Cheating Scandal [LOCKED DUE TO POLITICS]

[Mirak]

I don’t know what to make of this. Originally reported by the WSJ but mostly buried behind a paywall, more of it is copied and reported here…

It’s hard to think of a worse environmental scandal in recent years than Volkswagen’s 2015 diesel-emissions cheating. The German automaker was rightly pursued by regulators, enforcement agencies and class-action lawyers.

The scandal ended up costing Volkswagen an estimated $33 billion in fines and financial settlements—and revealed that diesel-emissions cheating was endemic.

When it comes to electric cars, the government has a cheating scandal of its own. Under an Energy Department rule, carmakers can arbitrarily multiply the efficiency of electric cars by 6.67. This means that although a 2022 Tesla Model Y tests at the equivalent of about 65 miles per gallon in a laboratory (roughly the same as a hybrid), it is counted as having an absurdly high compliance value of 430 mpg. That number has no basis in reality or law.

Until recently, this subsidy was a Washington secret. Carmakers and regulators liked it that way. Regulators could announce what sounded like stringent targets, and carmakers would nod along, knowing they could comply by making electric cars with arbitrarily boosted compliance values. Consumers would unknowingly foot the bill.

The secret is out. After environmental groups pointed out the illegality of this charade, the Energy Department proposed eliminating the 6.67 multiplier for electric cars, recognizing that the number “lacks legal support” and has “no basis.” [Let’s not mince words, how about … illegal subsidy]

Carmakers have panicked and asked the Biden administration to delay any return to legal or engineering reality. That is understandable. Without the multiplier, the Transportation Department’s proposed rules are completely unattainable. But workable rules don’t require government-created cheat codes. Carmakers should confront that problem head on.

I don’t know this “efficiency number,” but apparently it is used by the Energy Department to award carbon regulatory credits to manufacturers, and the government knowingly inflated this number, by rule, by a 6.67 multiplier, in order to dole out massive subsidies? Primarily to Tesla, which used the sale of these carbon credits to prop up its profitability.

Now the ED wants to eliminate the rule, but the trouble is the Transportation Department used the inflated efficiency numbers to set standards which the manufacturers can’t possibly meet without the inflation.

If true, and I’m not gonna doubt the WSJ reporting, this is a massive scandal. And it wasn’t Tesla cheating… it was our own government agency.

Anybody else know more about this?!

Sponsored

 

[Billyk24]

What about Tesla playing loose with the rules in determining the range of their vehicles? Remember Model Y ranges have recently been downgraded. Higher ranges, increased carbon credits, more income for playing loose with the rules.

 

[Ghost Ryder]

So the EPA/govt wanted to push an agenda and enabled companies to benefit from it at Taxpayers expense? What else is new?

 

[ctenidae]

I don't think there are any taxpayer dollars involved here, nor is it some cheaty scandal like Dieselgate. DoT, and the US gov't in general, wants to encourage EVs. One way to do that is to overweight their contribution to hitting CAFE standards.

Now that the encouraging effect has occurred and most manufacturers have an EV offering, the overweight can be pulled back. Of course, that means having to actually meet standards now, so naturally the manufacturers don't like it.

 

[Billyk24]

I don't think there are any taxpayer dollars involved here, nor is it some cheaty scandal like Dieselgate. DoT, and the US gov't in general, wants to encourage EVs. One way to do that is to overweight their contribution to hitting CAFE standards.

Now that the encouraging effect has occurred and most manufacturers have an EV offering, the overweight can be pulled back. Of course, that means having to actually meet standards now, so naturally the manufacturers don't like it.

Consumers aren't buying into it either. Mach E are piled up across the country as a reflection of issues.

 

[HoosierMachE]

Just want to point out this is an opinion piece written by two very conservative activists, not a journalistic article. The Wall Street Journal is now owned by Rupert Murdoch's News Corp.

 

[Logal727]

Just want to point out this is an opinion piece written by two very conservative activists, not a journalistic article. The Wall Street Journal is now owned by Rupert Murdoch's News Corp.

Like everything OP posts, complete with a clickbait title.

 

[Mach1E]

I don't think there are any taxpayer dollars involved here, nor is it some cheaty scandal like Dieselgate. DoT, and the US gov't in general, wants to encourage EVs. One way to do that is to overweight their contribution to hitting CAFE standards.

Now that the encouraging effect has occurred and most manufacturers have an EV offering, the overweight can be pulled back. Of course, that means having to actually meet standards now, so naturally the manufacturers don't like it.

I understand the reasoning behind CAFE standards.

What I don’t understand is a company like Tesla that builds cars using zero gas, and never plans on building gas cars,
Somehow gets paid credits by other manufacturers so they can continue to pollute.

That would be like the government letting my neighbor pay be $100 since I don’t do cocaine, and then the government allowing them to do cocaine. This would cut down on drug use how exactly?

 

[mkhuffman]

The EPA needs to be defunded and eliminated. I am tired of them wasting my money.

 

[Ghost Ryder]

I understand the reasoning behind CAFE standards.

What I don’t understand is a company like Tesla that builds cars using zero gas, and never plans on building gas cars,
Somehow gets paid credits by other manufacturers so they can continue to pollute.

That would be like the government letting my neighbor pay be $100 since I don’t do cocaine, and then the government allowing them to do cocaine. This would cut down on drug use how exactly?

It's the carrot and the stick approach. If gov't wants to encourage a behavior, in your example, don't use cocaine. They can pay people not to use cocaine, or fine people that do. Or they can do both. That's the point of the emission credit. They incentivizing automakers to go electric at the same time penalizing OEMs if they don't.

 

[Mach1E]

It's the carrot and the stick approach. If gov't wants to encourage a behavior, in your example, don't use cocaine. They can pay people not to use cocaine, or fine people that do. Or they can do both. That's the point of the emission credit. They incentivizing automakers to go electric at the same time penalizing OEMs if they don't.

Except in my example-

Tesla was never going to do anything different.

And I was never going to use cocaine.

The end result is actually the opposite of the goal- NOTHING changes other than money changing hands to do what people were going to do in the first place.

 

[TheSteelRider]

This sounds wild, but I am approaching with an open mind. I did some digging, and found some more 3rd party information from sites other than WSJ.

I found a paper written for Texas policymakers that seems to support this claim. Now, we need to understand that Texas is an oil state, and, in general, there is a decent amount of anti-EV sentiment in most places outside of cities like Austin, Houston, and Dallas. So, I encourage you to consider this source and it's potential bias.

https://www.texaspolicy.com/wp-content/uploads/2023/10/2023-10-TrueCostofEVs-BennettIsaac.pdf

The "foundation" that authored the paper self-describes as:

The Texas Public Policy Foundation is a 501(c)3 nonprofit, nonpartisan research institute. The Foundation promotes and defends liberty, personal responsibility, and free enterprise in Texas and the nation by educating and affecting policymakers and the Texas public policy debate with academically sound research and outreach.

As an example of potential bias in the paper, we see things like this:

Elon Musk claims to oppose the federal tax credits for EVs (Elliott, 2021) ... However, Musk never criticizes federal 1 Note that the EPA’s estimates for EV fuel economy are based on a completely different and much easier test than is applied to ICEVs. ... In this paper we do not account for the EPA’s preferential fuel economy testing and ratings for EVs and the additional transfer of wealth from ICEV buyers to EV buyers that results. regulatory credits, which added $1.78 billion to Tesla’s 2022 revenue and have been a major, if not primary, driver of the company’s profitability (L, 2023).

Now, this is indeed an accurate statement. In fact, since Tesla is a public company it is easy to unpack it's revenue and profit, and folks have known for years that CAFE credits add significant pure-profit to Tesla's bottom line, at least one fiscal year if not more the only profit the company made was from CAFE credits. That said, again I just want to be sure we are understanding the source before we continue to the issue at hand.

The "meat and potatoes" of the 6.67 involves CAFE standards (which are fuel economy and historically deal with petroleum based fuels). The setup is -- the government over the years has had to "translate" CAFE standards from petroleum to other alternative fuels such as ethanol, natural gas, hydrogen, etc. This seems to make sense no issue there.

The paper claims, however, that the translation made from petroleum to electricity is this 6.67 multiplier. I will direct-quote the pertinent portion of the paper dealing with translating CAFE to EVs (which of course do not use petroleum).

EVs also improperly benefit from an erroneous interpretation by the U.S. Department of Energy of a series of laws Congress passed that use the CAFE standards to promote alternative fuel vehicles over gas-powered vehicles. First came the Alternative Motor Fuels Act (S. 1518, 1988, Sec. 8), which promoted the commercialization of alternative motor fuel vehicles (fueled with ethanol, methanol, natural gas) by giving a bonus multiplier of 6.67, or 667%, to their actual fuel economy.2 Then, the Energy Policy Act (H.R. 776, 1992, Sec. 403) expanded the definition of “alternative fuels” to also include hydrogen, coal-derived liquid fuels, other non-alcohol biofuels, and electricity. It also enabled “dedicated automobiles,” that is, vehicles that run solely on alternative fuels, to receive the favorable fuel economy treatment. Subsequently, a July 1994 transportation law specified the multiplier would only apply to “liquid alternative fuel” (H.R. 1758, 1994, Sec. 32905).
Despite the law clearly excluding electric vehicles, DOE issued a rulemaking in June 2000 to establish a petroleum equivalency factor for EVs that applies the 6.67 multiplier to EVs. That rule continues in place today, despite a statutory requirement for DOE to update its estimate annually. Thus, an EV manufacturer is given 6.67 MPG of credits for every 1 MPG of actual fuel economy improvement.

I've preserved the source links in the quote so you can read the rules and judge for yourself.

 

[Mirak]

Like everything OP posts, complete with a clickbait title.

The clickbait title is the title of the article. Take it up with the authors. And rather than attack the authors as "conservative activists," I would appreciate knowing more about the merits of what they are saying.

I am not coming at this with an agenda. I am trying to understand. Ditch the tribal and help me understand.

 

[Ghost Ryder]

Except in my example-

Tesla was never going to do anything different.

And I was never going to use cocaine.

The end result is actually the opposite of the goal- NOTHING changes other than money changing hands to do what people were going to do in the first place.

The tax credit likely was part of their calculation when they determine whether it was even feasible to build or expand. Without the carbon credit, Tesla may not have survive it's early days or may not have expanded as quickly. The carbon tax credit achieved what it was meant to do, and that was to promote EV production.

 

[Mirak]

This sounds wild, but I am approaching with an open mind. I did some digging, and found some more 3rd party information from sites other than WSJ.

I found a paper written for Texas policymakers that seems to support this claim. Now, we need to understand that Texas is an oil state, and, in general, there is a decent amount of anti-EV sentiment in most places outside of cities like Austin, Houston, and Dallas. So, I encourage you to consider this source and it's potential bias.

https://www.texaspolicy.com/wp-content/uploads/2023/10/2023-10-TrueCostofEVs-BennettIsaac.pdf

The "foundation" that authored the paper self-describes as:


As an example of potential bias in the paper, we see things like this:


Now, this is indeed an accurate statement. In fact, since Tesla is a public company it is easy to unpack it's revenue and profit, and folks have known for years that CAFE credits add significant pure-profit to Tesla's bottom line, at least one fiscal year if not more the only profit the company made was from CAFE credits. That said, again I just want to be sure we are understanding the source before we continue to the issue at hand.

The "meat and potatoes" of the 6.67 involves CAFE standards (which are fuel economy and historically deal with petroleum based fuels). The setup is -- the government over the years has had to "translate" CAFE standards from petroleum to other alternative fuels such as ethanol, natural gas, hydrogen, etc. This seems to make sense no issue there.

The paper claims, however, that the translation made from petroleum to electricity is this 6.67 multiplier. I will direct-quote the pertinent portion of the paper dealing with translating CAFE to EVs (which of course do not use petroleum).


I've preserved the source links in the quote so you can read the rules and judge for yourself.

THANK YOU. Now we're getting somewhere. I am genuinely interested in what is going on here.

Sponsored