Extend the EV Tax Credits - Why the Washington Post Editorial Team is Wrong
After more than a decade of uninformed electric car bashing from certain segments of the population—with the last two years especially seeing an incredible spike as EVs have curiously become a political pawn piece—it's not surprising that there is a veritable smorgasbord of bad will towards the otherwise innocuous vehicles. To listen to some of the punditry talk, supporting electric cars is the equivalent of throwing your mother overboard on a cruise vacation.
But I wonder if those same EV-hating pundits would have pulled out the unwavering ideological argument that supporting any kind of industry with government money is anti-American and will turn your babies into helpless, socialist wards of the state back when the government poured money into our fuel and highway system? Would they go back and say that tax breaks to help oil companies drill more were a bad idea? Would they argue that government funding of the electrical grid, nuclear powerplants or any of the innumerable technologies that wouldn't exist today without government programs to support their development was the wrong decision?
Clearly EV-hating extremists aren't new news, so why is this an issue again? As PluginCars.com readers likely know by now, with the New Year a few tax credits for EVs expired: namely the 30% Federal Tax credit for the installation of a charging station. Along with this came news of a new Republican-led assault on the existing $7,500 federal tax credit towards the purchase of an EV.
And then, sensing an opportunity, over the weekend the Washington Post published an editorial that basically said EVs aren't ready for prime time and that all tax credits for them should be taken away, warning that "Backers of the charger tax credit may lobby Congress to renew it when lawmakers tackle the payroll tax extension issue again in the new year. We hope that Congress says no."
Here's Why the Washington Post Editorial Team is Wrong:
The Washington Post editorial has made the typical mistakes and assumptions that so many influenced by the propaganda machine have started to take for fact when really they are, at best, half truths or, at worst, blatant lies:
"As a means of reducing carbon emissions, electric cars and plug-in hybrid electrics are no more cost-effective than ethanol."
This claim is bogus. Electric cars are about five times more efficient (depending on what study you use) at converting energy into movement than a combustion engine of any type, whether it runs gas, diesel or ethanol. In fact, the simple act of making a gallon of gas takes just as much energy as it does to drive an electric car 40 miles. So not only is there 40 miles of energy in that gallon, it takes roughly 2 more gallons to drive the same distance as an electric car on the energy it took just creating those two gallons of gas. I suspect his argument has to do with numbers of vehicles on the road. There aren't many EVs (yet) so of course their impact is small. That's why it's important to encourage more of them onto the road (with subsidies, policies, etc.).
"Only upper-income consumers can afford to buy an electric vehicle; so the charger subsidy is a giveaway to the well-to-do."
New technology is always more expensive initially. And, while it's true that the base price of an EV is currently more expensive than that of a combustion car, the difference is not so large that only the "well-to-do" can afford them. It's about comparing apples to apples. Take the gas-powered Ford Focus; it's about the same size as the LEAF. A base Ford Focus can be bought for less than $20K, but when you add in all the equipment that makes it comparable to a LEAF it will cost you $26K. A LEAF can be bought for $35K. Factor in the $7,500 federal tax credit and the cost effectively comes down to $27.5K; a difference of $1,500, which will more than be made up for in fuel savings over 5 years. Also, the LEAF can be leased for around $380 per month with a $2,500 down payment. That is not "well-to-do" pricing, that is middle class pricing (or used to be before a free market gone wild ruined our economy—thanks largely to the uncharacteristically unconservative policies of the so-called modern conservative).
"Get rid of the $7,500 tax credit too."
The editorial goes on to say they feel similarly about the $7,500 tax credit, but that reasoning is circular. If the writers mean, as they imply, that the tax credit would be better if it was for "average Americans," then the $7,500 is what is leveling the playing field and making the technology affordable for average Americans. Of course if you take the $7,500 away then you start making the cars inaccessible to average Americans so the writers' case gets stronger. It's self-fulfilling prophecy.
"Given the price of eligible models, like the $100,000 Fisker Karma, that rationale sounds an awful lot like trickle-down economics."
Only a thousand of the Karmas will be sold this year if they're lucky, and a $7,500 tax credit on a $100,000 car is meaningless to those buying it. Compared to expected sales of about 50,000 to 100,000 of all the other plug-ins that are consumer priced in 2011, the amount of tax credit going to the Karma is negligible. The only reason the Karma is brought up is to further a false narrative. It's a cheap shot that has no bearing on presenting a successful argument.
"Sales of electric vehicles were disappointing in 2011, with the Volt coming in below the 10,000 units forecast."
Firstly, the writers ignore that the Leaf hit its sales target of 10,000 units. Secondly, it's no surprise that sales of EVs were slower than expected in 2011. Given the amount of misinformation being strewn about by the majority of uneducated media, the picture being painted of EVs is that they are stupid, suck money out of the government, re-distribute wealth, destroy the free market, are anti-American, don't protect your freedom, are more polluting than gas cars, and will actually cost you more in the long run-not to mention you're a sissy if you drive one. All of which are unequivocally and provably wrong.
The reality of our sad situation is that success of anything is tied into marketing, and the EV is an easy target for bad marketing--and the effect is a completely twisted consumer impression of what they are and what they can do. It's no wonder they aren't selling more. It's another self-fulfilling prophecy.
"The ethanol credit was on the books for 30 years before it finally died. Let’s hope Congress can start unwinding the federal government’s bad investment in electric vehicles faster than that."
The general insinuation throughout the editorial is that the government has no right meddling with the free market, a mantra that the right wing often espouses with increasing aggressiveness these days. Yet it's a hypocritical one. The modern car didn't come into being simply because some companies struggled on their own without government support. Highways, bridges, and fuel stations were all paid for (at least partially) with government funds. Our electricity infrastructure was also paid for in the same way.
The U.S. government has a solid and successful tradition of propping up new technologies for a few decades before they become as second nature as having a fridge or flipping a switch. To claim otherwise is sheer stupidity. The electric car can kill several birds with one stone: pollution, oil dependence, national security, and fuel price shock. It is a great solution to our needs as a nation and, with the right support, is the best thing we can do to help our nation's transportation needs in the future. Without that support it will never come, but then again, neither would have our nation's electricity grid or system of highways. We'd clearly be in a better position today without those, right?
Notes: This article came about as the result of a conversation with Jocelyn Fong, the Energy and Environment editor for Media Matters for America and I thank her for providing the impetus. One of the other things we talked about resulted in my back of the napkin calculations showing that the amount of money the government has spent on EV tax credit so far, and likely will in 2012 is a relative drop in the bucket. The following are those calculations.
$7,500 Federal Tax Credit Breakdown for 2011:
- Chevy sold ~8,000 Volts
- Nissan sold ~10,000 LEAFs
- There were less than 1,000 other eligible vehicles sold (Transit Connect Electric, Tesla Roadster, Smart ED).
19,000 vehicles x $7,500 = $142,000,000
2011 Charging Station Credit Breakdown:
This one's a bit trickier b/c not every electric car owner will use it and there are actually two different versions of it: one for consumers and one for business. The consumer one is for 30% up to $1,000. The business one is also 30%, but up to $30,000. Say 95% of all EV buyers used the tax credit, you have roughly 19,000 stations so:
19,000 stations x $1,000 = $19,000,000
Businesses installing stations is somewhere in the realm of 2,000, of which the median commercial installation price would be about $15,000, 30% of which is $4,500 (tax credit is for 30% up to $30,000).
2,000 stations x $4,500 = $9,000,000
All told the charging station tax credit has probably cost the U.S. government somewhere in the realm of $28,000,000.
Both programs together have cost the government somewhere around $170,000,000. Let's round up to $200,000,000 and it's still a tiny slice of money from the overall federal budget. If electric car sales increased to 50,000 this year, that amount would go up to roughly $500,000,000 for 2012, still a small amount considering the $4.4 BILLION we spend on tax credits for oil companies each year.
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