How else can auto makers meet the requirement of a 55 mpg fleetwide average by model year 2026?
Under the guise of regulating greenhouse-gas emissions, the Environmental Protection Agency recently announced new, more stringent fuel-efficiency standards for passenger cars and light-duty trucks. The new standards affect vehicles starting with the 2023 model year, and 2026 vehicles will be required to achieve a fleetwide average of 55 miles per gallon, an increase of more than 35% from the current 40 mpg standard for 2021. The EPA intends to impose even more stringent standards for 2027 models and beyond.
Auto makers say the new standards can’t be met without more government subsidies for electric vehicles and charging infrastructure. The EPA projects that an auto maker can meet the 2026 standards if electric vehicles make up about 17% of its sales.
The real purpose of higher fuel-efficiency standards is to impose an electric-vehicle mandate by regulatory fiat, because there is little chance that Congress will enact legislation banning the sale of internal-combustion vehicles.
Meeting the new standards will be a challenge for auto makers. Through the first nine months of 2021, 460,000 electric vehicles and plug-in hybrids were sold in the entire U.S. Sales in California, buoyed by state subsidies, accounted for almost half of that total. By comparison, Ford Motor Co. sold about 535,000 pickup trucks during this same nine-month period.
Electric-vehicle proponents are quick to cite a lack of charging infrastructure as the primary reason consumers are reluctant to buy electric vehicles, but other economic factors also contribute to this reluctance.
Start with cost. Electric vehicles are more expensive than internal-combustion vehicles. The average electric vehicle sold for about $56,000 in September—$11,000 more than the average internal-combustion vehicle. Electric-vehicle prices have been increasing, not decreasing as many proponents predicted. Tesla, which accounts for more than half of all EV sales, has raised prices on some of its models three times this year. Growing electric-vehicle sales world-wide and supply constraints are causing material prices to increase. The price for lithium, a key component in EV batteries, has increased 240% this year.
Many consumers also don’t seem to want what electric vehicles offer. Pickup trucks are the most popular vehicles sold in the U.S. by far. Ford and Tesla intend to begin selling a battery-powered pickup next year, but it isn’t clear that many consumers will buy them. And those trucks will be costly: about $40,000 each for the most basic models, about $10,000 more than the most basic gasoline-powered trucks.
In real-world conditions, the distance an electric-vehicle can travel on a single charge is often far less than advertised. Batteries perform poorly in extreme cold, reducing performance as much as 40%. Extreme heat reduces battery performance by about 20%. Hauling heavy loads also reduces battery range. For those who drive hundreds of miles every day, as some rural consumers do, having to spend hours recharging an EV isn’t practical. It isn’t even possible when storms cause power outages.
There also is a physical trade-off between battery life and charging speed. It is best to charge batteries slowly. Direct-current chargers that can recharge an electric vehicle fully in an hour or less reduce battery life because the high current raises the battery temperature. Although all batteries degrade over time—another issue with electric vehicles that proponents often ignore—fast charging has been shown to degrade battery performance more quickly.
Proponents claim that increasing subsidies for electric vehicles will reduce the cost for consumers. But similar to how colleges raise tuition costs when the government offers more grants and student loans, subsidies to purchase electric vehicles act as an incentive for manufacturers to raise their prices and capture the subsidies for themselves. That’s basic economics.
More electric vehicles also would increase demand for electricity, driving its price higher. That would reduce the benefit of owning an electric vehicle and increase the financial harm to lower-income consumers who can’t afford any car. The EPA’s new diktat also will encourage consumers to drive their current higher-polluting internal-combustion vehicles longer, rather than replace them with more costly vehicles subject to higher fuel-efficiency standards.
As for the supposed reduction in air pollution and greenhouse-gas emissions, based on the average mix of electricity-generating resources in the country, new electric vehicles cause more air pollution than new internal-combustion vehicles. And even if all of the electricity used to charge electric vehicles came from zero-emission sources, the resulting reduction in carbon-dioxide emissions would have no measurable impact on world climate.
The EPA’s new rule will harm consumers and do little if anything for the environment. Such is the reality of the virtue-signaling environmental policies the current administration is imposing.
This piece originally appeared at The Wall Street Journal
Jonathan A. Lesser, PhD, is the president of Continental Economics, an economic consulting firm, and an adjunct fellow with the Manhattan Institute.
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