Jason Hayes, Mackinac Center for Public Policy
A recently released University of Michigan study promotes the alleged economic and environmental benefits of a transition to electric vehicles. But the study’s emphasis on fuel costs vs. overall costs limits its real-world applicability. The claimed environmental benefits of the transition are also questionable, and the policy interventions recommended by the authors fail to solve critical affordability issues.
A U-M news release promoting the study opens with the claim that “More than 90% of vehicle-owning households in the United States would see a reduction in the percentage of income spent on transportation energy—the gasoline or electricity that powers their cars, SUVs and pickups—if they switched to electric vehicles.”
The real-world usefulness of this study hinges on the phrase “transportation energy.” Study authors limited their economic analysis to the cost of the energy used to power the vehicles. As the study abstract notes, “Excluded in the analysis is the purchase cost of the vehicles themselves.”
That’s an odd choice given that one of the major focuses of the study is “energy justice” and a recognition that low-income households are being “left behind” by the EV transition. When a stated focus of your research concerns the availability of EVs to all Americans , the Kelly Blue Book-reported average $67,000 cost of an EV in June 2022 can’t be reasonably ignored. Focusing this research specifically on “transportation energy” costs, rather than the real cost of transportation, represents a significant limitation to the usefulness of the study’s findings.
The study’s authors also briefly mention other research that questions whether transitioning to EVs can realistically be considered “perpetually positive, neutral, or amoral” and list several issues EVs face in the “broader energy justice framework.” They only list outstanding environmental and social issues like: battery disposal, increased mining necessary to manufacture EV batteries, the “adverse environmental and social impacts associated with cobalt and lithium extraction,” exclusion of indigenous cultures in decision making processes, toxic pollution, water scarcity, and several others.
Focusing on a single concern in the above list — mining — demonstrates that the claimed environmental benefits associated with the EV transition are questionable at best. International Energy Agency data indicates that manufacturing EVs requires six times greater levels of mineral and metals than are required for internal combustion engine vehicles.
Work done by Mark Mills at the Manhattan Institute pairs with the IEA data to highlight the massive growth in mining needed to meet the proposed demand for EV batteries. “A single electric car contains more cobalt than 1,000 smartphone batteries,” Mills notes, and an “electric car battery weighing 1,000 pounds requires extracting and processing some 500,000 pounds of materials.” When measured against the hundreds of millions to billions of EVs needed to transition away from traditional vehicles, the scope and magnitude of increased mining becomes shockingly clear.
Study authors also recognize that “EV ownership in the U.S. has been dominated by households with higher incomes and levels of education.” EV affordability is a well-traveled issue and highlights some of the problems associated with government policy forcing technologies into the market place before they are ready for prime time. Given their high costs, EVs still tend to be a luxury item, with almost 80% of claimed EV tax credits going to households with annual incomes over $100,000.
The study’s authors recommend that further “policy interventions are needed to increase EV accessibility so that all Americans can benefit from the EV transition.” However, the current situation, with upper-middle-class and wealthy households snapping up the bulk of EV tax credits, exists solely as an outcome of existing “policy interventions” aimed at increasing accessibility to EVs. It’s reasonable to question whether additional subsidies will realistically solve the problem that subsidies helped create in the first place.
Adding to this difficulty, a 2019 Ernst & Young study estimated that removing the cap on the federal EV tax credit would cost taxpayers more than $46 billion. This means that while EV owners might reduce their spending on transportation energy, they will likely expend those savings on the higher purchase price and increased taxes to cover the subsidies lavished on EVs.
On the environmental front, the study’s authors claim that the EV transition would reduce “climate-warming” greenhouse gases. However, current estimates have determined it will take approximately 65,000 to 80,000 miles, or 5-7 years of driving to break even on greenhouse gas emissions. This long break-even point is due to the “embedded CO2 emissions” associated with construction, delivery, etc. of the car, as well as the fuel sources used to charge the car. More generous IEA data indicate that an EV, being charged with the “global average mix” of electricity, will still emit half as much CO2 as an ICE vehicle over its full life cycle. But author and economist Bjorn Lomborg notes that for only $300, it’s possible to purchase CO2 credits equaling those total emissions.
The U-M study avoids reporting the real costs of an EV transition with its odd “transportation energy” metric. The study also mentions but does not seriously investigate numerous environmental and social issues brought on or exacerbated by their proposed transition. Finally, the policy prescriptions recommended to extend EV ownership to low-income households typically benefit upper-income households. Taken together, the arguments presented in favor of transitioning to EVs in this U-M study lack the charge to spark any serious policy change.
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Jason Hayes is the director of environmental policy for the Mackinac Center for Public Policy.
