08/20/2023
Market force refers to the interplay of supply and demand factors that influence the price and availability of goods and services in a market. It's the collective impact of various economic, social, and environmental forces that shape the behavior of buyers and sellers, ultimately determining prices, quantities traded, and market equilibrium. These forces include factors like consumer preferences, competition, economic conditions, government policies, and technological advancements.
Here's an example. Henry Ford built his first car in 1896. At that time private travel was mostly with horse drawn carriages or bicycles. The gov't did not force people to abandon this mode of transport in favor of Ford cars. Ford continued to work on his model until it became impossible to ignore his product. People actually ditched EVs to drives ICE cars from Ford. From 1895 to 1910, electric automobiles were more common in most areas of the United States and Europe than gasoline internal combustion vehicles. In the year 1900, manufacturers produced about 1575 electric vehicles compared to only 936 gasoline cars.
The Pope Manufacturing Company (the Tesla of that era), one of the largest and most influential automobile manufacturing companies at that time, produced primarily electric vehicles. Electric vehicles appeared in Chicago, London, New York, and Paris as passenger automobiles and carriages, taxicabs, delivery vans, and even fire engines.
It will surprise you to know that EVs were the vehicles of choice between 1900 and 1905. They were the cleanest (produced no fumes), quietest and simplest to operate. During that era over 60% of cars in America were EVs. At some point ICE cars took over that EVs were only 3% of cars on the road. Eventually, it died off.
One factor that made this possible was that EVs could only travel about 25 miles per charge. This made it unappealing compared to ICE cars. Today EVs can travel 262 miles on a full charge but ICE cars can travel for 550 miles on a 50 litre tank of gas. The point is that no one gave any mandates for the population to go for ICE cars. Market forces made that possible.
The argument for electric vehicles has very little to do with the environment because EVs need batteries that are made with lithium which is mined from the earth, sometimes by kids. Also, if all the cars in the world were to become EVs, the earth doesn't have enough lithium for that, but let's ignore that and pretend for a bit.
If all the cars in Canada were to become EVs, Canada would need to invest $400bn in its electricity generation infrastructure by 2050. Canada 2023 is $457bn. Essentially, Canada needs to invest about $14bn yearly from now till 2050 if it is to have enough electricity to power to have all vehicles become EVs.
Now back to market forces. If Canada is able to increase the supply of electricity way above current demand, the price of electricity falls. With reduced cost of electricity will come reduced cost of charging EVs which means more people will buy the. Add improved battery performance over time and EVs will be more attractive than ICE cars. Demand for EVs will rise. Market force of demand and supply.
In 2023, Canada has given a subsidy of $11bn to Stellantis-LG energy and $13bn to VW both battery makers so they can make batteries in Canada and create jobs. $imagine what $24bn can do to the power grid of Canada. That's two years of improvement in electricity infrastructure to make EVs more attractive.
If govts across the world have to essentially bribe battery makers to make batteries there is something we aren't being told. If EVs are the future of transportation why aren't we ramping up electricity generation? Today, only necker power can provide the amount of electricity needed to power transportstion if ICE cars become EVs. Do you see nuclear power plants being built?
Some days back I reported that Model e, Ford's new electric division, lost $1.8 billion in the second quarter of 2023, on sales of just 34,000 electric and plug-in hybrid models. It had forecast that it would lose $3 billion this year, but now believes losses will hit $4.5 billion.
Tesla seems to be the only or one of the few EV maker to be turning profit. In 2022, Tesla made a profit of $12.5bn on a revenue of $81bn, but Tesla doesn't have the manufacturing capacity to make as many EVs as needed to replace ICE cars and even if it shares its technical knowledge to other EV makers, there's not enough lithium to go around.
Make EVs cheaper to buy and charge, increase its battery performance and mileage, watch people buy them. Market forces.
