Biden’s high-cost plan to accelerate adoption of electric vehicles in the United States

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With the electric vehicles that make up only 2% of auto sales in the United States in 2020, achieving a rapid “energy transition” to a fully electric vehicle fleet within the next 15 years will be a huge effort, an effort that President Joe Biden and his fellow Democrats in Congress are determined to aggressively advance. To do this, the administration plans to tackle the task in two directions: first, by spending hundreds of billions of dollars on increased incentives and subsidies for automakers and by developing new charging station infrastructure; second, by imposing new regulations that would dramatically increase the cost of gasoline and the internal combustion cars that use it.

On a post-election trip to Detroit in November, then-President-elect Biden told an audiencee that it has big plans to increase the incentives for electric vehicles already in place at the federal level. Following Biden’s lead last week, Senate Majority Leader Chuck Schumer outlined his own plans to incentivize electric vehicles in a new infrastructure bill that Congress Democrats plan to move soon. .

“This is a bold new plan designed to accelerate the United States’ transition to all electric vehicles on the road, to develop charging infrastructure, and to grow American jobs through clean manufacturing,” Schumer says The Verge in a brief interview this week. “And the ultimate goal is for every car made in America to be electric by 2030, and for every car on the road to be clean by 2040.”

As reported by The Verge, Schumer’s plans include increasing the current electric vehicle tax credit of $ 7,500 per car, direct incentives to automakers who phase out their internal combustion vehicle fleets, tax incentives for homeowners who install their own home charging equipment and direct subsidies. local governments to expand their public charging infrastructure. Finally, Senator Schumer proposes spending $ 45 billion on subsidies to modernize the country’s charging infrastructure and targeting $ 17 billion to subsidize the modernization of car manufacturers’ facilities to manage the production of electric vehicles.

Schumer’s estimate for the total price of all of these grants at the federal level? $ 454 billion over ten years, which honestly seems a very conservative estimate.

Steps the administration plans to take on the side of increasing the price of internal combustion cars include traditional methods such as increasing controls on tailpipe emissions, which barely exist in newer models of our cars. days, and increasing the fleet gas mileage standards imposed on automakers. Over the past 40 years, requirements like these have already helped drive up the cost of gasoline-powered cars to the point that auto finance companies are now offering long-term loans that look like a real estate mortgage just to pull things off. of their land. Yet despite all this, internal combustion cars are still significantly cheaper than electric vehicles of a similar class. Thus, the imposition of additional restrictions is in part motivated by the desire to help standardize these price tags.

But the administration also plans to impose more subtle behind-the-scenes measures whose impact on car and gasoline prices will be very real but difficult for consumers to pin down as the cause of the sticker shock to come. One of these measures is the result of an action that President Biden himself has already taken in the form of a executive order released in late February, ordering its regulatory agencies to increase the standard estimate of the social cost of carbon (SCC) from $ 7 per tonne of emissions from more than 700% to $ 51 per tonne.

Like David Kreutzer of the Institute for Energy Research (IER) recently wrote, the principle here is simple: the higher the estimate of the SCC, the more energetic and impactful regulatory measures can be justified. A carbon tax of $ 51 per tonne would equate to an increase in gasoline prices of about 45 cents per gallon, adding $ 500 per year to the average gasoline bill of American households. Emissions regulations imposed using the same price for the social cost of carbon are likely to produce a similar result.

If we assume that a consumer plans to keep a car for the duration of a typical loan, say 6 years, that adds $ 3,000 to the cost of owning a gasoline car. Or, like Joe Daniel, energy analyst for the Union of Concerned Scientists said to the Wall Street newspaper Recently, “for electric vehicles to take off, they have to be as practical as gasoline-powered cars – that’s the point of this big purchase.”

Obviously, the massive increase in the CCS assumption, once built into the regulatory pie, will also increase the cost of all other forms of energy as new regulations are put in place, including the cost of electricity consumed to recharge EVs. But American consumers have been successfully conditioned to somehow assume that charging their cars is “free.”

After all, they can just park in one of those handy spaces right in front of their local parking lot. Whole Foods Market

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and set their You’re here

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or Chevy Bolt to charge as they go inside to shop. When they come out half an hour later, there’s no bill to pay – not directly, anyway – no slot in the pump to insert a credit card, no digital readout of the price per gallon (or watt) to compare to what the price was the last time they filled up.

Since so many Americans don’t have a clue where electricity comes from or how it is produced (hint: mostly by burning fossil fuels), there is simply no connection between the cost of the EV and the cost of the power needed to charge it. So it becomes “free”, at least in the minds of many consumers.

From a political standpoint, the Biden / Congressional Democrat considering stepping down as the transition to electric vehicles seems smart enough in its multi-pronged approach. But woe to them all if the American public ever wakes up and makes the costly connection between politicians and their wallets.

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