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Should your next car be electric—or no car at all?
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Should your next car be electric—or no car at all?

The road to decarbonization hinges on getting the incentives right
February 16, 2023

Let the best of Anthropocene come to you.

It’s boomtime for makers and buyers of electric vehicles (EVs). Choices are expanding, prices are dropping, and last year’s Inflation Reduction Act extended consumer tax credits for cars built in the US—as well as adding incentives for companies making EV batteries. From behind the wheel of an electric Humvee, Biden recently proclaimed: “On my watch, the great American road trip is going to be fully electrified.” 

But if the aim is to cut carbon emissions, behemoths like the Humvee—which on an average US power mix contributes more CO2 emissions per mile than a gas-powered Toyota Corolla—are hardly going to help. Some incentives will go straight to manufacturers with no guarantee consumers will see the benefit, and research strongly suggests that the best way to reduce transportation emissions is to get people out of their cars altogether. The IRA is a positive start, but the road to sustainability is long. Are big EV incentives the most efficient route?   

 

• • •

The last thing we need to subsidize
is more cars, electric or not

1.  Unnecessary incentives. The New York Times reported this week that EVs could match gasoline cars on price this year. GM’s new Equinox crossover EV, for example, will be just a few thousand dollars more to buy than its gasoline equivalent when it arrives this fall. EVs generally have 5 to 15% lower running costs, thanks to efficient motors, home charging, and reduced maintenance. That would make the battery vehicle cheaper within a year or two—and much cheaper over its lifetime—without any incentives required at all.

2.  More cash for Musk. Tens of billions of dollars of the IRA incentives are going directly to the makers of EV batteries. The government estimated that battery incentives would total around $30 billion. But if all the planned manufacturing occurs, that figure could balloon to $136 billion over 10 years, Axios reports. Tesla alone expects to earn up to $1 billion in battery tax credits this year, with Elon Musk calling their potential value to his company “gigantic.”

3.  The money missed the bus. “Focusing on electric cars and trucks is unlikely to quickly reduce US emissions and fails to account for the resource intensity of car manufacturing, non-carbon pollution produced by vehicles, and the unsustainable land uses car dependence produces,” write researchers at the non-profit Urban Institute. They point out that public transit, when electrified, has carbon emissions a third of those of electric cars. Spending just the $136 billion battery incentives on transit instead could revolutionize high speed rail, electrify transit lines, build thousands of miles of bike lanes—or simply pay for every public transit trip in America for a year, with $55 billion left over for new services. According to the American Public Transport Association, 45% of Americans currently have no access to public transit.

using data from TNMT/Lufthansa Innovation Hub

 

• • •

More cars are inevitable,
and they should be electric

1.  We still live in a world of highways. Utopian dreams of electric tricycles and fuel-cell airships aside, the US and the world are still addicted to automobiles. Despite a pandemic blip, the total vehicle miles traveled in the US shows no sign of a downturn. The reality is that cars are here to stay, so we might as well choose the best we can. EVs are hands down better for the environment than internal combustion engine (ICE) vehicles, even considering the pollution from manufacturing batteries, and the fact that many power grids use coal and gas. A fascinating study from non-profit Resources for the Future recently put a dollar amount to those savings: each extra EV represents a net climate benefit of between $3,100 (under the most pessimistic scenarios) and $34,000. And the net health benefits to the community are worth another $690-$3,300 again.

Annual Vehicle Miles-Traveled in the United States

Source: Federal Highway Administration monthly Traffic Volume Trends reports

2.  Buyers just need a nudge. The science is clear and the economics are favorable, so why did EVs constitute fewer than 6% of passenger cars sold in the US last year? It seems that consumer reluctance to trying something new can definitely be assuaged with cold, hard cash. In Norway, where EV incentives began in 1998, over 80% of new cars sold in 2022 were electric. The same could happen (albeit probably more slowly) in the US. Shiying Wang at Georgetown University found that every $1,000 in purchase incentives increased EV sales by between 5% and 14%, across all 50 US states.

3.  Climate justice is EVs for all. An argument leveled against previous EV incentives is that they mostly went to rich people buying luxury rides. A paper from Ashley Nunes at Harvard Law School in Nature last year suggested that for incentives to be really effective, they should be redistributed towards regular buyers and the second-hand market. The IRA took steps in that direction, eliminating the incentives for anyone earning over $75,000, and offering a credit of 30% (up to $4000) of a used EV vehicle price. With older EVs now regularly selling for $12,000 or less, that should make them attractive to a wider audience.

• • •

What to keep an eye on

1.  ICE bans. Enough of carrots, what about sticks? Joe Biden signed an executive order stating that all new government light vehicles purchased should be EVs by 2027. And Oregon, Washington, and California will not allow new gas cars to be sold within their borders from 2035. Dozens of countries around the world have similar bans kicking in between 2030 and 2040. As the dates for these get closer, will incentives fade away? Or ramp up to convert the last few gas guzzlers?

2.  Sustainable gasoline? It’s not enough to just ban new car sales. To really dent emissions, you need to reduce the CO2 being emitted by ICE cars on the road now, and for decades to come. Prometheus Fuels is working on a carbon-neutral gasoline-replacement “electrofuel” created from CO2 already in the air. Although there are questions about whether it will ever be viable, its CEO suggested it could start selling the fuel this year.

3.  Changing infrastructure. Gasoline cars evolved hand-in-hand with highways and gas stations. If EVs are ever going to dominate, public and private charging stations (as well as the power stations to feed them) will have to keep up with demand. 

4.  Whether your next car qualifies for a credit. Ever since the IRA was announced, consumers and manufacturers alike have been scratching their heads over which vehicles are eligible for the complex, multi-part incentives. (Here’s a helpful list up to date as of early February 2023). Several cars have been added in recent weeks. 

Top image: ©Anthropocene Magazine

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