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The surprising affordability of used electric vehicles shows how California’s climate policy can tackle inequality

California has led the US for decades in electric vehicle adoption, pollution reduction, and innovation, but electric vehicles are still viewed as a luxury available only to the wealthy. New research focusing on used electric vehicles shows that they are actually cheaper than used gasoline-powered cars, which holds the promise of increasing budget relief for all Californians.

The original case for electric vehicles was primarily for public health benefits, particularly in California, which is home to six of America’s ten most polluted cities, 80 percent of which are due to traffic. Tailpipe emissions are even more dangerous than previously thought, while cars and light trucks are the state’s single largest source of greenhouse gas emissions.

Chevrolet Bolt electric car in Danville, California, March 2020. (Photo by Smith … [+] Collection / Gado / Getty Images)

Gado via Getty Images

New research quantifies consumer savings from three to four year old electric vehicles and contributes to the health and climate benefits of electric vehicles. Used electric vehicles save consumers an average of $ 500-1,000 compared to similar gasoline cars because they have lower fuel and maintenance costs. The gasoline price shocks that recently hit the east coast show how EVs also protect their owners from volatile oil markets.

Although electric cars are cheaper to own than gasoline cars, their pre-sale prices are still higher without government incentives. Rapid battery innovations lower the cost of electric vehicles so quickly that they will be cheaper to buy within a few years. Smart politics is and will remain indispensable.

Bar chart showing that the price of EV battery packs fell by 89% in real terms from 2010 to 2020.

The price for EV battery packs fell by 89% in real terms between 2010 and 2020.

Bloomberg New Energy Finance

California pioneered the creation of incentives to improve access to electric vehicles. For example, Clean Cars 4 All offers discounts for low-income households on used or new electric vehicles at the point of sale. Incentives reach up to $ 9,500 for people living in neighborhoods with the worst air pollution, making owning a used electric vehicle 38 percent cheaper than buying a similar gasoline car – a breeze to buy a car.

Some context helps illustrate the dramatic impact of these affordability benefits on the budget. Owning a car is the second largest expense for California households, consuming more than 30% of after-tax income in low-income households, three times more than in higher-income households.

Electric vehicle adoption is increasing among low and middle income households, but consumer incentives remain important. We still have a long way to go to fill the accessibility gap, so targeted incentives like Clean Cars 4 All remain essential to meeting California’s equity goals. Incentives for middle-income buyers to purchase new EVs are also crucial, as potential EV buyers generally point to higher cost as a primary concern.

Bar chart showing that from a total cost of ownership perspective, used electric vehicles are cheaper than used gasoline cars even without incentives, but the inclusion of incentives makes them 38% cheaper for low-income buyers.

The total cost of ownership of a used electric vehicle is 38% cheaper than a comparable gasoline car model, though … [+] the highest Clean Cars 4 All Incentive is included.

Energy innovation

Without such a broader policy, California risks falling out of step with the state’s electrification goals. On a hopeful note, both Governor Newsom and the state legislature’s budgets include revenue for both broad and targeted incentives – but continuity is not assured.

Other innovative measures are also needed to shift the use of electric vehicles to the fast lane, such as: Infrastructure expansion is of the utmost importance and policy makers are rightly considering public-private efforts to expand infrastructure while pursuing new approaches to overcome the barriers to accessibility of EV charging for residents of multiple units.

Nissan Leaf

The Nissan Leaf electric car is plugged in and charged at an electric vehicle charging station in San … [+] Ramon, California. (Photo by Smith Collection / Gado / Getty Images)

Getty Images

California’s strong EV policy rewarded innovation, helped EVs become the state’s top export in 2020, and doubled direct car manufacturing jobs from historic levels. California manufacturing jobs make an average of $ 80,000 a year. Jobs in the larger electric vehicle industry even beat this impressive benchmark, paying an average of more than $ 90,000 per year with 275,000 jobs nationwide. Maintaining leadership in electric vehicles through smart policies will extend these economic upward ramps to the middle class.

Electrifying transport at the scale and speed required to meet our nationwide climate goals will be challenging, but the momentum is growing. The steady pace of innovation and increasingly enthusiastic automakers mean that dozens of new electric vehicles of all shapes and sizes will soon hit the road. The EV revolution can help alleviate the intertwined issues of environmental justice, climate change, and income inequality – if California’s climate policy takes full advantage of the surprising affordability of electric vehicles.

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