Utah’s handouts for the wealthy
I like the idea of electric vehicles. I hope to buy one in the next several years to replace our hybrid SUV, which is getting on in years. But I strongly object to Utah’s legislature awarding $5 million to subsidize electric vehicle charging stations.
You may have noticed a small but increasing number of electric vehicles in your area. So far, most EV’s are being purchased by “first adopters,” folks who want to be the first on the block with the latest or who seek out new technologies that appeal to them.
Other EV buyers are environmentally sensitive, or at least want to appear that way, and see themselves as making a difference if only in a small way in the big scheme of things. This explains the large number of Hollywood celebrities who purchased Toyota’s Prius hybrid when it first came out.
Estimates vary but producing an EV today costs thousands of dollars more than a comparable gasoline-powered vehicle depending on EV range and weight. The cost of expensive lithium ion batteries will decline with increasing production, but the biggest cost reductions will come because far fewer high-paid union workers are needed to assemble EVs.
For buyers, EV operating cost savings eventually recoup much of today’s cost differential.
Federal and state income tax credits of up to $7,500 — to which I object as well — have encouraged buyers so far. This largesse showered on today’s EV buyers is a result of the government seeing EV’s as an important way to reduce greenhouse gas emissions. Federal credits end after a manufacturer sells 200,000 EVs, a number Tesla has already passed.
Since today’s EVs are mostly high-end models aimed at less cost-conscious buyers, and since tax credits will phase out, government handouts are flowing to early buyers who need them least: the wealthy. Spending thousands of dollars more on an otherwise-comparable vehicle isn’t a realistic choice for most folks. Adding insult to injury, income tax credits are more likely to appeal to those with higher incomes than to the rest of us.
Regardless of how you feel about the environmental credentials of EV’s, should the wealthy be getting government handouts?
This isn’t the first time, nor likely will it be the last, that government intervenes in markets for some noble purpose that turns out to have unintended negative consequences.
Another example: The government mandates that we buy gasoline that is mixed with ethanol, a corn-based product. The ostensible purpose is to reduce greenhouse gas emissions and to make the country less dependent on foreign oil producers.
But ethanol turns out to be a mixed bag. It lowers miles per gallon 2–3 percent and doesn’t work well in small engines. Further, a Cornell and University of California – Berkeley study concluded that “corn requires 29 percent more fossil energy than the fuel produced.” Furthermore, the U.S. is now a net petroleum exporter, knocking out the final leg supporting the ethanol mandate.
As both EV’s and ethanol demonstrate, there is one sure byproduct of government intervention: Corporations that supply government-mandated markets become their biggest advocates, lobbying intensely for continued support from the public purse.
EV manufacturers want the Trump administration to extend the tax credits and the nationwide miles-per-gallon requirements that justify their EV research and development. Ethanol producers and corn farmers, who received $114 billion in subsidies from 1995 to 2019, lobby intensely for continued ethanol mandates.
This is corporate welfare, plain and simple. We pay for it with our tax dollars, yet the result is a myriad of unintended consequences.
Utah legislators should stop subsidizing the wealthy. If there’s a need for EV charging stations, let private business meet that need.
The viewpoints expressed above are those of the author and do not necessarily reflect those of The Independent.
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This opinion piece is full of disinformation. For example, auto companies (and other manufacturers) have been trying to avoid expensive union labor on all production. Being an EV company or EV product line has nothing to do with it. Calling all EV cars “high end” to imply only the rich can afford them is silly. The Nissan Leaf and Chevy Volt have been out for years in the low $30K price range. While not cheap, it’s easily in reach of most middle class auto buyers. If you are going to form an opinion, you might start with the facts. This piece is manufacturing “facts” to justify a pre-determined position.
Bill, you failed to follow the hyperlink to no less an authority than the Detroit News explaining why far fewer workers will be needed to to assemble EVs than are currently needed for gasoline-powered vehicles. As the Detroit News points out, even the electric motors are likely to be manufactured elsewhere, possibly overseas. I stand by my statement and with the Detroit News.
Neither the Leaf or the Volt have been significant successes. Sales of the Leaf have actually dropped in recent years. Why? Re-read my statement in the column: “Spending thousands of dollars more on an otherwise-comparable vehicle isn’t a realistic choice for most folks.” So while they are well within the price range for middle income buyers, the fact that they are priced higher than comparable gasoline-powered vehicles, limits their appeal.
If you are going to make a comment, I’ll quote you by saying “You might start with the facts. [Your comment] is manufacturing “facts” to justify a pre-determined position.
Good article. Unfortunately the federal government has been subsidizing the fossil fuel industry for years creating a very unbalanced playing field for the new technologies. I don’t want my tax dollars going for either but given the imbalance it’s probably necessary at this point. The feds have created an unfortunate situation. It doesn’t take much Googling to find info about how much money has been funneled into fossil fuels and this opinion is coming from a woman who worked 20 years in the oil/gas industry.
No matter what route you take, you got to get there somehow. Hey, anybody see the design for the thorium powered vehicle that never needs refueling? Yes I know, government subsidies tend to backfire, and yes, we are still on the oil plan. However, buy the ticket and take the ride. Yep, only the fool can whisper in the king’s ear, “we are all bozos on the same bus”. How about trains? Oh, same story. Look, at least Howie got us all thinking.