David Williams: Are electric vehicles the most subsidized product in America?

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By DAVID WILLIAMS | TAXPAYERS PROTECTION ALLIANCE

Electric vehicles may be the most subsidized product in America. Federal taxpayers shell out $7,500 every time a new eligible electric vehicle is purchased (usually by wealthy buyers). State and local taxpayers chip in an additional $1,500 for each EV purchase.

Then, there’s the tens of billions of dollars “invested” by policymakers into building EV plants. Even these bank-breaking concessions aren’t enough to please the Biden administration. Recently finalized EV tax credit rules expand eligibility for the subsidy while maintaining bizarre trade sourcing rules likely to lead to further tariffs from China. It’s time for President Biden and lawmakers to ditch protectionism and finally end EV subsidies. 

From the start, President Biden’s fumbling approach to EV subsidies has harmed the economy without bolstering ecology. In 2022, the chief executive declared, “[t]hanks to American ingenuity, American engineers, American autoworkers… if you want an electric vehicle with a long range, you can buy one made in America.” Prices were already through the roof, with taxpayers being asked to shoulder these pricy purchases. Kelley Blue Book estimates that the average price of a new EV is more than $65,000, compared to $48,000 for gas-powered cars. Biden imposed requirements that EVs must undergo “final assembly in North America,” contributing to even higher prices for taxpayers and consumers. 

Biden’s rules make production cost-prohibitive by restricting the foreign mineral inputs (e.g., graphite) that could go into tax credit-eligible EVs. The administration has since reversed course and allowed for a grace period for graphite sourcing. However, the new rules, “introduce a stricter test for measuring whether 50% of the vehicle’s critical minerals come from the United States or a free trade agreement partner…[requiring] automakers to more precisely account for the value added at each step of the supply chain.” The net effect of all these confusing new rules is to expand the number of vehicles eligible for EV tax credits, while increasing compliance costs. And, of course, this cost will be passed onto taxpayers and consumers. 

Instead of tethering absurd rules to a complex and costly program, the Biden administration should start from scratch and axe the tax credit. EV subsidies are showered onto the wealthiest Americans at the expense of their poorer neighbors. According to a 2023 analysis of California EV purchase patterns by the news outlet CalMatters, “Most of the median household incomes in the top 10 [zip codes with the highest share of EVs] exceed $200,000, much higher than the statewide $84,097. Typical home values in those communities exceed $3 million, according to Zillow estimates.” In comparison, “electric cars are nearly non-existent in California’s lowest income communities: only 1.4% of cars in Stockton’s 95202, where the median household income is $16,976, and 0.5% in Fresno’s 93701, where the median is $25,905. Most are plug-in hybrids, which are less expensive.” This study’s findings are consistent with earlier, multi-state surveys. A 2018 study by Dr. Wayne Winegarden of the Pacific Research Institute found, “79% of electric vehicle plug-in tax credits were claimed by households with adjusted gross incomes of greater than $100,000 per year. Households with incomes greater than $50,000 per year claimed 99% of the credits.” 

This stunning regressivity ensures that subsidies are a net-negative for ecology. Wealthy Americans primarily purchase EVs as secondary cars, keeping them in the garage for occasional outings. EV owners are largely still using conventional cars, and there’s less-than-hoped-for substitution between gasoline and electricity. As a result, extra pollution is generated via increased EV production without corresponding decreases in driving emissions. One 2022 Harvard study suggests, “foregoing gasoline in favor of volts may actually increase, not lower, overall emissions in some cases.” This is far from the outcome envisioned by “green” activists and policymakers. 

The Biden administration and lawmakers ought to seriously rethink adding more fuel to the dumpster fire of EV subsidies. Struggling Americans shouldn’t be forced to foot the bill for these over-hyped toys for tycoons. 

David Williams is the president of the Taxpayers Protection Alliance. This article was originally published by RealClearEnergy and made available via RealClearWire.

21 COMMENTS

    • Not even close.
      Seriously, you directed me to an article about that once, and oil was WAY down the list per unit for subsidies. Distorting statistics is a bad way to prove a point. Just because the dollar amount is high does not mean the per unit is high. The US uses a tremendous amount of petroleum, and the per barrel subsidy is pennies compared to what green initiatives gets.
      And, you know it.

      • Are you seriously trying to compare it on a per barrel/per unit basis?! That’s apples and oranges and a complete false equivalency. And you know it.

        • Do you have a better way to compare subsidies on such different quantities? Literally billions of barrels of oil used in the US every year (Per the US Government Energy Information Administration, the US used 20.28 million barrels a day in 2022), and there are some 3.3Million EVs in the US, total for all years of production. (Source: Edmunds)
          .
          Simply comparing gross subsidy amounts is lying with statistics. Only a moron would think they are making any point by ignoring the units produced.

        • And, that is a serious question.
          In what world do you think you can apply a “gross dollar amount” comparison to something that has such a massive difference in consumption across the US? You say I am making it into an apples versus oranges comparison, at least I am still in the fruit section.
          Your comparison is apples to automatic transmissions. You are not even in the same retail outlet.

  1. But the taxpayer doesn’t care as look who they keep voting for.
    Remember everything is free from the government as long as you do what they say.
    Sounds like total control to me.

  2. Much like strippers.
    Green energy and everything associated with it stop working when you stop throwing money at it.

  3. This is all about trying to quickly phase out the production of fossil fuels. The climate wackos take the most publicly used fossil fuel instrument and market a new concept……the electric vehicle.
    And it takes massive amounts of fossil fuels to generate the electricity required to operate it. Not to mention that electric vehicles require hoards of rare earth minerals from China to build batteries. Those massive batteries could trigger cancer from their electrical fields which sit feet away from the occupants. And recharging stations will require trillions of $$ of investment capital.
    All of this for what???
    .
    To satisfy the big wet dream of climate activists.
    .
    The internal combustion engine is probably the greatest invention of mankind, and it can still be refined over the next several decades. This is the direction to keep going on.

  4. I saw an analysis, but cannot locate it again, where if you removed the subsidies from EVs and their charging, it would cost the equivalent of $17 per gallon to drive the vehicle. In other words, without subsidies, EVs are the single most expensive vehicle to operate. (OK, a late 60s muscle car “might” be a bit pricier on a per mile basis, but pointing out the exception does not disprove the rule.)

    • Hey. Don’t knock 60s muscle cars! If could get my hands on one, I’d be cruising in style to Freddy’s.

      • Same here, but I remember joke about the Olds 442. It was named that because it needed four gallons of gas and four quarts of oil for every two miles.

    • Let’s start with you Frank.
      I would say 50% tax for you due now.
      Carbon tax who’s uneducated proposing another tax we don’t want or need.

    • So we need a “free market” wherein the scales and balances are titled to favor one product over the other by means of a tax? Doesn’t sound like a free market to me.

      What if we just had an actual free market wherein the best product was available at the best price?

    • I would be OK with a carbon tax.
      If someone, anyone, could tell me what difference it would make to the environment.
      .
      Tell you what Frank. How about you take a stab at it. How, in your personal opinion, will a carbon tax change anything in any way?

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