The electric vehicles of tomorrow don’t help with gas prices today

Gas prices in the United States hit an all-time high earlier this month due to rising inflation and sanctions placed on Russia after it invaded Ukraine. Even states with high gas taxes, such as California and Illinois (which doubled its gas tax in 2019) proposed “gas tax rebates” or “property tax credits” for lower- and middle-income citizens. Meanwhile, U.S. Secretary of Transportation Pete Buttigieg seems to think the solution is convincing Americans to buy expensive electric vehicles. However, Buttigieg and other proponents consistently exaggerate the affordability of EVs, and widespread adoption is still much farther away than many people expect.

Buttigieg has recently been getting a lot of press for the Biden administration’s $5 billion effort to help states build electric vehicle charging stations. Buttigieg claims the network is necessary so that “people from rural to suburban to urban communities can all benefit from the gas savings of driving an EV.” (Elon Musk disagrees in a recent Wall Street Journal interview: “Do we need support for gas stations?” he asked. “We don’t. So there’s no need for this.”

Most importantly, the only people who can “benefit from the gas savings of driving an EV” are those who can afford the high upfront cost, an average of close to $60,000 for a new electric vehicle. Sadly, that’s no comfort for Americans today who struggle with some of the highest gas prices in history.

Even for the few Americans who can afford to buy an electric car, the savings can take years to be realized. Annual savings on electricity (compared to average gasoline prices before the spike) are estimated at $500 to $1,000. Still, much of these savings disappear on road trips when electric car drivers have to rely on higher costing public charging stations, according to a Wall Street Journal report. In addition, a recent study of leading EVs concluded that “insurance for electric cars tends to cost 15% more than it does for a comparable combustion model.”

As electric cars become more popular, these costs will likely go down, but “cost parity just won’t be enough, on its own, to drive mainstream adoption to high levels,” argues Jeremy Michalek, director of the Vehicle Electrification Group at Carnegie Mellon University. “Even if we had a perfect EV today that everyone wanted, it would still take over a decade to transition the fleet.”

Many consumers aren’t as excited about electric cars as Democratic political leaders would hope. J.D. Power’s first-ever Mobility Confidence Index Study surveyed more than 5,000 people before the COVID-19 pandemic, finding that “68% of respondents said they had no experience with EVs, even sitting in one, and only 40% of that group would consider going electric.” As Tesla has found, there are millions of excited, wealthy early adopters in major cities, but getting the rest of the country excited about electric cars may take much longer than we expect.

That hasn’t stopped investors from putting billions of dollars behind bold predictions for the future of electric vehicles, most recently with the initial public offering of Rivian, an electric-vehicle startup. Despite delivering only a few hundred vehicles, Rivian was initially valued in November at more than $100 billion. (The company’s value has since fallen by more than two-thirds after it temporarily raised prices and significantly cut delivery targets for the following year.)

Democrats in Congress are helping to fuel this unjustified sense of optimism. The “Build Back Better” plan proposed to increase the existing tax credit for purchasing an electric vehicle from $7,500 to $12,500 if the car is made in a unionized U.S. plant (since unions have been hesitant about embracing electric cars otherwise).

Despite the Democrats’ rhetoric, people with annual incomes of more than $100,000 have claimed 80 percent of EV tax credits. “The nation’s teachers, nurses, and factory workers are all paying higher taxes for a program that generously benefits those who buy electric vehicles,” says Mark Perry of the American Enterprise Institute. If electric cars are the future, why does the government need to pay wealthy people so much to buy them?

The beauty of our market system is that private investors are free to take these risks (and lose their own money if they are wrong). That happened with several recent electric vehicle startups—Lordstown Motors, Nikola, and Workhorse—that are now facing fraud charges or government investigations. But if the government starts subsidizing these industries, taxpayers will end up bearing the cost if the technology fails to meet expectations, as they did with solar-energy startups Solyndra and SoloPower.

Christians are called to steward the creation given to them by God, and doubtlessly, Christians of goodwill will debate the merits of energy policies. Perhaps, in a decade or two, gas-powered vehicles will be a thing of the past. But, today, almost all Americans still drive them and are paying higher prices than ever before. Happy talk about the future of EVs doesn’t solve that problem.