By Lloyd Rowland
The Biden administration is pushing extremely costly policies that encourage the adoption of Low Carbon Fuel Standards and force the production of electric vehicles under the guise of reducing carbon emissions. However, these measures would have a very small impact on emissions. Rather than improving the capabilities and efficiency of vehicles on our roads, these measures empty Americans’ pockets and upend consumer choice.
Restrictions on carbon dioxide have caused significant pain at the pump for all Americans. California and Washington are leading the charge on these restrictions, and their residents are paying the price. Low carbon fuel standards in these states have driven fuel costs to over $5 a gallon. According to the Institute for Energy Research, the passage of Washington’s Climate Commitment Act resulted in a whopping 45-cent-per-gallon increase in gasoline prices.
That number is almost four times the increase promised by supporters of the Low Carbon Fuel Standards, which was supposed to be no higher than 12 cents per gallon. When reporters dug into the story, they learned that Washington director for Climate Solutions, Kelly Hall, stated that increasing the cost of gasoline as a means of encouraging “the transition away from fossil fuels” was always “part of the point of this policy.”
Unfortunately, policies mandating electric vehicles are also predicted to raise the costs of vehicle ownership. Currently, electric vehicles are substantially more expensive than gas-powered cars. The Heritage Foundation explains that the 2023 Ford F150 Lightning costs around $10,000 more than a comparable gas truck.
Higher per-vehicle prices for electric vehicles are largely due to the costs of materials such as lithium and cobalt, which are essential in the production of EV batteries. Battery cost and the difficulty of screening for damage following an accident also mean that electric vehicles are more expensive to insure and repair. Recent studies undermine the common claim that — with fewer parts to maintain — electric vehicles will be easier to repair and maintain. A November study published by Solera explains that “on average, EV repair costs are 29% higher than internal combustion vehicles globally.” The study also notes a distinct “parts cost disparity: EV parts are, on average, 48% more expensive, including components like high-voltage batteries and control units.”
Large-scale adoption of electric vehicles could also drive up the prices of standard vehicles as manufacturers attempt to recoup losses incurred by sluggish EV sales. According to Road & Track, Ford alone is set to lose $4.5 billion on electric vehicles this year. Lagging EV sales would seem to indicate that customers do not want fully electric vehicles. Traditional vehicles are more affordable, possess a longer range, and lose less mileage in cold weather. Consumers are understandably hesitant to make the switch to an electric car, and manufacturers are increasingly hard-pressed to offset these losses.
Facing growing resistance, the Biden administration has resorted to subverting consumer choice with incentives and mandates for buyers and manufacturers designed to get the public on board with the electrification agenda. These take several forms, including credits toward the purchase of electric vehicles. According to the Internal Revenue Service, these credits add up to a maximum of $7,500 and apply to vehicles up to $80,000 MSRP. Qualifying households may make up to $300,000 in certain cases, meaning federal policy supports the regressive plan of taxing the poor and middle class to subsidize electric vehicles for wealthy car buyers.
According to the Heritage Foundation, proposed EPA regulations constitute a backdoor mandate that two-thirds of new cars sold in the United States must be electric by 2032. The Biden Administration is also paying auto and battery manufacturers a combined $15.5 billion to produce electric vehicles, although consumer demand appears to be plateauing and EVs are piling up on dealer lots.
Under normal market conditions, these EV ventures would likely be short-lived given the billions of dollars in losses they incur. However, the existence of subsidies encourages automakers to continue working on unpopular products.
With policies like these in place, Americans will increasingly find themselves priced out of vehicle ownership as government overreach undermines consumer choice. Dealerships and manufacturers will find their lots overflowing with vehicles that consumers either do not want or cannot afford. To stave off this carmageddon, our country should prioritize an economically sound policy that makes cars and fuel more affordable and puts consumers back in the driver’s seat.
Lloyd Rowland was an energy and environmental policy intern at the Mackinac Center for Public Policy.
Originally published by the Mackinac Center for Public Policy. Republished with permission.
To read more about Biden’s EV ventures, click here.
To read more about the folly of net zero, click here.