Opinion: Unplug electric vehicle subsidies and let consumers decide

By Nicolas Loris | The Daily Signal

Frustrated with General Motors Co.’s recent announcement of plant closures and layoffs, President Donald Trump said the administration is now looking at cutting at subsidies to the automaker, including for electric vehicles.

Good. Families should be empowered to purchase the car they want without nudging from Washington and the financial help of their fellow taxpayers.

Electric vehicle handouts subsidize the wealthiest Americans and, despite their being advertised as a more “climate-friendly” option, they produce next to no climate benefit for the planet.

Photo by Michael Bielawski

Rather than extend the tax credit for electric vehicles, Congress should eliminate preferential treatment for all energy sources and technologies.

Trump does not quite have the power to cut GM’s current electric vehicles subsidies full stop. But he could play an important role in the future of the targeted tax subsidy.

Both federal and state governments have generous handouts for electric vehicles. The federal tax credit extends up to $7,500 and applies to the first 200,000 electric vehicles per manufacturer, and then a phaseout of the credit begins.

Tesla is in the phaseout period now, and General Motors Co. is close to hitting the 200,000 mark.

Congress is considering a larger package to revive and extend special tax breaks that use the tax code to pick winners and losers.

Some members want to include a permanent extension of the $7,500 tax credit and to lift the 200,000 cap. An unlimited subsidy would be a massively expensive bill for taxpayers and a win for cronyism that awards money based on preferential treatment, rather than the competitive process.

Furthermore, extending the subsidy would continue to take decision rights away from car buyers and leave them in the hands of the federal government.

The federal government uses a number of policy levers to nudge (or force) consumers to use the technology or fuel source of its choice. Whether it’s a mandate to blend corn into our fuel supply or a government-backed loan for an electric vehicle company, each time the government presses its thumbs on the scales to direct investment, it disempowers consumers and impedes innovation.

Rather than extend the tax credit for electric vehicles, Congress should eliminate preferential treatment for all energy sources and technologies. That way, innovative companies will be chasing after the preferences of consumers rather than the next handout from Washington.

Car buyers have a number of different reasons for purchasing a specific car or truck and may have different reason for purchasing alternative-fuel vehicles.

Families will be better served when Washington isn’t telling consumers what type of vehicle to buy and why, especially when politicians, bureaucrats, and other so-called “experts” get those justifications for switching to alternative vehicles flat-out wrong.

For instance, one alleged justification for switching from gasoline-powered vehicles to electric ones is the climate benefit. Earlier this year, The Guardian wrote, “Switching to electric cars is key to fixing America’s ‘critically insufficient’ climate policies.” The Obama administration included the adoption of electric vehicles as a way it was responsibly combating climate change.

But the numbers tell a different story. Jonathan Lesser, an economist and the president of Continental Resources, calculated the reductions in greenhouse gas emissions from increased adoption of electric vehicles in a May 2018 studyfor the Manhattan Institute.

Lesser found that “electric vehicles will reduce them, compared to new internal-combustion vehicles. But based on the [Energy Information Administration’s] projection of the number of new electric vehicles, the net reduction in carbon dioxide emissions between 2018 and 2050 would be only about one-half of 1 percent of total forecast U.S. energy-related carbon emissions. Such a small change will have no impact whatsoever on climate … .”

Similarly, according to recent data compiled by analysts at Bloomberg New Energy Finance, “an electric vehicle in Germany would take more than 10 years to break even with an efficient combustion engine’s emissions.” Mining of materials for, and the manufacturing of, lithium-ion batteries is quite carbon dioxide intensive. Plugging into an electric grid powered by coal doesn’t help, either.

The fact that the emissions output is close to a toss-up goes to show how meaningless the climate abatement of switching to electric vehicles is.

January 2019 will bring a divided Congress and plenty of time for disagreement. But one issue that unites the far left and the far right is opposition to corporate cronyism. Electric vehicle subsidies are just that.

The subsidies accrue to carmakers and America’s wealthiest households, which can also afford an electric vehicle without any help from other taxpayers.

A good New Year’s resolution for the outgoing Congress and the new members should be a commitment to end corporate welfare. Not extending bad policies that pick winners and losers is a good place to start.

Image courtesy of Bruce Parker/TNR

5 thoughts on “Opinion: Unplug electric vehicle subsidies and let consumers decide

  1. How are these electric vehicles going to contribute to maintaining our highways? Will they pay a healthy tax at charging stations or are we all going to eat it in our electric rates? I imagine that it’s the latter and where is the electricity coming from? It’s not nuclear.

  2. Why subsidize these earth-saving vehicles, they are sucking up free energy charging
    their vehicles ………………on who’s dime ??

    Where do they think their free energy is coming from coal, oil or wood-fired generators
    it’s not free………….. If you want to own one of these vehicles then pay your own way !!

  3. Proponents of subsidies for EVs often do not understand the impact on the VT grid

    RE proponents often claim EVs would be charged at night, and that it would “flatten the demand” curve. In reality, peak demands would occur at night, instead of during the day.

    – VT monthly average travel is about 6.252/12 = 0.521 billion miles; summer monthly maximum about 0.521 x 1.14 = 0.594 b miles, winter monthly minimum about 0.521/1.14 = 0.457 b miles. Daily averages, such as for a holiday weekend, likely would vary more than 14% from the annual average.

    – If ALL Vermont light duty vehicles, LDVs, were electric, and the mix LDVs is assumed to require 0.350 kWh/mile in the battery, as measured by the vehicle meter, it would require 2.705 TWh/y to be fed to the VT grid to charge the LDVs during the year.

    NOTE: Wind and solar would be unsuitable without TWh-scale energy storage, as people do need to reliably charge their vehicles to get to work.

    NOTE: Some people will say biofuels will be used as well. Good luck with that, as there is not enough crop acreage in the US. The only other way is with algae ponds, which is at least 2 – 3 DECADES in the future to be in mass production.

    – If the charging of VT EVs were evenly distributed from 10 pm to 6 am, every day, the VT summer nighttime demand increase would be 1.14 x 2.705 billion kWh/y/(8 x 365)/1000 = 1055 MW.

    – If the charging of VT EVs were evenly distributed during 24 hours of the day, the VT summer around-the-clock demand increase would be 352 MW. See table 1.

    – That would be a significant increase of the normal nighttime demand of about 500 MW. The normal daytime peak demand is about 700 MW, and about 900 MW during the late afternoons of hot summer days.

  4. Let the market place decide? AMEN!!!!!!!!!!!!!!!!!!!!!!! Take away the freebies, charge for a 7 hour recharge and POOF!!!!!!!!!!!! Problem solved.

  5. Don’t think you understand. To liberals pushing their green agenda, it is not about facts. It’s about what feels good and sounds cool to them. Just like voting for incompetent democrats.

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