This is a post about #EVs. But first bear with me and eat your peas.
Peas are dramatically better than when I was a kid. They are sweeter, smoother, and less mushy. And green beans don't have that nasty string down the middle anymore, though I always liked green beans, anyway.
There are some effective pea farmers out there making investments in higher quality products that appeal to more consumers at a price point where they can turn a profit. I work across the street from J.R. Simplot Company and can easily see the kind of intensive R&D that goes into improving vegetables.
Now imagine that the FDA issues a rule that companies needed to sell a bag of frozen peas for every serving of french fries. At first this would benefit pea farmers as Big French Fry bought up pea credits. And people who like peas would benefit from lower prices and better availability.
But soon, the market for peas would be saturated. There's a lot of money in french fries and the demand would stay strong. Potato companies would start growing commoditized peas and dump them below cost in grocery stores. If that squeezed their margins, they'd work to raise the price on French fries by investing to make them even better, both because they know more about French fries than peas and also because you can't make money with peas when everyone is flooding the market. As french fries become harder to buy, prices go up and you can make even more profit on each sale. And all you have to do is keep selling more low quality, low-cost peas. Because the important thing about French fries is now squeezing as much margin as possible out of each batch. The important thing about peas is moving as much volume as possible, regardless of quality or price.
In this world, the original pea farmers who cared about a compelling product and have made peas so much better than they were when I was young are all going to go out of business. Look for example at how we have basically one pork producer in this country who turns out bland, unappealing pork. The Other White Meat push by the FDA has already destroyed that market.
Now you understand why the EPA's fleet fuel economy rules have resulted in $90,000 pickup trucks with every feature known to man and a bunch of crappy, commoditized, unappealing EVs that are flooding the market and ending the development that was funded by smaller EV manufacturers that were trying to win customers through markets, rather than just trying to move volume.
There's a reason Elon wants to end the credits other manufacturers buy from him. The EV options are destined to remain unappealing for consumers so long as car manufacturers are incentivized to dump volume rather than chase profits.
Chief Executive Officer at Hydro2050
7moGreat call Gillian Fennell