The true cost of electric cars to the average American taxpayer has been laid bare by a landmark new study into the eco vehicles.
In order to bring EVs to market, governments have created a variety of tax incentives for buyers and manufacturers. They have also sponsored the development of the infrastructure needed to charge them.
But those subsidies can come at a cost to taxpayers, buyers of gas vehicles or simply households that pay electricity bills.
A new paper by conservative think tank Texas Public Policy Foundation estimated that the average electric car incurs hidden costs of $48,698 over a 10-year period.
‘Electric vehicle owners have been the beneficiaries of regulatory credits, subsidies, and socialized infrastructure costs totaling nearly $50,000 per EV,’ said one of its authors, Jason Isaac.
A new paper by conservative think thank, Texas Public Policy Foundation , estimated that the average electric car incurs hidden costs of $48,698 over a 10-year period
Ford’s electric F-150 Lightning truck outside its headquarters in Dearborn, Michigan. The company said during an earnings call this month that it had lost around $36,000 on the sale of each electric car sold this quarter
‘These costs are borne by gasoline vehicle owners, taxpayers, and utility ratepayers, who are all paying a hefty price for someone else’s EV.’
The paper estimated that the average cost of EV subsidies, ultimately footed by American taxpayers, were around $8,984 per car. That was thanks to a combination of the well-known $7,500 federal tax credit as well as state subsidies.
‘Our preliminary analysis indicates that states handed out over $646 million in taxpayer subsidies to EV buyers in 2021,’ read the report. ‘Dividing by the 435,320 EVs sold in 2021, the average EV buyer received state credits totaling $1,484.’
Separately, it found that the infrastructure required to facilitate electric cars in America is not paid for directly by the owner of the car. It described those expenses as ‘socialized infrastructure costs.’
‘Home and public charging stations used by EVs put a significant strain on the electric grid, resulting in an average of $11,833 in socialized costs per EV over 10 years, which are shouldered by utility ratepayers and taxpayers,’ read the paper.
The authors argued that the gasoline infrastructure is used for other products and society at large, whereas electric vehicle charging costs currently only serve EV owners.
They also claimed that the additional strain placed on the power grid when charging electric cars would ordinarily incur ‘demand charges’ – or a premium for higher energy consumption at a certain time.
‘Currently, most utilities are socializing that cost for EV owners by not assessing demand charges on residential EV chargers, even though those chargers can use as much power at certain times as several homes,’ the report claimed.
The Texas Public Policy Foundation paper argued that the additional strain placed on the power grid when charging electric cars would ordinarily incur ‘demand charges’, which EV owners are not expected to pay
Car companies will recover losses they incurred making and selling electric cars by increasing the price of their gas-powered vehicles, the authors suggested
But the largest cost identified by the report was that on buyers of gas cars.
The argument made was that as car manufacturers incur costs in order to meet federal and state mandates to make more electric cars than they would otherwise, they pass those costs on to buyers of their gas cars.
According to the paper, around 16 states have ‘zero emission vehicle’ (ZEV) mandates whereby the state sets a number or percentage of new vehicles sold that must be zero-emission.
‘Of course, the cost to meet these mandates is not limited to the states that impose them but spread out over the entire fleet of each automaker trying to meet them,’ read the paper.
On top of that, federal regulations impose similar obligations on automakers that incentivize them to make more electric vehicles.
‘The largest source of financial support for EVs comes not from direct subsidies but from hidden costs driven by federal regulations,’ read the paper.
‘These regulatory standards are applied on a fleetwide basis and allow for the trading of regulatory credits, the costs of which are passed on to buyers of gasoline and diesel vehicles.’
The Texas Public Policy Foundation paper estimated the value of those credits was around $27,881 per vehicle.
‘The Biden administration’s stringent fuel economy standards and regulatory manipulations are driving American automakers toward bankruptcy and adding thousands of dollars to the cost of every gasoline vehicle,’ said Brent Bennett, another of the paper’s authors.
‘Rolling back these subsidies and burdensome regulations would save consumers money.’
Just this month, Ford said during its third quarter earnings call that it lost an estimated $36,000 on each electric car it sold in the quarter.
