Car sales are declining as the coronavirus outbreak pushes the global economy into a recession, and the electric and renewable wings of the industry are suddenly under threat like never before. To face the crisis, some of the world's biggest consumers of electric cars are on the verge of relaxing emission standards to ease the burden on automobile manufacturers. This could help car companies but would be an unfortunate turn of events for both climate and electric car companies like Tesla.
According to Reuters, China is considering easing quotas for how many electric vehicles car manufacturers must produce each year as the industry deals with a drop in sales due to the coronavirus outbreak. The country is considering delaying planned emission restrictions by six months so car manufacturers can weather an expected 10 percent drop in sales in the first half of 2020.
China hasn't committed to easing these standards yet, but it's believed that car companies would benefit from being able to sell more profitable gasoline-reliant vehicles. Xin Guobin, vice industry minister, reportedly said on Monday that China may need to "make adjustments on new energy vehicles and related policies to further promote the coordinated and healthy development of the automotive industry."
Considering China has the world's largest automobile market, such a shift could have a major impact on the climate. China has been attempting to aggressively reduce greenhouse gas emissions to fight climate change, including by investing over $750 billion into renewable energy, so delaying the increase of emission standards would hamper those efforts.
China isn't the only country that may roll back emissions standards. The Trump administration announced on Tuesday it is planning to roll back Obama-era fuel standards, but this was part of the administration's plan long before the coronavirus outbreak started to threaten the auto industry. The Trump administration has made of point of crafting policies that benefit fossil fuel companies but threaten to escalate climate change.
The Trump administration's plan to roll back fuel standards prompted a rare criticism from former President Obama, who seemed to compare Trump's denial that a pandemic was coming to his climate denial.
As industry experts have noted, electric vehicles have been slowly gaining in popularity for years, and this was expected to be a record-breaking year for electric car sales before the coronavirus outbreak upended the economy. Now, things aren't looking so good for the auto industry. It is expected that car sales will decline by at least one million vehicles in 2020. Car sales are expected to be half of what was expected for April.
It's not just the coronavirus outbreak that could hurt the electric car industry—low gas prices could also be a problem. The price of a barrel of oil is currently down to just over $20—from around $60 just months ago—due to a large surplus caused by Russia and Saudi Arabia increasing production as the countries fight for market share. If gas prices stay extremely low like they are now, people may be less likely to purchase electric vehicles.
All of this certainly isn't good for electric car companies like Tesla. The car company closed its California and New York factories in response to the coronavirus outbreak but has since reopened the New York facility to produce ventilators for those who have been infected with the virus. Bloomberg estimates Tesla may end up reporting a 30 percent drop in sales for the first quarter of 2020 compared to the last three months of 2019.
Unfortunately, it seems that one public health emergency may end up contributing to another one. More gasoline-reliant vehicles on the road means more pollution and an increase in the greenhouse gases that contribute to climate change. Hopefully, we'll see the electric car industry come back with a vengeance once this is all over.
The Inverse analysis
Though China is considering delaying an increase in emission standards due to the coronavirus outbreak, the United States is just doing it because the president cares more about fossil fuel industry profits than climate change. We'll hopefully learn from this pandemic that it's not a good idea to ignore scientists when they tell you a serious threat is on the horizon, and that applies to viruses and the climate. We don't want to see another situation where countless Americans die because our leaders didn't start taking scientists seriously until things were already out of control.