Electric Vehicle Subsidies Are An Environmental Injustice

Promotion of electric vehicles as a solution to climate change is rampant, including massive subsidies, huge spending on charging infrastructure, and mandates for EV purchases or bans on vehicles with internal combustion engines (ICEs, most of which run on petroleum products). The problem is that electric vehicle promotion policies are less the answer to the question “What’s the best way to reduce greenhouse gas emissions?” then they are to the question “How do we get people to buy electric vehicles?” A cynic would say it’s the answer to the question, “What’s the most expensive way to reduce greenhouse gas emissions?”

This is not our first time at the electric vehicle rodeo. Recall that in the 1990s, California Air Resources Board Commission Alan Lloyd cancelled the state’s electric vehicle mandate, saying it was his job to clean the air, not to promote electric vehicles. Sadly, this view is now being drowned out by those advocating electric vehicles without regard for, well, mostly cost but really anything.

Granted, electric vehicles have greatly improved in performance since the 1990s. (Presumably their costs are also much lower, although no mass-produced electric vehicles were offered for sale then, so no comparison can be made.) However, they are clearly not broadly competitive with internal combustion engines, given that it is necessary for governments to offer large subsidies and even propose banning petroleum-fueled cars. But to go from the current global market share of 14% to 100% is going to require in-depth consumer acceptance and there are no signs that such is close.

So, why push electric vehicles? Their primary benefit is lower maintenance costs and a partial reduction in emissions, the former certainly appealing but the latter something that consumers have had trouble embracing. The Ukrainian War has demonstrated that even the environmentally friendly (sic?) countries in Western Europe preferred plentiful, cheap energy rather than cleanliness.

Of course, that doesn’t tell us as much about the political sustainability of programs to promote EVs, especially when it involves giving large cash grants ($7500 in the U.S.) to wealthy buyers of expensive cars. Bloomberg’s David Welch, in a column entitled “Electric Vehicles are out of Reach for Most U.S. Consumers,” estimated that 15% of the population could afford an electric vehicle. What will happen when local governments ban them?

Oh, but we’re told don’t worry, battery prices are plummeting and some EV prices have recently been cut, and rather substantially. The basic Model S is now only $90,000 or so and the basic Model X is a mere $100,000. I’m guessing urban bus systems are not quaking in their boots over the threat to their ridership. The basic Model 3 starts at $43k, a bit more than the promised $35k when it was announced in 2016, and the long-range model went for $56k, according to Electrek.co.

Considering the current popularity of ‘environmental justice,’ support for electric vehicle subsidies from Democrats is a bit puzzling. As Julianne Malveaux put it in a 2019 column for The Hill, “Should a moderate-income person, who is likely to be driving an older or used car have her tax dollars actually go to provide a new, energy-efficient electric car to a higher income person? Hardly.”

And it’s not a choice between reducing greenhouse gas emissions or not, but rather a choice of methods to accomplish that. At the risk of beating a dead Tesla, electric vehicles are one of the most expensive climate change technologies. In its famous 2013 carbon abatement cost curve, McKinsey didn’t even include electric vehicles because they would have been five to ten times the most expensive approach considered. In more recent research, Goldman Sachs put the cost of reducing GHGs from light-duty vehicles at $450/ton CO2, far more expensive than nearly every other approach. (“Carbonomics” 2021)

Why then do some people promote subsidies for electric vehicles? Because they’re promoting electric vehicles, just as many did in the 1990s, when the technology was much less mature. There have already been a couple studies, admittedly with limited data, suggesting that a significant fraction of EV buyers in the U.S. have been dissatisfied enough to switch back to gasoline vehicles; if this dissatisfaction spreads to taxpayers, it would augur poorly for the many who have embraced the exuberance for electric vehicles. In which case, EVs will fail to become mass market items let alone completely replace the ICE. Certainly, sales will continue but the question will be how big a niche their market will be over the next decade.

Electrek2023 Tesla prices: How much does your favorite model cost?
The HillElectric car tax credits subsidize inequality
Our World in DataHow much will it cost to mitigate climate change?