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America Needs Elon Musk — to Sell Electric Cars

America Needs Elon Musk — to Sell Electric Cars

Tuesday, 3 May, 2022 - 05:45

My family’s next car will almost certainly be electric — and that’s a problem, not necessarily for our family but for America.


You see, we’re your basic highly educated big-city liberals. We have solar panels. For family burger night, we’ve gone meatless. Our current car is a Toyota Prius hybrid, which we barely drive. We take our son to school on foot. When we go to the office, we walk. When we go to the supermarket, we walk. When we went to a baseball game last weekend, we took the Metro.


In other words: Our carbon footprint is undoubtedly smaller than that of the average three-person US household.


Which, from a policy standpoint, is not ideal. The people in America most likely to buy an electric car are the people who are already more environmentally conscious than average. But the people America most needs to buy an electric car are the people who drive their gasoline-powered vehicles more than average.


Analysts at Coltura, a nonprofit that is working to accelerate the transition from gasoline, calculate that the top 10% of drivers consume 32% of the gasoline — more than the bottom 60% combined. The top 20% use nearly half the gas.


Coltura calls this top 10% “super-users.” They’re people like my father-in-law, who drives a Ford F-150 on his 40-mile daily commute through rural Texas. Because gasoline consumption is so uneven across car owners, it doesn’t just matter how quickly electric vehicles get on the road. “It is also essential to ask who goes first,” writes Kristin Eberhard, the director of climate policy at the Niskanen Center (where I am a senior fellow).


So far surveys indicate that Democrats are more likely than Republicans to express interest in buying an EV, and EV market share is higher in blue states. The problem is that partisanship correlates with geography, with Democrats more likely to live in dense areas with shorter driving distances and less fuel consumption. EV market share in Washington, which is dramatically denser and more transit-oriented than any state, is higher than in 49 states. All those urban EVs are displacing much less gasoline use than would an equivalent number of electric cars in rural or exurban areas.


Some of this is just marketing — which is where Elon Musk comes in.


Intended or not, Musk’s recent conservative tilt — such as his championing of Republican concerns about biased content moderation policies on Twitter — could be a boon for the environment. Selling Teslas (especially the forthcoming Cybertruck) to primarily conservative super-users would put a much bigger dent in emissions then getting more urban liberals like me to upgrade our hybrids.


On a policy level, argues Eberhard, the current approach to federal EV subsidies needs to change.


The existing flat $7,500 tax credit for an electric car purchase nudges people to buy, but does nothing to alter the shape of the demand curve. It’s also regressive, because electric car buyers are richer than the average American. Coltura proposes something called a “gasoline displacement incentive” of $10 per gallon, so an F-150 driver who does 40,000 miles per year at 20 miles per gallon could be eligible for a whopping $20,000 subsidy if they bought an EV — while a Sunday-only Prius driver like me would only qualify for a pittance.


Because gasoline super-users have roughly the same income distribution as the general population, these subsidies would be much less regressive than the existing EV credit. They would also be, almost by definition, more cost-effective in terms of gasoline consumption avoided per dollar spent.


In political terms, however, it’s probably a tough sell. Progressives are going to want to reward people like me who’ve been making responsible environmental choices, not deliver a bailout to exurban SUV owners. And conservatives who would benefit from this reconfigured program don’t care as much as liberals about climate change, air pollution or other potential benefits of an EV subsidy program.


On the other hand, things change. Ten years ago, I wouldn’t have predicted that America’s most successful electric car entrepreneur would be a conservative hero and a progressive villain. If a plan to subsidize EVs for super-users did come together, it could create a virtuous political circle by expanding the constituency for electrification.


Attentive readers will notice, meanwhile, that the underlying logic here is essentially the same as that of old-fashioned technocratic ideas like raising the gas tax or economy-wide carbon pricing. Whether done as a subsidy or as a fee, the point is to try to alter behavior in proportion to actual usage of fossil fuels. The conventional wisdom has long been that these ideas are far too politically toxic to be taken up by Congress, and that’s almost certainly right. But the technical merits are worth keeping in mind, because as inflation continues, it seems likely that sooner or later Congress will be debating the value of austerity.


When that time comes, essentially all the political choices become unpalatable — which means the unpalatable becomes possible. In a world without free-lunch budgeting, it’s important to think hard about issues such as how to design electric vehicle subsidies in the most cost-effective way. Right now, any attempt to put in place a carbon tax or increase gas taxes would be politically suicidal. But there’s no guarantee it always will be. And then the prospect of targeting super-users may have a compelling political as well as economic logic.


Bloomberg


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