Electric Vehicle is charging in street.
Last week Sen. Chuck Schumer (D-NY) proposed a bold plan to help spur the sales of zero-emissions electric cars in the U.S. with the goal of having net-zero carbon dioxide emissions by mid-century.
Central to the plan would be cash incentives of reportedly between $3,000 and $5,000 for those trading in an older gas-powered car for a full-electric, plug-in hybrid, or fuel-cell electric vehicle. Lower-income Americans – who tend to be priced out of the new car market in the first place, let alone ones that run on electricity – would get an additional $2,000 instant discount on a new or used electric car.
This essentially would be the old “Cash for Clunkers” program from 2009 revisited. Officially called the Car Allowance Rebate System, it was intended to give the then-suffering U.S. auto business a needed shot in the arm while replacing inefficient older vehicles on the road with higher mileage models. The program took 677,000 cars out of circulation, which ultimately helped cause the values of pre-owned vehicles to take a precipitous spike. It also created a stinging shortage of affordable well-worn used models for low-income buyers. The same could well happen here.
Schumer’s plan, outlined in a New York Times op-ed piece, would reportedly cost $454 billion over a 10-year period and aim to take 63 million gas-powered cars off the road by 2030.
The plan, however, would limit these discounts to American-made electric vehicles, which is something to which the lobbyists at Asian and European automakers may take exception. This is no doubt why Schumer says that his proposal is supported by labor unions like the United Automobile Workers and the International Brotherhood of Electrical Workers, along with domestic car manufacturers like Ford and General Motors. This is in addition to endorsements from environmental groups, including the Sierra Club, the Natural Resources Defense Council and the League of Conservation Voters.
But would slapping cash on the hood of an electric car be enough to take electric cars mainstream? As it is, since 2010 U.S. electric-car buyers have been granted a one-time federal tax credit of $7,500, with a number of states adding their own incentives to help spur sales. Electric car deliveries are rising, but they still only account for just over two percent of the new-vehicle market. At that, a single model – the immensely popular Tesla Model 3 – outsells all electric cars put together, and that’s despite the federal tax credits for Tesla buyers having dropped to just $1,850. The credit is being phased out for Tesla models and General Motors’ Chevrolet Bolt EV because those automakers reached a prescribed sales threshold.
Another element to Schumer’s plan would be to earmark a reported $45 billion to expand the public charging infrastructure to help make it accessible to all Americans where they live and work. It also allots $17 billion in incentives to help manufacturers retool existing U.S. factories to produce electric vehicles and batteries in order to prevent China from becoming globally dominant in this regard. Schumer’s hope is to recover the cost to fund these programs in the additional taxes that would be paid by tens of thousands of workers getting into good-paying jobs. But there’s also a chance that, in the long run, it would only ultimately shift jobs from factories that build conventionally powered vehicles to those that make electric cars.
Unfortunately, even with a wave of new battery-enabled vehicles coming to showrooms in the coming years, automakers seem to have little enthusiasm to sell full-electric cars, and consumer knowledge regarding the technology is lacking. And not all electric cars are sold nationwide in the first place. Some, like the Kia Niro EV and the Volkswagen e-Golf, are only offered in California and perhaps a few other states that share its stricter environmental regulations. And both supply and demand for electric cars tends to be virtually nonexistent in many parts of the country. This is especially true in rural areas where vehicles – most often pickup trucks – tend to be driven for long stretches at a time, with public charging stations nowhere to be found.
At any rate, don’t expect to see legislation surface any time soon. As it is Congress has been unable to reach a vote to extend or expand (or cancel, as has been proposed) the current federal electric-car incentive. Schumer only promises he’ll bring a comprehensive climate bill that addresses these issues if Democrats gain control of the Senate in next November’s elections, presumably keeping the House of Representative and maybe even then only if there’s a Democrat in the White House. As always, stay tuned.
