search
Close Nav

Electric Vehicles: Savior or Chimera?

back to top
commentary

Electric Vehicles: Savior or Chimera?

March 30, 2020

Electric vehicles, while not yet economically viable or particularly prevalent due to their rather high cost, are increasingly popular among the politically and economically influential.

Many believe that purchasing and operating electric vehicles is the duty of all who care about climate change. Unfortunately, there exist two realities that belie this belief.

To begin with, electric vehicles do not necessarily provide the environmental benefits many of their proponents claim. This is largely due to the fact that the majority of electric vehicles are charged with electricity produced by coal burning power plants.  Unfortunately for proponents of electric vehicles, these power plants tend to have the unfortunate consequence of producing more green-house gasses than the internal combustion engines that power most vehicles in America.

Additionally, most of the factories that make electric vehicles obtain their energy from coal-burning power plants as well, which constitutes nearly one-fourth of all energy production in the US today.

In fact, recent research suggests that driving electric vehicles does little to reduce carbon and greenhouse gases. A paper recently published in Issues in Science and Technology posits that driving an electric vehicle instead of a conventional petroleum-powered vehicle accomplishes nothing to reduce global CO2 emissions, and in coal-reliant countries like China and Japan they may contribute significantly more to CO2 emissions than traditional gasoline-powered automobiles.

Electric vehicles also are becoming a status symbol and exacerbate inequality. Right now—and for the foreseeable future—EVs are fairly expensive, mostly available to only the wealthy. In addition, those who choose to operate electric vehicles do not pay federal fuel taxes levied on gasoline sales, unlike those who drive internal combustion vehicles. These revenues fund the federal Highway Trust Fund and are used to construct and maintain federal highways and bridges, as well as for other transportation needs.

Because there are only about two million electric vehicles worldwide, the gas tax may be functioning well enough at present to avoid a funding crisis, but the number of electric vehicles is about to rise significantly. The Bloomberg New Energy Finance (BNEF) forecast predicts that the price of electric vehicles may be on par with gasoline vehicles in the next five to ten years. It also predicts that electric vehicle sales will surpass those of internal combustion engine vehicles by the next decade. If more Americans choose to purchase electric vehicles, revenues going into the Highway Trust Fund, which have been slowly trending downward for over a decade, will fall even further.

The market for semitrailer trucks and other heavy-duty vehicles—another crucial source of gas taxes—is being similarly uprooted by electric vehicles. Tesla’s recent announcement of its Tesla Semi quickly triggered rival automotive manufacturers to announce plans to do something similar.

While one solution might be to simply increase the federal fuel tax, doing so would further exacerbate the inequality of the tax and do nothing to reduce congestion on roads in dense urban communities, a growing problem across the country. That the federal government is doling out millions of taxpayer-funded dollars to provide subsidies to electric vehicle producers in an extremely cost-ineffective program that allegedly addresses the problem of climate change only worsens the problem.

While people should feel free to purchase electric vehicles, we should not force lower-income Americans to subsidize these vehicles via government subsidies and increased fuel taxes.

Eric V. Schlecht is president of OnPoint Strategies. He has worked on tax, budget, and economic policy issues in Washington for more than 25 years and served in leadership offices in both the House and Senate.

Interested in real economic insights? Want to stay ahead of the competition? Each weekday morning, e21 delivers a short email that includes e21 exclusive commentaries and the latest market news and updates from Washington. Sign up for the e21 Morning eBrief.

Photo by Sven Loeffler/iStock

e21 Partnership

Sign up for our MORNING E-BRIEF for top economics commentary:

By clicking subscribe, you agree to the terms of use as outlined in our Privacy Policy.

 

 

 

 

 

 

 

 

ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
Close