Leave Vehicle Choices to Consumers and Markets, Not Government

Sabrina Fang
Posted June 29, 2018

A coalition of consumer-focused industries is making the case that consumers, and not government, should choose the car they buy and drive – responding to the automobile associations’ request for additional subsidies from the taxpayers to pay for electric vehicles (EV).

In a letter to the governors of Maryland, Connecticut, Maine, Massachusetts, New Jersey, New York, Rhode Island and Vermont – all that have adopted California-style mandates for EVs – the coalition that includes API, Society of Independent Gasoline Marketers, NACS, NATSO, Petroleum Marketers Association, and America Fuel & Petrochemical Manufacturers urged lawmakers to proceed with caution before further subsidizing EVs and to follow free market principles:

“California is a classic example of a technology-forcing regulatory environment with a history of aspirational targets and failed outcomes. The original California Low Emitting Vehicle rule adopted in the early 1990’s required 10% EVs by 2003. This policy requirement significantly missed the mark. California had to adjust, modify and relax the program requirements several times (including a change to allow the certification of partial zero emission vehicles (PZEV)). Yet today, after spending $449 million on vehicle rebates alone, California ZEVs only account for 4.8% of light-duty vehicle sales and about 1.2% of the cars on the road in the state.  Significant subsidies are also offered by Massachusetts ($2,500) Maryland ($1,200) and NY ($1,100) in addition to the federal subsidy (up to $7,500), yet those states have only achieved ZEV sales of 1.3%, 1% and 1%, respectively.”   

The coalition explained that the top 20% of income earners in America received 90% of the federal subsidies for electric cars. That amounts to a subsidy for the highest income-earners, money that could go towards enhancing schools, emergency response, road repairs and public safety.

Americans are smart and free-market principles provide the best options for people to make their own decisions:

“Transportation policies should acknowledge that consumers are purchasing internal combustion engine vehicles today, and those vehicles are staying on the road longer and are going further on a gallon of gasoline. Transportation policies that conflict with the will of the consumer and attempt to force changes in behavior should be considered with caution as they may impose undue costs on consumers and taxpayers with diminishing environmental benefits and unintended consequences.”

The coalition calls on states to put consumers first:

“Regardless of existing subsidies and incentives, the consumer still is not purchasing zero emissions vehicles (ZEVs). The lack of consumer response may be due to the concern that, according to recent studies, the cost of ownership of a battery electric vehicle (BEV) representative of current technology is between 50% and 400% more expensive than a conventional vehicle equipped with an internal combustion engine. Or it could be that the consumer understands that a ZEV may be better described as “emissions displacement” vehicles. The ‘zero-emission’ classification fails to acknowledge the energy required to build the vehicle and battery systems (above that needed for an ICEV), the energy source used to generate the electricity required to charge the vehicle, and the environmental cost of battery disposal.”

This discussion is relevant with electric vehicle sales growing. But first, let’s understand some things about EVs.  To call them “zero emissions vehicles,” or ZEVs, ignores the energy (and emissions) required to build EVs and their battery systems, as well as the fuel used to generate the electricity that charges those batteries, which also has emissions. It also ignores long-term environmental issues associated with ZEV battery disposal. As API Downstream Group Director Frank Macchiarola told Congress earlier this year, it’s more accurate to call EVs “emissions displacement vehicles,” because their emissions appear at points other than a tailpipe. According to data from the Department of Energy and EPA, the CO2 emitted from generating and providing the electricity needed to power an EV is equivalent to as much as two-thirds of the CO2 coming from a gasoline-fueled vehicle.

Electric vehicles play a role in the transportation fleet, and we think all forms of vehicles, electric and those using gasoline or diesel fuel should be available to consumers and the marketplace.  The vehicles market is large enough for all technologies. As the coalition letter underscores, however, consumers and not government should make those choices. Government should not be picking winners and losers by subsidizing – or mandating or banning – one technology over another.

Unfortunately, that is what California is doing by proposing sweeping policies on ZEVs. Gov. Jerry Brown’s final State of the State speech noted that to meet the state's emissions goals California “will need five million zero-emissions vehicles on the road by 2030.” This year, a California State Assembly member proposed a ban on the registration of any new light-duty vehicle that does not meet the state's ZEV definition after Jan. 1, 2040. Other states are following California’s lead by offering incentives and subsidies intended to spur the purchase of ZEVs.

The fact is that for nearly 150 years the gasoline- and diesel-fueled engines have provided an efficient, low-cost and reliable means for American families to hit the road for work, school, vacations and other activities. Advancements in these engines have resulted in cleaner-running vehicles using cleaner fuels, which has helped reduce U.S. air pollution by 73 percent, even as vehicle miles traveled nearly tripled and the economy grew by 253 percent in the last 45 years.

Bottom line: Policymakers and regulators should be mindful that policies that incentivize shifts in consumer behavior should be considered with caution, to limit unnecessary costs to consumers and to prevent unforeseen and unintended consequences to our society. They should look to the market to guide policy and regulatory decisions. And, policymakers should evaluate and prioritize the full range of technologies and fuels, by considering all factors that will help our nation cost-effectively meet our shared, economic prosperity, energy security and environmental stewardship objectives.