It is hard for farmers to take electric vehicles (EVs) seriously. They are way too expensive, too alien to our mechanical expertise, and poorly adapted to our power and transportation needs. Their tiny proportion of auto sales (about 2-5%) right now gives ample reason to scoff at widespread replacement of internal combustion engines (ICE).
All these criticisms are valid, but somebody obviously didn’t explain it to automakers. All major brands are gearing up for a switch to EVs over the next decade.
In comparison to BMW’s target of 25 plug-ins and electric vehicles by 2025, Volkswagen Group announced it would have 50 fully electric vehicles by that date, although these will be spread across its many brands. Daimler has publicly committed to having more than 10 electric vehicles in its lineup by 2022.
Or to the world’s largest car market: China.
The apparent impracticality of EVs in rural America combined with our unique worldview justifies our doubts, but there is an even better reason – consumer demand. While few in our corner of the world have driven or even seen an EV, let alone a pricey Tesla, evidence of buyers eagerly awaiting the chance to put one in a garage is nowhere to be seen.
In fact, many of us have puzzled how manufacturers could make such a blunder of planning and investment. What are they thinking?
Rural Blind Spot?
That could be our blind spot. Even if you doubt automakers sincerely believe carbon emissions are harmful and will necessitate something other than ICE due to regulation or consumer whim, there are two other big reasons why prudent executives are moving toward EVs.
First is labor cost. An EV has considerably fewer parts (estimates of how much fewer are all over the board, as the definition of part is debated endlessly). It requires less labor to build and maintain. Already autoworkers are feeling the effects as factories convert to EV production. The second factor is a subtler aftershock of trade wars.
As we enter the third year of trade interruptions, and the possibility of politically managed trade becomes reality, global supply chains are the weakest link in the auto business model. Reducing the number of parts, and the vulnerabilities of maintaining those chains when trade rules are in constant upheaval is an obvious step to harden your profit plan.
Supply-Push Phenomenon
In short, EVs are coming not so much because consumers are lusting for them, but because car producers see financial benefits – especially long-term – from switching. It’s a supply-push phenomenon, not demand-pull. This may not sit well with many, especially farm climate skeptics and ICE fans. Carmakers should build what we want to buy – not what automakers want, they contend.
While putting that irritation to simmer in the back of our minds, consider if that outrage seems a little familiar. Indeed, it is almost identical to how consumers have frustrated us with complaints about GMOs. Adoption of GMO crops was overwhelmingly driven by the significant advantages they gave to producers, with virtually no immediate benefit to consumers.
This certainly didn’t deter ag from embracing them. After all, GMOs weren’t hurting food buyers, and are arguably better for the environment, etc. Even that persuasion was half-hearted, because there was no market penalty for GMOs.
Perhaps our time has come to experience not getting what we want from a market. While I think ICE will continue to power farm equipment and vehicles, we will have fewer choices, and less infrastructure (repair, fuel, aftermarket, etc.), not to mention lower used vehicle values. On the other hand, fuel could be much, much cheaper.
John Phipps, a farmer from Chrisman, Ill., is the on-farm “U.S. Farm Report” commentator.
