A recent study on electric vehicles (EVs) suggests that their production and operating costs might be far higher than previously known.
The Texas Public Policy Foundation’s report, authored by Brent Bennett and Jason Isaac, takes a detailed look at the financial implications of owning an EV.
Electric vehicle proponents often highlight their advantages such as reduced maintenance expenses and anticipated savings from future battery price drops.
However, Bennett and Isaac raise an important question: have proponents truly accounted for the myriad of subsidies, regulatory credits, and infrastructure support that bolster the EV market?
Their research shows that, without the $22 billion in government incentives provided to EV manufacturers and consumers, the average 2021 EV would cost an owner an additional $48,698 over a decade.
Factoring in these subsidies, the cost of fueling an EV parallels a gasoline price of $17.33 per gallon.
This figure does not factor in the considerable subsidies included in the misnamed 2022 Inflation Reduction Act, specifically targeting the EV battery production sector.
The duo emphasizes that these incentives significantly impacted the 2021 EV market.
Federal and state subsidies and regulatory credits effectively lowered the retail price of EVs by an average of nearly $50,000.
Despite these benefits, car dealerships are witnessing a surge in unsold EVs.
For instance, Ford Motor Company reports a staggering loss of over $70,000 on each of its EV sales.
The authors further highlight another important point: gasoline prices encompass the complete process from refining to marketing.
In contrast, do EV owners truly account for the additional expenses imposed on the electric grid when they plug in their vehicles?
These costs, associated with generation, transmission, and distribution, could escalate in the future.
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Bennett and Isaac’s conclusion is a sobering reality check.
They state that the actual cost of an EV significantly surpasses that of traditional gasoline powered vehicles.
Their conservative estimate suggests that an average EV incurs $48,698 in subsidies and an additional $4,569 in charging and electricity costs over a decade.
This amounts to $53,267 or $16.12 for an equivalent gallon of gasoline.
Without consistent government support, EVs might remain pricier than gasoline powered cars in the foreseeable future.
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