As originally published in KnoxNews, a USA Today network.
Americans’ love of automobiles makes policies affecting them controversial. Automobiles offer us freedom, opportunity and joy, so it’s been a policymaking challenge to find a balance that’s pro-consumer and pro-environment.
A bipartisan group of U.S. senators is pursuing a commonsense approach. The Driving America Forward Act allows an additional 400,000 electric vehicles per manufacturer to be eligible for a consumer tax credit. The bill was introduced by Lamar Alexander (R-Tennessee), Susan Collins (R-Maine), Gary Peters (D-Michigan) and Debbie Stabenow (D-Michigan).
Electric vehicles make more sense than ever before and continue to be key to a cost-effective, consumer-driven approach to reducing emissions from transportation. They are turning the corner and well positioned to win the hearts and minds of American auto lovers while simultaneously reducing emissions. Even though they are still a small percentage of cars on U.S. roads, widespread adoption may not be far off thanks to heightened innovation and more favorable federal and state policies.
To date, federal support has been steady. The Department of Energy supports research and grant programs for electric vehicle development. A federal tax credit of up to $7,500 for the first 200,000 vehicles sold by a manufacturer has worked well. Tesla was the first manufacturer to reach this limit, and they no longer need the credit as an incentive to sell electric vehicles. Everyday consumers now know the Tesla brand.
The Senate proposal extends the number of electric vehicles eligible for the tax credit by an additional 400,000 vehicles per manufacturer, but it also decreases the credit to $7,000 and ramps down the subsidy faster once the cap is hit. This is a good compromise that offers safeguards to taxpayers while achieving measurable clean air benefits.
The subsidy as proposed phases out automatically as the electric vehicle market matures. America is a world leader in innovation and electric vehicles are an important frontier worth supporting. The tax credit assures that small businesses can enter the market, and well-known automakers can diversify their lineups and offer consumers more environmentally-friendly choices.
Ideally, the U.S. could be an exporter for a new generation of automotive technologies. There’s plenty of demand. In 2017 alone, nearly 580,000 electric vehicles were bought in China.
Costs for electric vehicles are coming down each year, charging at home is inexpensive, recharging options and locations are growing, and limited lifetime maintenance costs are appealing. Many drivers are already saving money in the long run, with approximately $860 in savings per year on fuel alone.
The best role for government is allowing the market to match transportation options with consumer needs. Already, the results are interesting. For example, the growing popularity of ride-share companies like Uber and Lyft presents an opportunity for replacing these vehicles, which spend so much time on the road, with electric vehicles.
Policymakers don’t need to over-steer the auto industry. Steady federal policy, innovative state programs and more choices for consumers will keep pressure on lowering prices with the benefit of lowering emissions.The Driving America Forward Act will be the catalyst needed.
Charles Hernick is the director of policy and advocacy at the Citizens for Responsible Energy Solutions Forum, a 501(c)(3) nonprofit organization committed to educating the public and influencing the national conversation about actionable, free-market, responsible clean energy solutions.