Free-market advocate says electric car subsidies should sunset

Phil Kerpen of American Commitment says federal subsidies for electric vehicles should be allowed to sunset.

The subsidy through the tax code is a $7500 credit for purchasers of electric vehicles is really sort of at the center of a fight here in Washington, because it’s currently phasing out,” said Kerpen. “It was originally designed to be a full $7500 tax credit for the first 200,000 per manufacturer. Then it goes into a one-year phase out where it’s half the credit amount for six months, a quarter of the credit amount for another six months and then it goes away completely.”

Tesla and GM have hit their 200,000 sold and so they are in their phase out year. They don’t want them to end.

“They’ve got the auto manufacturers, they’ve got the components manufacturers, they’ve got the electric utilities, they’re all out there lobbying to lift this cap and to extend this,” said Kerpen. “This is a fight we could win, because we have the advantage of, if Congress does nothing, the phase out will take place.”

Kerpen notes that, given the current energy mix, which type of vehicle pollutes more, gas or electric, is a close question.

“Manhattan Institute did a study of this last year looking at sort of the modern, clean, internal combustion vehicles versus electric vehicles charged by the current energy mix on the electric grid,” said Kerpen. “They found a slight benefit in greenhouse gas emissions, around 1%. The interesting thing, though, is they also found that every other type of air pollution is worse with the electric cars using grid power than with modern internal combustion engines. You
actually worsen NOx emissions SO2 emissions, particulate matter, the stuff that causes smog.”

It remains to be seen whether electric or fossil fuel cars will win the day, but Kerpen would like to see a level playing field.

Image courtesy AAA