REPORT: Taxpayer Subsidies Propping Up Electric Vehicle Market

Posted on Wednesday, December 20, 2023
by Andrew Shirley

AMAC Exclusive – By Andrew Shirley

Dutch road sign: electric vehicle charging station

While electric vehicle (EV) proponents have long touted that EVs are cheaper than internal combustion engine vehicles (ICEV) on a per-mile basis, a recent study has cast serious doubt on that assertion and warned that EV costs could rise significantly with some government subsidies now in jeopardy. Meanwhile, the Biden administration has poured billions of dollars into building more EV charging infrastructure with virtually nothing to show for it.

According to a report from the Texas Public Policy Foundation (TPPF), despite various claims that the cost of charging an EV equates to less than $1.50 per gallon of gasoline averaged out over the lifetime of the vehicle, “the true cost of fueling a 2021 EV, including excess charging costs and subsidies, is equal to $17.33 per gallon of gasoline.”

As TPPF explains, most per-gallon cost comparison estimates released by EV advocates only take into account how much the electricity needed to charge an EV costs. For example, if a full recharge for an EV requires 75 kilowatt-hours of electricity, EV companies will claim that each recharge only costs as much as that amount of energy – around $10 to $14 in most states.

But these estimates don’t take into account the energy lost when converting electricity from alternating current, used in the power grid, to direct current, used in EVs, nor do they account for the extra energy needed to overcome a battery’s resistance to charging as it nears full capacity. These factors alone more than double the per-gallon equivalent cost of an EV charge.

But the real hidden costs that EV advocates miss (or just ignore) are the massive subsidies that the federal government has been handing out in recent years – more than $200 billion so far not including the hundreds of billions more contained in Biden’s so-called “Inflation Reduction Act.”

Another more obvious added cost of EVs is that they are simply more expensive to purchase. According to TPPF, an average EV is about $22,000 more expensive than a comparable ICEV – and that’s with the $7,500 tax credit that the Biden administration has offered on a significant number of EVs. Many states also offer up to $1,500 in tax credits on certain EVs, further obscuring the true cost.

But thanks to new policies aimed at countering China, many of those subsidies, including on Tesla, far and away the most popular EV brand, could soon be going away.

According to reporting from Politico earlier this month, a series of new rules recently unveiled by the Biden administration would “disqualify a vehicle from receiving the credit if even one of its suppliers has loose ties to Beijing, such as producing parts in China or having as little as 25 percent of board seats controlled by China.”

The policy could be a major hit for companies like Ford, which has invested heavily in its EV lineup but has relied heavily on Chinese battery technology and manufacturing.

In short, electric vehicles could become a lot more expensive in the very near future, undoubtedly making Americans even less enthusiastic about buying one.

Despite a potentially rocky road ahead, however, Biden has plowed forward with plans to require that 67 percent of all new vehicle sales be electric by 2032, a policy many are calling an EV mandate. Although the House has passed legislation barring the administration from moving forward with the regulation, Biden has said that he would veto the bill if it were to make it past the Democrat-controlled Senate.

Even more concerningly for Americans now facing the prospect of being forced into an expensive EV, Biden has offered no reason to believe that the government is capable of fulfilling its promises to significantly expand EV infrastructure in the near future.

Despite allocating some $7.5 billion for new EV charging stations in the 2021 infrastructure law, for instance, the very first charging station funded by the bill was just opened in Ohio on December 11 – more than two years after passage of the bill.

The White House has attempted to sell this “milestone” as a major accomplishment, but industry experts remain skeptical that the government is capable of meeting the demand for charging stations that its EV mandate will create. The National Electric Vehicle Infrastructure program calls for half a million charging stations to be built by 2030. One in two years is not a good start.

All of this could mean a nightmare scenario for American drivers is just around the corner. Dozens of news stories over the past few years have documented the headache of long lines at charging stations throughout the country. A J.D. Power survey from August of this year found that 20 percent of EV owners have visited a charging station but left due to long lines, and that satisfaction among EV owners with their charging experience overall has plummeted by 36 points since 2022.

It may well be the case that EVs are the wave of the future, and the technology will eventually surpass the convenience and affordability of ICEVs.

But at the present moment, it seems that the entire industry is being propped up by government subsidies and mandates. Once the training wheels are inevitably removed, the entire auto industry – and perhaps by default the American economy – could be in for a shock.

Andrew Shirley is a veteran speechwriter and AMAC Newsline columnist. His commentary can be found on X at @AA_Shirley.

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