The $7,500 EV tax credit is gone, but each gas car still gets $20k+ in subsidies

The $7,500 US federal EV tax credit is no more, having expired yesterday, a deadline which was set when republicans voted to reverse climate progress and channel trillions of dollars from everyday Americans to wealthy elites.

However, that’s not the end of subsidies for the American auto industry, as most gas cars continue to benefit from over $20k in subsidy for each vehicle over the course of their lifetime.

In its mission to make Americans sicker and poorer, the republican party has made a point of attacking cheaper and cleaner transportation options in the form of EVs. It’s doing its best to ship American EV jobs overseas, and instead throw your hard-earned tax dollars at dead technologies where the money will be completely wasted.

One of its salvos in these attacks has been to remove the $7,500 EV tax credit, which had made superior new transportation options more affordable for Americans (and, strangely, it did this with the help of the CEO of America’s largest EV maker, even though it will harm his company). That tax credit was taken away from Americans yesterday, seven years earlier than planned.

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So, after inflating vehicle costs by $7,500, republicans feel quite accomplished at taking a step towards their goal of making your air dirtier and enriching their oil buddies which they sought a billion dollar bribe from. And yes, that inflation will increase the price of gas cars as well – when the price of one product goes up, then there is less downward pressure on the price of competing products, which can then raise prices.

Some have stated that removing this subsidy is only fair, and that a new technology should have to stand on its own two feet. But that rationale misses something very important – the fact that fossil-powered vehicles have benefitted from over a century of extreme subsidies, which have been far larger than any amount of subsidy ever received by electric cars.

Fossil cars get far more subsidy than EVs ever did

The International Monetary Fund estimates that fossil fuel subsidies total $760 billion per year in the US alone, with roughly half of that subsidy going towards oil, which is used primarily to fuel cars.

These subsidy calculations consider both explicit subsidies – direct payments or tax breaks from the government to oil producers – and implicit subsidies, or the ignored costs associated with burning oil which get absorbed by the whole economy, rather than by the producers or consumers of the oil.

To explain the concept of implicit subsidies, imagine you live in a place where you have a separate bill you pay for trash pickup. Now, imagine if your neighbor decided that they didn’t want to pay this cost and would just start throwing their trash in the middle of the street and let everyone else clean it up for them. In this case, you and your other neighbors are subsidizing that neighbor’s trash pickup, having to clean up a mess that they are not paying for.

It’s the same with burning oil, but instead of spewing trash into the street, polluters are spewing trash into our lungs, which we then have to pay for in the form of asthma medication, hospital visits, lost productivity, and the effects of climate change.

These costs add up to hundreds of billions of dollars per year in the US, and trillions globally – and in addition to those monetary costs, also increase misery. I’m sure most of us would rather sign a check with our pocketbook than with our lungs.

In another study, the ignored costs of gasoline measured around $3.80 a gallon (although it’s likely that number is even higher now, as the study dates from 2015).

We can multiply this number by the amount of gallons of gasoline an average car will use in its lifetime (at average 24mpg for new cars and 150k-200k miles of useful service, that’s 6-8k gallons of gasoline burned, times $3.80), and find that the embedded lifetime subsidy runs in the tens of thousands of dollars. Even for a relatively efficient 40mpg car, that’s $19,000 in subsidy over a 200,000 mile lifetime, based on that 2015 subsidy number.

Now, compare to EV subsidies. EVs received $7,500 per car federally, with some additional state and local credits in certain regions, and some cars receiving lower subsidies due to income or domestic limitations. But lets stick with the $7,500 number as an average.

With Americans buying 1.3 million EVs in 2024 (and a market share of just under 10%), that means a total of around ten billion dollars in total subsidy for EVs in 2024. Which means not only is the total amount of subsidy lower for EVs than the hundreds of billions of dollars worth of benefits that gas cars enjoyed, but the amount per EV is significantly lower than the amount per gas car.

And as long as we’re considering total subsidies, we should consider that only a few million EVs have been sold in the US total, ever. Meanwhile this country has run through more than a billion gas cars, all of which have polluted with impunity.

Solutions are available, but republicans don’t want to solve problems

This discrepancy has been pointed out by many before, including Tesla CEO Elon Musk himself, who in the past has repeatedly claimed that if subsidies were removed from both EVs and gas cars, that EVs would be more cost-competitive, not less, given the imbalance in total subsidies received by the two technologies.

What Musk said was true in the past and is true now – but he seems to have forgotten one half of that equation, and threw a substantial amount of money towards removing EV subsidies and keeping gas car subsidies alive (and then whining about the thing he paid for).

The actual solution to this issue is to make all polluters pay for the pollution they cause. This should apply to both gas and electric vehicles – each should have to pay in proportion to how much damage they cause. But since EVs are much cleaner, they would naturally pay less than gas cars.

A plan like this has been supported by a series of former republican luminaries seemingly from a different era when the party wasn’t quite as violently anti-American as it is today, and by, uh, basically every economist. And IMF says that if efficient pollution pricing were implemented globally, it would generate net benefits of 3.6% of global GDP and save 1.6 million premature deaths per year.

However, that solution is unlikely to see much discussion, given that oil shill Chris Wright, who is currently squatting as the Department of Energy’s titular leader, just censored discussion of it.

Last week, Wright’s department sent out an Orwellian memo stating that nobody at the Department of Energy is allowed to talk about the subsidies, in a rather blatant attempt to distract everyone from the man behind the curtain (a.k.a., the hundreds of billions of dollars per year the oil industry is fleecing from the public). Maybe it’s time to get a government that’s actually interested in the well-being of its populace, rather than only interested in sucking their dead bodies dry in the name of oil profits.

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