Free markets are good, except when they cost elites money

Every couple of weeks, the AFR offers space for former ASX CEO Elmer Funke Kupper to attempt rehabilitation.  After all, this is the same Elmer Funke Kupper who resigned from his job in 2016:

over allegations that he knew of a $200,000 payment to the family of Cambodian strongman prime minister Hun Sen.

This is the same Elmer Funke Kupper who does not read business books because:

business books are often outdated and tend to be written by outsiders who haven’t done anything themselves.

So in today’s AFR, Elmer Funke Kupper writes about electric cars and why Tesla cars are not the future:

I (Elmer) quickly realised that electric cars are our future. I also realised they won’t be Teslas.

As a matter of fact, Spartacus sort of agrees that, if electric cars are the future (and that is a big if), then Teslas won’t be it.  But Spartacus’ reasons for disagreement a fundamentally different to Elmer Funke Kupper’s.  You see that Elmer Funke Kupper believes that cars made in America can’t cut the mustard:

When was the last time you bought a car designed and built in America? Exactly. I became more convinced when I looked at the companies. The big guys – Mercedes, BMW, Volkswagen, Peugeot, Renault and others – will bring their brands, dealer networks and balance sheets. Their ranges will include small cars, family cars, sports cars, 4WDs and luxury cars.

Well dear Elmer.  Mercedes, BMW and Volkswagen have large car production facilities in the US.  As do Toyota, Honda, Hyundai, Fiat and Volvo.  And all the car companies have large design studios in the US.  Spartacus believes that Tesla will lose to Mercedes and BMW and similar not because Tesla manufactures in the US, but because Mercedes and BMW and similar are in the business of cars and not spin.  You see car companies, unlike spin companies, actually make money.

But how does dear Elmer Funke Kupper propose to achieve an electric car future you ask?  With extensive government intervention in the market:

First, we should set an ambitious target for the next 20 years that both sides of politics sign up to. This should include the sale of new vehicles and zero emission standards.

Second, we should implement incentives to buy electric cars. I recommend that we remove luxury car tax, set a lower GST rate, apply lower FBT for company cars and reduce the annual road tax. That would yield an immediate and material effect.

Third, we should invest in the infrastructure that supports electric cars. This will happen in part as supply follows demand, stimulated by consumer incentives. The government can assist further by requiring that all new developments install charging points. This includes offices, shopping malls, apartment buildings and parking garages. This is much more efficient than adding the facilities later.

And finally, we should be uncompromising in the delivery of electricity that is abundant, highly affordable and (relatively) clean. Supply plans should cater for a world where most cars are electric.

Nothing like a wealth dilettante arguing for more subsidies for his lifestyle at the expense of the masses.

But this is the best part of dear Elmer Funke Kupper’s arguement:

I’m a believer in free markets, provided they work. When they’re broken, we cannot leave it.

Interesting position statement give that dear Elmer Funke Kupper’s 3 most recent, highest paying and highest profile executive gigs were for regulated monopolies – ANZ Bank, TabCorp and ASX.

Perhaps he should have said that he is a believer in free markets, provided they work. When regulation is necessary to protect Elmer from competition and salary compression, we cannot leave it to the market.

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45 Responses to Free markets are good, except when they cost elites money

  1. And how does Elmer Fudd posit that these charging stations will be supplied with reliable and cost-effective power?

    As posted elsewhere (from memory), it’s calculated that every charging outlet in a residential home, is the equivalent of adding five new homes to that street. Every fast charging outlet is the equivalent of adding 20 homes.

  2. Bruce of Newcastle

    There’s a very simple way for electric cars to become popular: exceed the performance of internal combustion cars at an equal or lower on-road cost.

    That doesn’t mean subsidies since that is not lowering the cost, just hiding it and robbing victims to pay for them (ie taxpayers).

    Unfortunately for Elmer the concept of energy density makes equalling the performance and cost of ICE cars impossible for hard-wired reasons of chemistry and physics.

    So no one is going to buy them unless they’re forced upon an unwilling public, like Trabants. Welcome to the new East Germany v2.0.

  3. Rafe Champion

    Nice! Imagine the cost of providing a reliable supply of unreliable energy! Check the volume of Wind and Other right now. In summary, 270 provided to cater for total demand of 21,000. Someone check the figures, have I misplaced some decimal points?

  4. manalive

    An all-electric VW has broken the Pikes Peak record and a Toyota Hybrid won Le Mans 2018, Porsche 919 Hybrid in 2017, 2016, 2015.
    But I’m not a fan.

  5. H B Bear

    Australia’s leading anti-business business pamphlet would be better off with a column by Elmer Fudd. Ah Fauxfacts you’ve done it again.

  6. H B Bear

    Interesting position statement give that dear Elmer Funke Kupper’s 3 most recent, highest paying and highest profile executive gigs were for regulated monopolies – ANZ Bank, TabCorp and ASX.

    Big Business – Australia style. Big Business, Big Government, Big Union – the Holy Tinity.

  7. wal1957

    That’s right Elmer.
    Let’s involve the government.
    What could possibly go wrong?
    Pink Batts…NBN…School Halls…NDIS…NEG…etc, etc

  8. An all-electric VW has broken the Pikes Peak record and a Toyota Hybrid won Le Mans 2018, Porsche 919 Hybrid in 2017, 2016, 2015.

    Indeed, but it’s easy to do this for special events and in controlled conditions. Try and out-perform a petrol car in normal and uncontrolled conditions.

    One day something may come of it, but that day is well and truly in the future, as far as any existing technology is concerned.

  9. David Archibald

    Re “believes that car’s made in America”.

    Please Spartacus. The plural of car is cars, not car’s which is the singular possessive.

    If many cars have something, then it is cars’.

  10. Please Spartacus. The plural of car is cars, not car’s which is the singular possessive.

    You are correct and it has been corrected. But please remember, Spartacus and Catallaxy don’t employ sub-editors – this is not the ABC or Fairfax. Spartacus crams these posts while doing his day job so is aiming for speed.

  11. Speedbox

    Tesla is a highly polished turd. In terms of market cap, it exceeds that of Ford, Nissan or Fiat and is very close behind General Motors. Time and again Tesla have missed their production targets and the business is riven with issues but, it is some kind of market darling – the nonsense, dressed up as serious business management and swallowed by the devotees of Elon Musk, is incredible. It borders on a cult.

    Meanwhile, the major car manufacturers, being those who actually know how to design, test, produce and market their products, have been busy doing what they do best. Industry forecasts are that by 2020 there will be some 75+ different models of electric or hybrid vehicles available and by 2025, that number will swell to 500 (!) different variations.

    Tesla will be left behind.

    There are a number of practical issues with electric cars, not least the issue of charging but, they will dominate the global automobile landscape by 2030. Don’t forget that new diesel cars will be outlawed in Europe around the same time. The issue for trucks is more complex but is solvable. By no later than 2040, a new ‘petrol’ car will be impossible to buy in most of the world. Volvo have already announced that every new car they produce from 2019 (next year!) will be either electric or hybrid.

    So, the take up of electric/hybrid vehicles will not need more direct Government intervention per se – it will happen because the market (and government) have already dictated that that electric/hybrid cars are the future. The manufacturers agreed with various Governments several years ago that electric was the future and the manufacturers prepared accordingly. The major manufacturers have invested billions of dollars in design and testing to date – do you think they did this for fun?

    By the way, the Federal Government will ultimately loose around $11 billion in fuel tax per annum as the shift to electric cars succeeds. Am I being too machiavellian to wonder whether the Government has already considered the tax opportunities on electricity and, simultaneously, the linkage to the increased construction of “environmentally friendly” electricity production facilities (all heavily supported by Govt).

    Electric cars are coming – would you rather own shares in a service station or a power generator?

  12. Confused Old Misfit

    I’m curious.
    How can a “market” be broken?
    A “market” either is or it is not.
    If it is not functioning then it is not a “market”.

  13. Spartacus and Catallaxy don’t employ sub-editors – this is not the ABC or Fairfax

    Since when did either of the latter start employing sub-editors once more?

  14. Boambee John

    Government should legislate that all cars provided as part of a salary package must be pure electric powered, not hybrids.

    That will focus the minds of some public servants and “business” leaders.

  15. Speedbox

    For clarity, I am not an electric/hybrid car tragic. I was a young man when the old 308 cubic inch V8 was commonplace and was considered a “small block”. We all loved roaring around in our V8’s complete with Holley carburetors and extractors.

    BUT……

    Electric car performance and price will always play a role but in just a few short years, the diversity of electric model offerings will make buying an electric/hybrid vehicle no different to that of today. If you can afford a higher performance electric car it will be available – alternatively, for those wanting a ‘run around’ type of vehicle at a modest price, that too will be available.

    As the major manufacturers gear up for mass production and with improvements in battery technology and the availability of charging facilities (including fast charge) becomes more widely available, electric cars will gain broader acceptance. Coupled with favourable tax treatment, the masses will be herded towards electric cars whether they like it or not. Correspondingly, manufacturers will slowly (at first) reduce the models/versions of petrol engines available.

    The decisions have already been made – it is now only a matter of execution.

    Its going to happen – you can either try to take some (long term) investment advantage of this shift or lie back and think of England.

  16. egg_

    Free markets are good, except when they cost elites money

    Hence, ruinables is not a free market.

  17. Entropy

    So, the take up of electric/hybrid vehicles will not need more direct Government intervention per se – it will happen because the market (and government) have already dictated that that electric/hybrid cars are the future. T

    This is the breathtaking kind of shit the left are foisting on us.

    Speed Box, has it occurred to you that the investment in electric cars is only happening because the car manufacturers want to continue to sell cars. It isn’t because they see EV as a bright starry future, it’s because they know the government will force them. By doing things like banning diesel, and imposing ever growing restrictions on how ICE are made. And that is before you consider all the subsidy farming opportunities.

    IT IS NOT MARKET DRIVEN. It is regulatory driven.

  18. egg_

    Electric car performance and price will always play a role but in just a few short years

    Grid charged vehicles will have to compete with fuel cell vehicles in a “fair fight” – hence, the serious car manufacturers are working on the latest generation of FCEVs, some used in military applications (GM), despite Elmer Fudd’s protestations.
    Neither can compete with a current ICE. for day to day use.

  19. egg_

    For clarity, I am not an electric/hybrid car tragic. I was a young man when the old 308 cubic inch V8 was commonplace and was considered a “small block”.

    ICEs are being forced to 1.4L turbos for efficiency and diesels will be banned because particulates.

  20. Speedbox

    Entropy – Of course this is regulatory driven. I know that and I guess so does everyone else. The point I have made a couple of times is that the decision to impose electric vehicles on the masses, by Governments around the world, has already been made. These issues are decided a decade or more in advance.

    What do you think they talk about at the G6, the G20 and regional forums? It is not all about “economic policy” – a raft of issues are discussed whether they be global or localised. Various vested interest groups apply their pressure and the assorted public servants nod in agreement. They then pull the strings on the politicians. The EU is in lock step. Lefty Head Office (the UN) is on board. The manufacturers are consulted then informed.

    Of course its borne from regulation (and deception/lies/smoke and mirrors) – my point is that it is a done deal. Electric cars will, by 2040, have completely overwhelmed the petrol powered car market whether we like it or not.

  21. Confused Old Misfit

    I had a truck with a 351 Windsor in it. It could work.

  22. egg_

    Ironically, US Light Truck sales are booming as manufacturers exploit the current regulations.
    F-250/Prius?
    Choices, choices…

  23. Speedbox

    Yes, the manufacturers don’t give a rat’s arse whether cars are electric, petrol, nitrogen powered or a pleasant mix of unicorn and pig shit. Yes, they just want to sell cars.

    The manufacturers do care about the billions in research and design dollars they spend. Car manufacturers use very long design/tool up timeframes – even a relatively minor facelift version can easily be two years plus. (which is kind of ironic given the actual just-in-time manufacture process). A full new model is years in the making.

    But as huge global businesses with millions of shareholders and tens of millions of direct and indirect workers, they are recognised as having a fundamental role in the electric car process. Thus, at the highest corporate level, issues are discussed with them by the relevant Government Minister. This has and will continue to happen at manufacturing centres all around the world.

  24. egg_

    Thus, at the highest corporate level, issues are discussed with them by the relevant Government Minister. This has and will continue to happen at manufacturing centres all around the world.

    Hence, the GM offroad FCEV for the US military – Govt gives them a market.

  25. RobK

    Breaking it down a bit, point by point:
    The elite racing hybrids benefit by having braking and acceleration boosted over conventional formula. (Here the word formula is critical).
    In stop-start general use there can be an advantage to the average person if costs are low.
    Technology changes do make electric transmission in a vehicle more attractive as costs come down in power electronics. Electric transmissions have been in use for ages in haulpacs on mines for example using diesel/electrics.
    The military has very specific requirements for efficiency (deisel can cost around $100/litre on the frontline).
    The low noise emmitted from fuel cells and favourable infra-red signal are big pluses in a combat vehicle. Cost is a minor player.
    In summary: i think electric automotive transmissions are likely (without regulation) because they are becomming cost effective. Fuel cells and battery storage still have a cost and life-cycle problem that will restrict them to short range use for now. The regulations can do an amount of forcing but cost increases generally will limit the regulatory impact in the end.

  26. Grandma

    The Granddad and I are heating only one room this winter because of the cost of electricity. Some fellow Australians are having to choose between electricity and food. Where is the cheap, abundant electricity for electric cars coming from? And why can’t I have some now?

  27. Boambee John

    Grandma

    Remember Textor? You and Grandpa don’t matter. Only signalling virtue matters.

    Treat the pricks accordingly.

  28. Boambee John

    Politicians, and the academics and media commentators who provide them with their talking points, are never circumcised.

    There is no end to the pricks!

  29. RobK

    Grandma,
    Yes, that’s the other problem with all-electric cars…..not to mention that ICE cars pay a lot in fuel excise whilst EVs are free loading or subsidized.

  30. egg_

    In summary: i think electric automotive transmissions are likely (without regulation) because they are becomming cost effective.

    The market/regulations are forcing something like a 1.4L turbo petrol hybrid SUV as the family vehicle of the future – the current VW Tiguan is not far off the mark.

  31. egg_

    ICE cars pay a lot in fuel excise

    Fossil fuels subsidising ruinables, as always.

  32. RobK

    Egg,
    Yes, I agree. Without the regulatory forcing you’d more likely see an F250 V8 with an electric transmission instead of a gearbox. I have an inkling they will make those anyway.

  33. Howard Hill

    Second, we should implement incentives to buy electric cars. I recommend that we remove luxury car tax, set a lower GST rate, apply lower FBT for company cars and reduce the annual road tax. That would yield an immediate and material effect.

    Nothing like a wealth dilettante arguing for more subsidies for his lifestyle at the expense of the masses.

    Are these the subsidies you’re talking about? Because if they are, I’d like to see them applied across the board to all vehicles.

  34. Speedbox

    At present, there is (generally) enough electricity supply to power this country and certainly the eastern states have better security than, say, SA. The immediate issue is cost and we all know why the costs have risen. The future issue will be cost and supply as you have pointed out.

    The rise of the electric car will place a significant additional burden on supply security. In, say, 25 years from now, three million electric vehicles being plugged into the grid will cause a huge issue if not addressed within the next few years. Just the general population growth (including immigration) will cause difficulties in a decade or less as demand grows and at least one power station is scheduled to close.

    In part, the problem is that the decisions about renewable electricity and electric cars etc are made many years in advance and Governments typically work a few months, or maybe a couple of years in advance (at best, allowing for elections). So, the current Government are desperately hoping they won’t have to seriously address the supply issue and Labor are pinning their hopes on renewables.

    Of course, renewables can never replace base load power. Ever.

    I think that sooner or later, a Federal Government will have to build (or encourage a private consortium to build) 2-4 traditional power stations along the east coast but that could be 10-15 years from now when the situation is critical and rolling blackouts have ‘softened up’ the electorate. Those stations may be gas or coal fired but the eventual requirement is inescapable.

    Unfortunately, your question remains partly unanswered except that electricity in this country will probably never again be cheap. Our only hope is that we have a “Trump-like” politician coming through although I am not confident. The current batch, and those lining up for future leadership, don’t have the national interest at heart and don’t really care if you and Granddad freeze in the dark.

  35. Tel

    Yes, that’s the other problem with all-electric cars…..not to mention that ICE cars pay a lot in fuel excise whilst EVs are free loading or subsidized.

    You can be sure they already have the drafts ready to whack a tax on as soon as people start to switch.

    Remember how converting to LPG was going to save you a motza?

  36. Shy Ted

    If we do buy electric cars our current internal combustion engine one’ will become obsolete and worthless. No car dealer is going to give you a decent trade-in price on something obsolete so we won’t buy the shiny new electric one because it’s just not worth it. And when the shiny new electric one is found to be hopelessly impractical, you forget to recharge, it’s parked in the street, you leave the lights on or any number of other of human foibles, word will get out that they’re carp and the market will implode. Also I know what next week’ lotto numbers are.

  37. Judith Sloan

    He’s basically a kook.

  38. H B Bear

    At present, there is (generally) enough electricity supply to power this country and certainly the eastern states have better security than, say, SA.

    Not for long. The Pony Club is routinely sending 1,000MW of ol’ fashioned coal electricity south to the various failed and failing States thanks to another misallocation of resources by previous governments. No more coal generators under Pony Girl so that disappears and then what?

  39. miltonf

    When was the last time you bought a car designed and built in America? Exactly. I became more convinced when I looked at the companies. The big guys – Mercedes, BMW, Volkswagen, Peugeot, Renault and others – will bring their brands, dealer networks and balance sheets. Their ranges will include small cars, family cars, sports cars, 4WDs and luxury cars.

    Sounds like a Point Piper parlor pinko.

  40. wal1957

    At present, there is (generally) enough electricity supply to power this country and certainly the eastern states have better security than, say, SA

    Our lovely Palachook in Qld is gonna change all that. She’s well and truly on the ruinables bandwagon.

    The sooner the blackouts occur, the better. Maybe, just maybe, people will then start to question why.
    They may even do a little research on their own to find out what sort of garbage the pollies and the renewable energy zealots have been feeding them.

    Heaven forbid, they may even learn what baseload power is!

  41. miltonf

    One of these idiots who thinks all Renaults are made in France etc.

  42. Richard Bender

    In 2017, 1,123 electric vehicles were solid in Australia. In 2017, 9,000 Ford Mustangs were sold in Australia. What was that about nobody wanting a US designed and built car?

  43. John Constantine

    Every factory shut down in Australia frees up enough ruinable electricity to power lots of cars.

    Obviously, we simply ration tory factories and shut the smelters and we have all the power for enough electric cars to save the planet.

    Shut the factories and go on holidays.

    Comrade vacationers.

  44. hzhousewife

    BAE is planning on sucking up plenty of electrons welding up some new frigates in SA. They’d better build a few more windmills over there.

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