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Were America's Electric Car Subsidies Worth the Money? (msn.com) 265

Posted by EditorDavid from the car-talk dept.
America's electric vehicle subsidies brought a 2-to-1 return on investment, according to a paper by the National Bureau of Economic Research. "That includes environmental benefits, but mostly reflects a shift of profits to the United States," reports the New York Times. "Before the climate law, tax credits were mainly used to buy foreign-made cars." "What the [subsidy legislation] did was swing the pendulum the other way, and heavily subsidized American carmakers," said Felix Tintelnot, an associate professor of economics at Duke University who was a co-author of the paper. Those benefits were undermined, however, by a loophole allowing dealers to apply the subsidy to leases of foreign-made electric vehicles. The provision sends profits to non-American companies, and since those foreign-made vehicles are on average heavier and less efficient, they impose more environmental and road-safety costs. Also, the researchers estimated that for every additional electric vehicle the new tax credits put on the road, about three other electric vehicle buyers would have made the purchases even without a $7,500 credit. That dilutes the effectiveness of the subsidies, which are forecast to cost as much as $390 billion through 2031.
The chief economist at Cox Automotive (which provided some of the data) tells the Times that "we could do better", but adds that the subsidies were "worth the money invested". But of course, that depends partly on how benefits were calculated: [U]ing the Environmental Protection Agency's "social cost of carbon" metric, they calculated the dollar cost of each model's lifetime carbon emissions from both manufacturing and driving. On average, emissions by gas-powered vehicles impose 57% greater costs than electric vehicles. The study then calculated harms from air pollution other than greenhouse gases — smog, for example. That's where electric vehicles start to perform relatively poorly, since generating the electricity for them still creates pollution. Those harms will probably fade as more wind and solar energy comes online, but they are significant. Finally, the authors added the road deaths associated with heavier cars. Batteries are heavy, so electric vehicles — especially the largest — are likelier to kill people in crashes.

Totaling these costs and then subtracting fiscal benefits through gas taxes and electricity bills, electric vehicles impose $16,003 in net harms, the authors said, while gas vehicles impose $19,239. But the range is wide, with the largest electric vehicles far outpacing many internal combustion cars.
By this methodology, a large electric pickup like the Rivian imposes three times the harms of a Prius, according to one of the study's co-authors (a Stanford professor of global environmental). And yet "we are subsidizing the Rivian and not the Prius..."
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Were America's Electric Car Subsidies Worth the Money? More

Were America's Electric Car Subsidies Worth the Money?

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  • Poor priorities (Score:3)

    by NotEmmanuelGoldstein ( 6423622 ) on Sunday October 13, 2024 @07:46PM (#64861885)

    ... subsidizing the Rivian ...

    Because it's manufactured/assembled in the USA, allowing the USA to claim they're creating jobs and being climate-change responsible: Many politicians care about only one of those benefits. Also, because the USA hasn't prioritized subsidies for small-size EVs, and because consumerism in the USA requires most goods be big, and containing bells and whistles that are now, expensive, difficult to repair and enable spying.

    40 years of inaction means climate-change friendly results are now more important. That's difficult when US subsidies either, a) make the manufacturer responsible for the entire life-cycle of the product, or b) treat all (EV) substitutes as equally valuable.

  • subsidies are political levers (Score:5, Insightful)

    by ElitistWhiner ( 79961 ) on Sunday October 13, 2024 @07:52PM (#64861901) Journal

    nice economic study

    But Tesla disrupted all automakers. The USA is a car-first nation with a lot of distance to cover nationwide. Twin calamities of EV and global warming threw the whole underpinning of burning oil to get energy in cars. Subsidies were a life ring to legacy and EV automakers to transition their business away from oil.

    We will see the results beginning latter half 2025 through 2027 how well that money was spent. Of the 400+ automakers worldwide, don’t expect more than two US automakers to emerge in EV. Out years 2028 and beyond is where consolidation, diversification and strategic partnerships will eclipse the dyed-in-wool carmakers who didn’t innovate beyond autos.

    Tesla included, no one has found the sweet spot, secret formula and trick to designing the future. We get a lot of yesteryear sedans, pickup trucks and quite frankly SXS is the true innovators to watch. Consumers may need to settle for 150mi radius and public transport beyond.

    • Re:subsidies are political levers (Score:4, Insightful)

      by Barsteward ( 969998 ) on Monday October 14, 2024 @01:05AM (#64862397)
      "and since those foreign-made vehicles are on average heavier and less efficient" - this made me laugh, apart from Lucid, Tesla, Mustang and GM Bolt i wouldn't call any other USA made car lighter and more efficient than foreign cars e.g. Hummer, Rivian, Ford Lightening
      "Finally, the authors added the road deaths associated with heavier cars." - How can they put this on EVs when you have such oversized and pedestrian unfriendly monsters such as pickups and SUVs? [axios.com]

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      I don't know how US subsidies compared to European ones in terms of value, but the European ones seem to have been much more effective. We have better charging infrastructure, and a much wider selection of EVs, including more affordable long range ones. Right now you can get a 250 mile MG5 for under £20k, and it's a much nicer and more practical car than the price would suggest.

      I think maybe the lack of a hard deadline for ending fossil car sales in the US has not helped. Carrot and stick, we ca

      • You've surely seen the Canyonero advertisement from the Simpsons? Like most good satire it dated remarkably fast. The Canyonero is only an SUV. Manufacturers found that they could persuade people to buy even vaster vehicles in the form of trucks.

        The 20k MG isn't so large that you could run over 15 kids in front of your truck without even noticing so it's not really for the American market...

        • The Canyonero is only an SUV. Manufacturers found that they could persuade people to buy even vaster vehicles in the form of trucks.

          We are talking about the USA, right?. We have SUVs based on pickup truck platforms. They are just as big as pickups because they ARE pickups underneath, the only substantial difference is that they have a big cab with an enclosed back end instead of a smaller cab and an open bed.

          In fact, some would argue that if it doesn't have a full frame, it's not an SUV at all, but a crossover (or "CUV"). This is undeniably true if it's based on a car platform, which a lot of them are, and then there is a grey area for

  • Wrong way to evaluate EV subsidies (Score:3)

    by larryjoe ( 135075 ) on Sunday October 13, 2024 @08:14PM (#64861945)

    EV subsidies were intended to jump start US manufacturing capability. So, the only important result to evaluate is whether car companies are better able to manufacture EVs after the subsidies are removed. If the answer is that the car companies can still only profitably make EVs with subsidies, then the subsidies have failed.

    The article mentions that most past EV buyers would have still bought EVs even without the subsidies, so that suggests that maybe the subsidies are working. However, those past EV buyers have tended to be not poor. So, it remains to be seen if not rich buyers will buy EVs without a subsidy.

    • The article mentions that most past EV buyers would have still bought EVs even without the subsidies, so that suggests that maybe the subsidies are working.

      At the margin, there has to be a number of people who bought an EV with the subsidy but who would not have without it. Unless the supply is limited and people would have paid list price and more to get one of the few vehicles available. My impression is EVs are not that scarce.

  • The problem is that its not at all clear that electric vehicles replace ICE vehicles. Instead the subsidies may just get someone to buy an additional vehicle who otherwise would have gone on driving the car they already have. They trade the old car in, someone else drives it for the rest of its life and there is no reduction in emissions. So there is nothing to offset the higher manufacturing footprint of an EV.

    In order to test the value of the subsidies you need to test the question of how many of the add

    • Re: (Score:2)

      by jezwel ( 2451108 )

      They trade the old car in, someone else drives it for the rest of its life and there is no reduction in emissions.

      The problem here is that this person bought an old ICE car rather than a new ICE or EV car. Addressing why old cars are resold is where you might need to investigate - perhaps having a large % of the population on low wages means they can never buy a new car, so they buy pre-owned.

      That means you need to wait another cycle (ten years or so?) of car ownership before these people can buy a second hand EV...

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        That means you need to wait another cycle (ten years or so?) of car ownership before these people can buy a second hand EV...

        EVs have been on the road for over 15 years now. There are healthy used EV markets out there. Granted, the vast majority are Teslas for obvious reasons, but there are other EVs out there, just not as much as other EVs haven't been on the market as long. But they are out there. Even a 2018 EV is already 6 years old and approaching 7, so these should be starting to come on the used mark

    • Re:Do the new EV's replace ICE vehicles? (Score:4, Insightful)

      by Powercntrl ( 458442 ) on Sunday October 13, 2024 @11:15PM (#64862267) Homepage

      Instead the subsidies may just get someone to buy an additional vehicle who otherwise would have gone on driving the car they already have. They trade the old car in, someone else drives it for the rest of its life and there is no reduction in emissions.

      Both my partner and I ended up trading in our ICE vehicles for EVs. Presumably the new owners of our previous vehicles would've just bought someone else's used ICE vehicles had ours not become available on the secondary market, so the fact that we're now driving EVs does represent a reduction of emissions.

    • Re: (Score:3)

      by AmiMoJo ( 196126 )

      Most people don't randomly buy a new car for no reason, so most EV sales are directly displacing ICE sales.

      The point of the subsidies though was to help develop the technology, both for the sake of the planet and to make sure that the US stayed competitive with EV drivetrains and batteries. It seems like it has largely failed to do the latter, unfortunately.

  • US-based companies may have increased sales and profits. But the companies don't keep the profits, they return them to shareholders. So, were those shareholders Americans or not? And did the older subsidies, which largely went to foreign companies, eventually wind up with Americans? And did the foreign companies assemble the cars in the US or elsewhere? Curious minds want to know!

    This is yet another example where attributing something to company X obscures what's actually going on. A company is a legal fict

    • Re:But who owns the companies? (Score:5, Interesting)

      by RossCWilliams ( 5513152 ) on Sunday October 13, 2024 @11:24PM (#64862283)

      But the companies don't keep the profits, they return them to shareholders.

      No, they don't. Most companies keep the lions share of the profits. In theory the shareholders benefit from the company increasing in value. It would be interesting to see what would happen if companies were required to return all their profits to shareholders in the form of dividends.

  • ROI (Score:3)

    by Retired Chemist ( 5039029 ) on Sunday October 13, 2024 @08:32PM (#64861981)
    How can a subsidy have a return on investment? The party providing the subsidy does not get any money back, so they have no ROI. The party getting the money has no investment, so their ROI would technically be infinite. The return for society in general can be calculated in so many ways that you can get any answer you want.
    • better air quality leading to less heath issues etc

    • Re: (Score:3)

      by AmiMoJo ( 196126 )

      Tax breaks for low emissions vehicles mean improved health for people who would have been breathing in pollution from fossil cars. That translates to less productivity lost to poor health, a direct benefit to the economy and the tax take.

      There are numerous other examples of how subsidies can have a nice ROI. It's just that it is indirect and sometimes difficult to measure, but it's certainly there.

    • How can a subsidy have a return on investment? The party providing the subsidy does not get any money back, so they have no ROI

      If the company pays taxes, that is giving money back (if the government is the investor).

      To calculate the ROI, you need to calculate how much taxes the company paid, and how much it would have paid if the subsidy hadn't happened. You also need to consider taxes from other companies who used technology developed. Obviously this is not all easy to measure, but of course that's a different problem.

    • How can a subsidy have a return on investment?

      In this case, we're talking about a subsidy seeking to reduce AGW impact. We can compare the results of the subsidy to other ways in which we could have spent the money to reduce AGW to determine what the return was; spending $x on the subsidy had the same effect as spending $y on some other method, so the return for our $x was $y.

      I feel like even AI could have answered this question... hmm, yep, here's a couple ideas from Google:

      Increasing supply
      When a government provides subsidies to suppliers, it can inc

  • There are better ways to reduce emissions than subsidizing EVs, because emissions by personal transportation [ourworldindata.org] are small percentage of total emissions.

  • You pay me a sum of money determined by some function of how badly you want to keep living your first world lifestyle while pretending to denounce it and its technological, economic, and social predicates

    And I go out in my back yard, pick a tree, and give it one big sloppy hug.

    Extra $ for pix of said hug.

    Extra $$ for pix of stuff beyond the hug. If internet-rando-on-vegetation is your thing. Not judging. Well...I am judging, just not judging how you blow off steam at the end of the day.

    • You've basically described carbon credits, not EV subsidies.

      EV subsidies allow someone to keep living their first world lifestyle while truly lessening their carbon footprint (and also saving a few bucks on gas, which can then be spent elsewhere in the economy).

  • At what cost? (Score:2, Insightful)

    by kenh ( 9056 )

    Also, the researchers estimated that for every additional electric vehicle the new tax credits put on the road, about three other electric vehicle buyers would have made the purchases even without a $7,500 credit. That dilutes the effectiveness of the subsidies, which are forecast to cost as much as $390 billion through 2031.

    People have been buying cars for a century without federal subsidies, now apparently they are required?

    And that number, $390 Billion? That's $390,000 Million, divide that by 390 million, and that's about $1,000 for every man, woman and child in the U.S., citizens, amnesty-seekers, migrants, etc. "... That's insane.

    The subsidies don't make the cars affordable, it simply spreads $7,500 of the cost over the entire tax-paying population of the country.

    Why can't car manufacturers simply be left alone to make the

    • Re:At what cost? (Score:5, Insightful)

      by RossCWilliams ( 5513152 ) on Sunday October 13, 2024 @11:38PM (#64862305)

      Why can't car manufacturers simply be left alone to make the cars the customers want to buy, rather than have state and federal mandates that require these subsidies?

      Because the cars they are selling are causing enormous problems even for people who don't buy them. And the car manufacturers have shown that left to their own devices the problems they create are even worse.

    • >> Why can't car manufacturers simply be left alone

      Well its real simple. ICE vehicles pollute the atmosphere and we have to stop doing that. They also make us dependent on foreign oil which is a strategic vulnerability. And besides, as the article states; "the researchers found that Americans have seen a two-to-one return on their investment in the new electric vehicle subsidies". What's not to like?

  • Whenever any report suggests that buying a Prius is a better ideal than any EV... follow the money and see where the Toyota donation came from.

    Toyota is third most obstructive company towards action climate change (after ExxonMobil and Chevron).

  • ... has the same problem. Aloof lobbyists and politicians pushing for subsidies that are basically financial support for the wealthy and rich. Even the green leadership regularly pushes for this sort of nonsense. Totally bizarre.

  • This has been going on for literal decades (Score:3)

    by sonoronos ( 610381 ) on Monday October 14, 2024 @03:19AM (#64862589)

    The game plan is always the same: Use subsidies to boost domestic production. Use xenophobic propaganda and jingoistic foreign policy to keep out foreign competitors.

    The USA has been doing this for literally decades. The real issue is that despite all of this, American carmakers still lag behind their foreign competitors. For electric cars, the place where American carmakers fall short is battery production. They just canâ(TM)t make them cheaply enough.

    I think what has really flipped things around this decade is that American consumption of automobiles has been eclipsed by foreign consumers. I surmise that, in this environment, the metric of success here is whether the exports of American vehicles has gone up appreciably due to the subsidies.

  • You can drive a gas car through Yellowstone, spewing exhaust gases all over this natural preserve. The fuel itself is poisoning the environment because you chose a pleasure trip there.

    You can drive a fully electric car through Yellowstone and not spew any exhaust. The fuel itself isn't doing any damage in the park, however, the way the electricity was generated probably was harmful somewhere else.

    But the truth it, that electricity was going to be generated anyway and used by residents for their ho

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