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Biden’s new plan to invest in electric cars to fight climate change

Biden’s American Jobs Plan also includes money to invest in electric cars. Electric vehicles are great, but subsidies are not.

Ashley Nunes
| Opinion contribution

America turns green. Recently, President Joe Biden unveiled plans to accelerate the transition to electric cars. The move – neatly packaged as the American employment plan – is being sold to “unify and mobilize the country to meet the great challenges of our time: the climate crisis and the ambitions of an autocratic China”. In recent years, Beijing has done well in the race to build and sell environmentally friendly technologies.

No more. Instead, expect the American employment plan to help us “outperform China” and, more importantly, “reduce the impact of climate change on our children.” Of course, victory won’t come cheap. The White House puts the total cost of the plan at $ 2 trillion. With a national debt of more than $ 28 trillion, $ 2 trillion seems like a bargain.

The White House wants $ 174 billion to increase sales of electric cars. The use of fossil fuels in transportation is significant, and gas guzzling cars are one of the reasons. Electric cars – admittedly cleaner by almost every metric – offer relief. Well they would if people could actually afford them. Not using gas is expensive and does not preserve the status quo. This explains why only 2% of the cars sold annually are powered by electricity.

Norway and electric cars

The answer supposedly lies in subsidies. Nothing – we are told – solicits consumers like handouts. Just look at Norway, where the local government has been offering generous incentives to buy electric cars since the early 1990s. The result? Just over 54% of all new car sales there are electric cars, a world record, and a decade ago it was just 1% of the total market.

Impressive stuff. At least it would be if there weren’t a few minor – but important – details. For one thing, Norway’s experiment with electric cars cost billions, and the majority of the vehicles sold went to households that also own gasoline-powered cars. Put simply, consumers seem to be treating electric cars as a complement, not a replacement. Even more worrying, electric car owners still rely heavily on gasoline-powered cars to get around. The average Norwegian household drove 7,500 miles in 2018, of which only 515 were in electric cars.

Don’t blame the Vikings just yet. Americans are no better. Take California.

Incentives for buying electric cars in the Golden State are among the most generous in the country. Local residents can enjoy discounts of up to $ 7,000 on buying or leasing an electric car. This is on top of the tax credit offered by the federal government of up to $ 7,500.

However, a recent California study investigating the use of electric cars found that these vehicles are driven 5,300 miles annually. That is less than half the national average. According to the authors, this result “raises questions about the electrification of transport for climate policy”.

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Questions like: Why do taxpayers have to pay the bill for assets that are not used very often? Is this really the smartest use of our hard-earned capital? Shouldn’t we stop tossing good money at bad? You don’t need a Harvard MBA to find out the answers.

Run Biden with “Science and Truth”

The hug of electric cars is nothing more than a political score. A recent poll by the Pew Research Center found that two-thirds of Americans say too little is being done to address climate change. Clearly, if one gets elected to (and stays) office these days, one needs to polish the green credentials.

For many politicians, this means shoring up electric cars. Never mind that this does little to effectively address climate change. In their rush to advertise their “green reputation”, proponents of subsidies for electric cars seem to be consistently neglecting an inconvenient truth: While the arguments for using an electric car are strong, the arguments for subsidizing an electric car are weak.

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President Biden says his $ 174 billion investment will help “win the (electric vehicle) market”. We don’t have to win the electric vehicle market. What we need is clean air, clean water and healthy communities. Electric cars should help. But they are not – at least not nearly as far as proponents claim. This reality deserves recognition, and public policy should reflect that reality.

During the 2020 presidential campaign, Biden promised that his government would lead with “Science and Truth”. Now is his chance.

Ashley Nunes is the Director of Competition Policy at the R Street Institute and a research fellow at Harvard Law School.


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