Electric Car Subsidies: Good or Bad?


The Tesla Model S electric car. Photo: Tesla Motors
Or Somewhere In the Middle?
Lately, there's been a media backlash against electric car subsidies. Almost all big newspapers have carried op-eds about it, and they've almost all been negative. Are they right? Are electric car subsidies a big mistake? Let's look at the pros and cons.
Photo: GM, Chevy Volt lithium-ion battery.
A Macro-Level Analysis of EV Subsidies
The naysayers often don't use very realistic scenarios to show how much money EV subsidies would cost. Even The Economist, a a weekly that is usually pretty good about that kind of thing, has published that "replacing all of Britain's cars with subsidised electric cars would cost taxpayers 150 billion pounds", clearly a straw-man. I don't think anybody is saying that EV subsidies would stick around until all cars are electric, or even that they should stay at the high level at which they are now for much longer (most tax-credits, like with hybrid cars, have a cap).

If the real goal is to save money, I think that cutting some direct and indirect subsidies for the oil, coal, and gas industries should be at the top of the list. They are mature industries that certainly don't need the help, and they are getting vastly more public funds than the pocket change that electric cars are getting.


Photo: Saul Loeb/AFP/Getty, with permission.

Another argument goes something like this: Electric cars aren't as clean as most think, they are charged with dirty electricity a lot of the time, it costs less to reduce CO2 and pollution some other ways, etc.


Photo: Michael Graham Richard

This is a valid argument up to a point (even when charged with electricity that partly comes from coal plants like in the U.S. mix, EVs are still cleaner than internal combustion engine cars, but they aren't completely clean). But this is mostly an argument in favor of cleaning up the power grid, not of sticking to gasoline and diesel powered vehicles.


Photo: Nissan

Building an electric car infrastructure will take time, and the sooner we begin, the faster we'll reap the benefits. Some targeted subsidies during this early phase can help move things forward (big private fleet buyers like GE can also help jump-start the transition). The sooner we get to economies of scales and to enough R&D; to provide battery breakthroughs, the sooner the transportation sector can break its addiction to oil.


Photo: Flickr, CC
Ideally, We'd Have a Level Playing Field
I'd still be much happier if there were NO subsidies for electric cars and no subsidies (direct or indirect) for fossil fuels, but since that doesn't look like it's going to happen in the near-term, it's probably a good idea to have smart and targeted EV tax credits that can be phased out when the technology is a bit more mature and volume production is lowering prices.

See also: Is the Electrification of Transportation a Good Thing?
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Tags: Electric Cars | Electric Vehicles | Transportation

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