California has led the United States in electric vehicle adoption for decades, cutting pollution and driving innovation, but EVs are still perceived as a luxury available only to the wealthy. New research focusing on non-luxury used EVs shows they are actually cheaper to own than used gasoline-powered cars, promising growing household budget relief for all Californians.
The original case for EVs was primarily their public health benefits, especially in California which has six of America’s ten most-polluted cities, 80 percent of it traceable to transportation. Tailpipe emissions are even more dangerous than previously understood, while cars and light trucks are the state’s single-largest source of greenhouse gas pollution.
Chevrolet Bolt electric car in Danville, California, March, 2020. (Photo by Smith … [+]
Gado via Getty Images
New research quantifies consumer savings from three-to-four-year-old EVs, adding to health and climate benefits from EVs. Used EVs save consumers $500 – $1,000 on average compared to similar gas cars due to lower fuel and maintenance costs, saving on “fuel” because they are three times more energy efficient as gas cars, while EV maintenance costs about half as much. The gasoline price shocks that recently rocked the East Coast demonstrate how EVs also protect their owners from volatile oil markets.
Though EVs are cheaper to own than gas cars, their upfront purchase prices are still greater without government incentives. Rapid battery innovation is reducing EVs costs so rapidly that they will be cheaper to buy within a few years. Smart policy is and will remain essential.
The price of EV battery packs fell 89% from 2010 to 2020 in real terms.
Bloomberg New Energy Finance
California has pioneered incentive design to increase EV access. For example, Clean Cars 4 All offers point-of-sale discounts for lower-income households on used or new EVs. Incentives reach as high as $9,500 for people living in neighborhoods with the worst air pollution, which makes owning a used EV 38 percent cheaper compared to a similar gas car – a no-brainer when car shopping.
Some context helps illustrate the dramatic budgetary impact of these transportation affordability benefits. Car ownership is the second-largest expense for California households, consuming more than 30% of after-tax income in lower-income households, three times more than higher-income households.
EV adoption is picking up among lower- and middle-income households but consumer incentives remain important. We’ve got a long way to go to close the accessibility gap, so targeted incentives like Clean Cars 4 All remain vital to fulfilling the California’s equity goals. Incentives for middle income buyers to choose new EVs are also crucial because potential EV buyers in general point to higher purchase prices as a top concern.
Total cost of ownership for a used electric vehicle is 38% cheaper than a similar model gas car when … [+]
Energy Innovation
Without such broader-based policies, California risks falling off-pace for the state’s transportation electrification goals. In a hopeful sign, budget plans from both Governor Newsom and the state legislature include revenue for both broad-based and targeted incentives – but passage is not assured.
Other innovative policies are also needed to shift EV deployment into the fast lane, like enabling on-bill utility financing with favorable terms for EVs and redirecting state cap-and-trade revenue to reduce electricity rates. Expanding infrastructure is paramount, and policymakers are rightly considering public-private efforts to scale up infrastructure while undertaking new approaches to overcoming EV charging accessibility hurdles for multi-unit dwelling residents.
Nissan Leaf electric car plugged in and charging at an electric vehicle charging station in San … [+]
Getty Images
California’s strong EV policies rewarded innovation, helping EVs emerge as the state’s top export in 2020 and doubling direct auto manufacturing jobs over historical levels. California manufacturing jobs earn an average of $80,000 per year. Jobs in the larger EV industry are beating even that impressive benchmark, paying more than $90,000 per year on average across 275,000 statewide jobs. Maintaining EV leadership through smart policy will expand these economic on-ramps to the middle class.
Electrifying transportation at the scale and speed required to hit our statewide climate goals will be challenging, but momentum is growing. The steady pace of innovation and increasingly enthusiastic automakers mean dozens of new EVs of all shapes and sizes will soon be on the road. The EV revolution can help alleviate the intertwined problems of environmental justice, climate change, and income inequality – if California’s climate policies fully tap the surprising affordability of EVs.
