The HuffPo recently alleged that everyone’s favorite multibillionaires, Charles and David Koch, are planning to spend $10 million per year to assault government incentives for electric vehicles. Why all the fuss? It could be because some of Koch Industries’ $115 billion annual revenue is derived from oil refineries and pipelines. Or, it could be because the Koch’s believe that the government “should not pick winners or losers.”
Should you be concerned that the Koch Brothers may turn their eye toward electric vehicles? Perhaps. Electric vehicle sales slumped an estimated 90 percent after policy support was removed in Georgia, although this drop could be attributed to savvy consumers waiting for updated models of the best-selling electric vehicles to hit dealerships. On a more positive note, the Koch campaign may bring added attention toward electric vehicles, which would provide opportunities to cite the facts. Electric vehicles are cheaper, cleaner, and more fun to drive than gasoline vehicles. One of the few caveats of today’s electric vehicles is their sticker price, which is exactly why the $7,500 federal tax credit and additional state-level incentives are needed to help electric vehicles compete in the marketplace.
The $7,500 federal tax credit for electric vehicles is a key short term policy to help electric vehicles compete in the marketplace.
Claiming that the government should not be in the business of picking winners and losers is akin to claiming that the government should just stick with the current winners.
For example, the current suite of tax breaks for fossil fuels cost the U.S. taxpayer around 10 times more than the federal electric vehicle tax credit. According to the U.S. Treasury, the fossil fuel tax provisions cost the U.S. government $4.7 billion every year and are scheduled to continue in perpetuity. The federal electric vehicle tax credit, on the other hand, cost $580 million in FY2015 and is expected to ramp down to cost $180 million in FY2024. How, exactly, does that make electric vehicles a current winner?
“No, no, no,” Charles Koch might say, “the government should not provide any support, to oil companies, electric vehicles, or any other industry.” Instead, the free market should decide what vehicles to offer. If there is a sufficient business interest in favor of making electric vehicles, then automakers will make them.
The major problem with this approach is the costs of climate change are too external to one single company, or even a single industry, for them to factor the global warming pollution their products create into their business decisions. It is estimated that climate change will cost the U.S. an annual $12 billion increase in electricity bills due to added air conditioning, $35 billion worth of coastal property and infrastructure damage from higher sea levels and potential surges in hurricane activity, and a risk of losing 50 to 70 percent of average crop yields.
On a global scale, Citigroup estimates that the world could lose up to $44 trillion if we don’t act on climate change. But to an oil company or automaker these are indirect costs, the majority of which will be borne by tax payers or other countries, and not for decades. So why factor them in when, for some, producing electric vehicles is already a financial loser?
Aerial views of the damage caused by Hurricane Sandy to the New Jersey coast taken during a search and rescue mission the New Jersey Army National Guard, Oct. 30, 2012. (U.S. Air Force photo by Master Sgt. Mark C. Olsen/Released). Coastal flooding and storm surges are not cheap to clean up, and can become an increasing threat as the climate continues to change. Image via WikiCommons
Whether government support should incentivize products that can cut our global warming emissions comes down to whether individuals or corporations should be responsible for paying for climate change. The answer probably lies somewhere in between, but at the very least consumers deserve the choice to reduce our emissions. Of course, electric vehicles create emissions too, but as I’ve previously discussed, the average electric vehicle is responsible for half the emissions of a comparable gasoline-powered vehicle. Electric vehicles also have the potential get vastly cleaner as our nation moves to a better electricity grid. Oil, on the other hand, is only getting dirtier.
Absent government support for electric vehicles or strong policies like the federal fuel economy standards that are set to double the average fuel economy of light duty vehicles by 2025, we would be stuck with vehicles that make the automakers the most profit, large SUVs and pickup trucks. Automakers didn’t even want to install seat belts for fear of increasing vehicle costs until Ralph Nader’s book, Unsafe at Any Speed, precipitated the creation of a federal transportation safety agency and sufficient public outcry to reduce the costs of traffic accidents that were borne by taxpayers, not the auto industry.
The same arguments that were volleyed in the regulatory fights over seat belts, air bags, and catalytic converters will likely be reused by the Koch’s in their attempt to remove electric vehicle incentives. It’s critical that these incentives remain on the books and help electric vehicles get past the consumer acceptance tipping point and become an engrained part of our transportation future that can maybe, just maybe, help us avoid the very worst impacts of climate change. Electric vehicles are too fun to drive, too efficient, and too clean to lose out to gasoline vehicles. Test drive one for yourself. You’ll be amazed.
So bring it on Koch Brothers! I’ll be waiting.