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September 29, 2021

Electric Vehicle Subsidy Powers the Affluent

Tax credits for Teslas and now union-made EVs largely won’t benefit the poor and middle class.

Despite a government push and years of consumer incentives, including a $7,500 tax break, the electric car industry still controls only a tiny percentage of the overall automotive market. But since we are under Joe Biden’s regime and he demands that 50% of all cars sold by 2035 be electric, we’re going to see the electric vehicle push placed on steroids if Democrats get their way with their big spending bill. And it goes without saying: The additional congressional fingerprints mean they’re going to try to share the wealth among favored constituencies — including the affluent among us who can afford to buy these electric cars.

The Democrats’ proposal would expand the existing $7,500 tax break to include an extra $4,500 if the car is manufactured by a facility with a “union-negotiated collective bargaining agreement” and $500 more if the battery cell is American-made. (Never mind the “rarely discussed reality” that most of the raw materials come from overseas.) And in a perverse twist on the reviled “Cash for Clunkers” program, the tax break would also be expanded on a smaller scale of $1,250 to $2,500 for preowned electric vehicles purchased by the working class, though the rebate would phase out for couples who make more than $150,000.

The extra juice added for union-made electric cars has given the proposal a powerful opponent by the name of Elon Musk, who expressed his disapproval of the bill as one “written by Ford/UAW lobbyists.” It’s worth noting that Musk still has the whip hand, as Tesla is the largest U.S.-based manufacturer of electric cars. He holds an 80% market share in California, where 40% of our nation’s electric cars are sold thanks to additional state incentives. But after several fits and starts (such as the infamous Chevy Volt) the Big Three are getting deeper into the electric game with a plethora of new models, including a recently introduced electric Mustang from Ford and a vow from GM to go all-electric with its Cadillac brand beginning in 2030, with the all-new Lyriq model coming out next year.

While money seems to be no object to Democrats as they pursue their Green New Deal fever dreams, there are proposals out there to claw back that tax break money from the rest of us who prefer to fill ‘er up instead of plug 'er in.

Back in August, our Thomas Gallatin put together this 2+2, noting that one way to make up for the gas tax revenue lost from Biden’s electric car order would be enacting a mileage tax, with rural drivers hit hardest. He also warned: “Lost in all the feel-good high-fives over electric cars is the fact that our nation’s electrical grid cannot handle millions of additional electric vehicles without major overhauling and upgrading. Thus, as usual, the government’s 'solution’ to one problem will create another (big) one.” Gallatin was correct. Moreover, our push for “renewable” energy will make the electric grid even more unmanageable — much like Europe’s is today.

Add in the upcoming recycling crisis of what to do about all those spent car batteries, and perhaps we now know why electric cars were placed in the dustbin of history a century ago, residing there until environmentalists got the notion that the advances they demanded in reducing tailpipe emissions in internal combustion engines weren’t enough due to their belief that we would soon run out of fossil fuels.

Those lines of thought were a mistake for which we will all soon be paying the price.

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