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Short Circuit: The High Cost Of Electric Vehicle Subsidies

May 16, 2018
By Jonathan Lesser

A recent report by the Manhattan Institute concludes federal and state subsidies for electric vehicles are expensive and the environmental benefits they produce are largely illusory.

Battery-powered electric vehicles, supposedly offer better performance, lower cost, and, most important, “emissions-free” driving, when compared to fossil fuel powered vehicles. In order to expedited the end of the internal combustion engine’s  use, billions of dollars are being spent to subsidize these electric vehicles and the charging infrastructure needed to support them. The subsidies “include state and federal tax credits for purchasing ZEVs; programs that subsidize the installation of vehicle-charging infrastructure in businesses, households, and along highways; and programs to subsidize the installation of residential and commercial solar photovoltaic systems for charging battery-powered vehicles. Additionally, state utility regulators have approved programs by local electric utilities to install charging-system infrastructure. Some states have encouraged ZEV purchases by granting these vehicles special access to carpool lanes, even when driven alone. Several states have implemented ZEV mandates as well as subsidies.”

This report shows:

  • Despite claims that ZEVs will reduce air pollution, broadbased adoption of ZEVs will increase air pollution and associated environmental costs relative to new internal combustion vehicles.
  • The economic value of CO2 emissions reductions associated with ZEVs is effectively zero.
  • Subsidies for ZEVs and the required infrastructure to support them benefit the affluent at the expense of the poor.
  • In California alone, the total cost of ZEV subsidies, including federal tax credits and state rebates for ZEV purchases, as well as subsidies for private and public charging infrastructure, is likely to exceed $100 billion.