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Costly and Counterproductive

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eye on the news

Costly and Counterproductive

An executive order to mandate electric-vehicle sales presents economic and environmental problems. August 9, 2021
Politics and law
Infrastructure and energy

On August 5, President Biden issued an executive order setting a goal that, by 2030, half of new vehicles sold in the United States must be electric—including fuel-cell electric, plug-in hybrids, and full-battery electric. Today, only about 3 percent of new vehicles sold are electric. According to Biden, the measure will “improve our economy and public health, boost energy security, secure consumer savings, advance environmental justice, and address the climate crisis.” In fact, it is likely to do the opposite of all those things.

Climate change is the stated reason behind the move. Biden’s announcement is timed to coincide with the August 11 meeting of the California Air Resources Board, which will discuss draft regulations to implement Governor Gavin Newsom’s executive order that all new vehicles sold in the Golden State be electric by 2035. Biden wants to engage with California and other states seeking to reduce emissions. Electric vehicles do have lower tailpipe emissions, so they are cleaner on the road. But they are not emissions-free: the electricity to run them has to be produced somewhere, and renewables alone cannot currently power America’s fleet of electric cars.

The order will have geopolitical consequences. The United States has achieved energy security by becoming a net exporter of oil and natural gas; mandating sales of electric vehicles would weaken that security. What’s more, the requirement could increase production of electric-vehicle batteries in China, which already dominates the market. The order seeks to encourage the production of batteries in the United States, but it is hard to see how America can produce them at lower cost.

Any increased dependence on Chinese battery production will render Biden’s order environmentally counterproductive. Notwithstanding Xi Jinping’s lofty promises of carbon neutrality by 2060, China was responsible for 27 percent of greenhouse-gas emissions in 2019, exceeding those of all other developed countries combined. Battery production in China today depends on coal-fired power plants; as Chinese battery production rises, so will global emissions. Batteries must be transported to America and disposed of when they are finished; mining the ingredients for batteries imposes major ecological costs.

Consumers stand to lose, too. Electric vehicles are more expensive than comparable gasoline-powered cars, so Americans would have to spend more to buy the same type of vehicle. The base price for the F-150 Ford electric pickup truck, for example, is $40,000—$10,000 more than the gasoline-powered model, the best-selling vehicle in the U.S. Either Uncle Sam will subsidize electric vehicles and increase the deficit, or Americans will have to spend more for the same car. In neither case will the economy—or the consumer—be better off. Finally, requiring sales of electric vehicles hurts low-income Americans who cannot as easily afford expensive electric cars.

Americans don’t need the government to tell them when to buy an electric vehicle. When they want to drive electric cars, the supply will materialize. Until then, mandates will be costly and counterproductive.

Photo by Hendrik Schmidt/picture alliance via Getty Images

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