By H. Sterling Burnett, The Heartland Institute
Electric Vehicles (EV) have been much in the headlines recently, from stories detailing the difficulties with charging them, to losses suffered by major auto makers pushing them at the behest of the Biden administration, to EV fires, the dependence on China for critical components used in EVs including their batteries, range and function issues, and beyond.
I have discussed the myriad problems with EVs on multiple occasions in recent months. For instance, I addressed range concerns in detail in a Liberty & Ecology article. And I examined problems with EV fires and resulting insurance problems in CCWs 486, 481, and 427, among other posts.
Recent surveys show that more important than their limited range and hauling capacity, their tendency to fail in bad weather and spontaneously combust, or any other issue, the upfront price of an EV is the factor driving automobile and truck consumers’ decisions concerning whether to purchase an electric vehicle. Car buyers enter the market knowing EVs, even with generous taxpayer-funded tax credits, carry an up-front price premium. But it turns out the higher up-front costs are only part of the story. In fact, a new study from the Texas Public Policy Foundation (TPPF) indicates EVs are even more expensive—much more expensive—to drivers, taxpayers, and the economy as a whole than anyone previously calculated, much less publicized.
“Major selling points promoted by EV advocates are lower maintenance and fueling costs over the life of the vehicle and the common claim reductions in battery prices will eventually make EVs less expensive to own than ICEVs [internal combustion engine vehicles],” writes the TPPF. “For example, a study conducted by a group at the Argonne National Laboratory estimated that while an average EV is about $22,000 more expensive to purchase than a comparable ICEV, they cost about $14,000 less to fuel, insure, and maintain over a 15-year period, making their lifetime cost only $8,047 more than an ICEV. …”
The authors of the TPPF study express skepticism concerning whether the Argonne lab’s cost estimates are accurate or optimistic, based on favorable economics driven by the Biden administration’s EV promotion efforts. Those concerns aside, TPPF points out, “no one has attempted to calculate the full financial benefit [or cost] of the wide array of direct subsidies, regulatory credits, and subsidized infrastructure that contribute to the economic viability of EVs.”
The TPPF’s research indicates an “average model year (MY) 2021 EV would cost $48,698 more to own over a 10-year period without $22 billion in government favors given to EV manufacturers and owners.” And when the subsidies for the EV charging network are considered, the costs of EVs are even higher.
Among the hidden or unaccounted for costs TPPF details vis-à-vis EVs are:
- Direct state and federal subsidies for EVs average $8,984 per vehicle over 10 years.
- 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.
- Regulatory credits with bonus EV multipliers from federal fuel efficiency and greenhouse gas emissions standards and state EV sales mandates provide an average of $27,881 in benefits per vehicle for producers of EVs.
Concerning the last cost item—typically unaccounted for when discussing the subsidies for EVs—auto manufacturers get Corporate Average Fuel Economy credits they can resell on the market for every EV sold that are seven times higher than the actual fuel savings the vehicles provide. In 2021, Tesla would not have reported a profit except for the sale of those credits (totaling more than $1.78 billion in 2022). Automakers Ford, GM, and others already cross-subsidize the cost of their EVs, to keep the prices down, by boosting the price of the ICEVs they sell. It turns out they also add much of the cost of the fuel economy regulatory credits sold to them by Tesla and others to the sticker price for ICEVs. The fact they are losing tens of thousands of dollars on each EV sold indicates that even with the cross-subsidies they can’t recoup the full costs of the vehicles and the regulatory credits they must purchase for each popular, relatively low mileage, ICEV they sale.
The bottom line, per the TPPF, is:
EV advocates claim that the cost of electricity for EV owners is equal to $1.21 per gallon of gasoline…, but the cost of charging equipment and charging losses, averaged out over 10 years and 120,000 miles, is $1.38 per gallon equivalent on top of that. Adding the costs of the subsidies to the true cost of fueling an EV would equate to an EV owner paying $17.33 per gallon of gasoline.
But, of course, these true fueling costs aren’t borne by the EV owner alone. They are spread across all taxpayers. Since the vast majority of EVs are purchased by those in the highest income and tax brackets, it means the poor and middle class are providing welfare for wealthy people’s EV fetish. Now that’s a regressive tax policy!
And that’s just the costs the TPPF study calculated. The TPPF notes “these estimates do not include the hundreds of billions more in subsidies in the Inflation Reduction Act (2022) for various aspects of the EV supply chain, particularly for battery manufacturing.”
Other hidden or unaccounted for costs related to federal and state efforts to rapidly expand the adoption of EVs include, but are not limited to:
- Billions of dollars in taxpayer-funded subsidies for electric buses, trucks, and truck stops, plus the addition of charging infrastructure at public facilities such as ports and airports;
- Billions in state and city taxpayer-funded subsidies other than state buyer credits, such as credits from California’s low-carbon fuel standard, which is a cross-subsidy from gasoline buyers to EVs;
- The unaccounted cost of EVs in terms of additional emissions from power plants, and the embedded environmental costs of the EV supply chain.
- The cost of allowing EVs to use managed lanes, such as high-occupancy vehicle lanes, and the cost of parking spaces given to EVs and EV charging stations.
- The [opportunity] cost to consumers of additional time spent charging EVs relative to fueling gasoline/diesel vehicles.
- Disproportionately high road damage from heavier EVs compared to gasoline/diesel vehicles.
- Disproportionately high EV recall costs compared to gasoline/diesel vehicles, which are socialized to buyers of gasoline and diesel vehicles from the company initiating the recall.
Discussing the study’s findings, Jason Isaac, a former Texas state legislator and the study’s co-author, told The Center Square, “The real cost of a Ford Lightning is closer to $172,00 and no one would buy them at that. I know their sales have tanked. The [electric] Silverado sold 18 electric trucks last quarter.”
In the end, the indirect subsidies and costs related to EVs—costs unaccounted for in normal calculations—dwarf the $15,000 to $20,000 premium auto manufacturers charge for each EV they sell, paid for directly by the vehicles’ purchasers. Everyone is paying dearly for climate scolds’ increasingly successful efforts to get ever more EVs on the road, premised upon displacing ICEVs in order to reduce the transportation sector’s greenhouse gas emissions.