Joe Biden’s EV Dreams Are Just Another Government Boondoggle
No one’s surprised to find President Biden’s $2.3 trillion infrastructure package brimming with special interest pork, but his green dreams may be the biggest government boondoggle yet.
Included in the infrastructure bill are $174 billion toward vehicle electrification, provisions for 500,000 new electric car charging stations, and plans to electrify the entire federal vehicle fleet.
While electric vehicles (EVs) are a strong symbol of climate activism — a clear statement declaring concern about the fate of the planet — as things stand today, they make little difference in terms of curbing global greenhouse gas emissions.
The United States’ energy grid is still largely reliant on fossil fuels. Adding millions of federal electric cars to the road and spending billions on charging stations without solving the problem of establishing reliable, zero-emission energy puts the cart before the horse. And though renewable energy like wind and solar are in vogue with the Democratic administration, the impracticality of scaling these technologies is an inconvenient truth that can’t be ignored.
Solar and wind are impractical sources of energy because of their intermittent power generation and low power densities. Any energy grid reliant upon these two carbon-free energy sources must be supplemented by baseload energy such as natural gas or nuclear. Biden’s plan would punish utilities, forcing them to phase out fossil fuels and embrace solar and wind via a clean energy standard, and would extend the renewable investment and production tax credit, a program that the notorious Solyndra once benefited from. Biden might be able to coerce the adoption of these technologies, but their underlying shortcomings aren’t going away.
Mandating a less reliable energy grid by pushing for solar and wind while at the same time incentivizing more electricity use by encouraging the adoption of EVs is a recipe for disaster. It’s destroying supply while jacking up demand. Even if the energy grid challenges could be overcome — a tall order — EVs remain a luxury good for the more affluent among us and are therefore impractical for the average driver.
For example, the most popular EV sold in 2020 was Tesla’s Model 3 at $38,690 on the low end with another $9,000 needed to obtain the long-range model. Tesla’s Model X was another top seller, ringing in at $91,190. Even with the $7,500 federal tax break, those prices might be a bit too steep for many Americans. Ultimately, the EV and green tech provisions in Biden’s infrastructure plan will only further subsidize wealthy Americans.
Furthermore, Biden’s plan to ramp up EV infrastructure by spending billions to build 500,000 charging stations across the country is entirely unnecessary. In 2019, 17 million new light-duty vehicles were sold. That same year, fewer than 363,000 EVs were purchased. Clearly, current demand doesn’t warrant such a massive government investment.
The reality is, true all-electric vehicles represent less than 2 percent of cars on the road today. That’s because for most drivers they’re simply unaffordable and impractical.
Yes, major car manufacturers, spurred by government fuel regulation, have pledged to invest more to develop their own electrified vehicles, but this doesn’t warrant government spending.
In fact, if these moves are driven by genuine anticipation of a spike in consumer demand, then this signals a need in the market for more charging stations to accommodate the coming surge in EVs on the road. Again, the government need not step in. As demand rises for EVs, so too will demand for EV infrastructure. Private entrepreneurs motivated by the desire for profit will rush to meet that demand. Growing national debt and raising taxes in order for government, rather than private industry, to meet that demand is not necessary.
And all of this spending comes on the heels of having already spent $5.4 trillion throughout the Coronavirus crisis. We’ve saddled the country with a debt so large even Keynesian economists typically favorable to the Democratic agenda have warned about the risk of inflation and growth stagnation. To spend another nearly $2.3 trillion on projects that won’t meet their stated aim is simply reckless. And remember, this package is only phase one of two.
The Congressional Budget Office predicts that if we continue under the current spending status-quo, per-person income will be $6,300 lower than it would be otherwise. That’s because, despite what proponents of the convenient Modern Monetary Theory might theorize, incurring massive debt does have real-world consequences.
Large government deficits hurt the economy in part because that debt represents money that could be circulating privately in the economy as capital to be invested in enterprises that would actually create wealth. The money the government spends has a short-term consumption benefit but a long-term growth cost. In short, increased spending will have the effect of throwing a weighted blanket on the economy.
Ultimately, consumer demand doesn’t warrant massive government spending on EV infrastructure. Further, EVs that plug into a grid reliant upon fossil fuels accomplish little in terms of curbing global greenhouse gas emissions. What we need are real solutions to climate change not ideological posturing and handouts to special interests. And most importantly, we must weigh the cost of government programs against other priorities, like long-term economic health.
Kat Dwyer is a Young Voices contributor working in the conservation policy space and is co-host of the Whiskey Bench podcast. Her writing has appeared in the Washington Examiner, The Hill, and others. Follow her on Twitter @KatJDwyer.