It's time to pull the plug on electric-car subsidies

Below is a commentary by Freedom Foundation of Minnesota CEO Annette Meeks published in the Sunday, April 10, 2016 Star Tribune.

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It’s Time to Pull the Plug on Electric-Car Subsidies

The federal government shouldn't be involved, and Minnesota shouldn't get started. Let buyers decide.

If you’re wondering why American voters are angry and fed up with politics as usual, a good place to start looking is at the crony capitalism that allows a few electric-car fanatics to pick taxpayer pockets for more and more government subsidies to fuel their hobby. And now some in the Minnesota Legislature want state taxpayers to get in on the act of subsidizing what amounts to a reverse Robin Hood scheme that would provide a state tax rebate of up to $2,500 for Minnesotans who choose an electric or hybrid plug-in vehicle.

These schemes in which all of us subsidize the elite few are just one of the reasons why both political parties are experiencing voter rebellion. It’s time for Congress to end electric-car subsidies and for state lawmakers to avoid this unnecessary subsidy altogether.

Electric cars aren’t anything new. According to the American Council for Capital Formation’s economist Margo Thorning, “Electric vehicles have been with us for almost 180 years. The first, an electric carriage created by an inventor named Robert Anderson, made its appearance in Scotland in 1832. By 1907, the American company Cutler-Hammer was advertising electric vehicles and the first electric charging station. Since that time Americans have seen tremendous innovations in everything from air travel to microwaves, yet there has been little progress converting consumers from gasoline-powered cars to vehicles powered by rechargeable batteries.” Yet, despite facts telling a very different story, electric-car advocates say that this is a “rapidly evolving technology” and that the high cost of these vehicles is falling, which will make them more appealing to a wider range of car consumers.

An importance difference between the first electric-car manufacturers and today’s is the reliance on government subsidies that subsidize nearly every aspect of their manufacturing and sales. It is hard to imagine that Tesla, the “it” electric-car manufacturer, would exist except for the fact that it is almost totally dependent upon U.S. taxpayers for survival. To date, according to a Los Angeles Times report, “[t]his Silicon Valley start-up [Tesla] has gotten $4.9 billion in state and federal support over the past decade.” If the federal government continues to subsidize Tesla at this rate, the company is on track to receive nearly $7.5 billion in taxpayer funds through 2019.

No matter how lavish federal and state subsidies are for these plug-in vehicles, the average consumer isn’t buying it. According to 2015 vehicle sales numbers featured in the Washington Post, “Americans bought a record 17.5 million passenger vehicles in the United States, of which 116,548 — 0.67 percent — were either plug-in hybrids or all-electrics.” Interestingly, sales of both hybrids and electric vehicles decreased by 6,500 since 2014.

In Minnesota, we have approximately 3,500 licensed electric vehicles on the road today. They represent less than 1 percent of the total 4.6 million vehicles registered in the state. It’s apparent to nearly everyone that consumers aren’t willing to give up a reliable form of transportation (gasoline-powered engines) in order to satisfy government planners who continue to wave huge cash subsidies in their attempt to lure new-car shoppers to purchase experimental vehicles.

The biggest lie told to taxpayers is that electric cars need enormous public subsidies because they are helping clean up the environment. It is important to remember, according to the Wall Street Journal, that electricity in America “is largely produced from fossil fuels” and that very same electricity is what’s used to “fuel” plug-in vehicles. Furthermore, with today’s inexpensive gas prices, it will take nearly 14 years for an owner of a relatively inexpensive electric car like the Chevy Volt to offset the sticker price differential. Considering the fact that an average Chevy Volt battery takes nearly 20 minutes to recharge at 80 percent of capacity, your trip Up North will take a little longer and cost a little more.

Voters all across the country are turning out in record numbers to demonstrate just how angry they are with government as usual. Enterprising candidates would be well-served to start by showing taxpayers they’re not going to Washington and St. Paul to conduct business as usual. They can do this by pulling the plug on electric-car handouts that benefit a few by taxing all the rest.

EDITORS NOTE: On Tuesday, April 12th, the Minnesota Senate sponsor of this legislation removed the proposed $2,500 state rebate from the pending legislation!


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