Are Electric Car Subsidies Really Needed?

John Goreham writes that if the objective is to sell affordable electric cars, then federal and state subsidies may be counter-productive.

Published: 22-Apr-2014

The electric vehicle (EV) market in the US enjoys subsidies from the US taxpayer in so many ways they are almost uncountable. Rather than pick apart the Zero Emissions Vehicle credit and direct subsidies that are often hidden from the consumer, like when the taxpayers of Maryland paid the factory utility costs for Fisker, let’s just look at the most obvious and easily understood subsidies. That being the $7,500 federal EV tax credit and $2,500 state refund that most EV buyers are offered. Let’s ask ourselves why these subsidies are in place and if the reasons are sound.

EV World is running a poll asking, "As an American citizen, if federal tax credits went away, would you be less inclined to buy an electric car?". See results to date here.
The primary reason most people and state agencies give for these types of taxpayer funded subsidies is that without them the cars won’t sell. Meaning won’t sell at all, or won’t sell robustly enough for the manufacturers to consider the vehicles viable. At a recent clean transportation promotional event this month the Governor of the Commonwealth Massachusetts touted a new $2500 direct rebate to EV buyers. In a Worcester Telegram article explaining why these types of funding programs are necessary, John O'Dell, senior editor and green car expert at Edmunds.com (a publication we respect), was quoted as saying. "Anything that makes a purchase less expensive helps. Electric (vehicles) aren't selling as well as some hoped they would."

This statement is typical of the opinion of EV advocates, which is why it was well suited to the story about Mass. deciding to give EV buyers some money. However, is it factual? Are EVs not selling because they cost too much and will “Anything that makes the purchase less expensive help make EVs sell the way advocates hope?” Let’s look at the two leading electric cars in America.

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