EV Subsidies Are a “Robin-Hood-in-Reverse Policy”


Among the many well-intentioned yet flawed climate action plans, electric vehicle (EV) subsidies are an often-overlooked yet pernicious example of handouts to the wealthy disguised as environmentalism.


The federal government provides tax credits of up to $7,500, with states like California kicking in additional breaks of up to $2,500 to entice consumers to buy EVs. Many states also throw in free charging, free parking, and/or access to HOV lanes to further sweeten the pot.


This all sounds like the government generously helping consumers become more eco-savvy … until you realize that these benefits are accruing almost entirely to the wealthiest consumers.


Consider: A 2015 analysis found Tesla owners have an average household income of $320,000, which is over five times the 2016 median US household income of $59,039.


It’s no surprise that a 2015 National Bureau of Economic Research paper found that “the top income quintile has received about 90% of all credits” for EVs, given that the $74,500 MSRP for a Tesla Model S is more than the annual income of the average US household.


As The Washington Post recently editorialized, EV subsidies truly are “a Robin-Hood-in-Reverse Policy.” And this policy is taking real money out of the pockets of average consumers in order to help the rich—the Congressional Budget Office estimated that the federal EV subsidies will cost $7.5 billion through 2019. That’s a lot of money that could be going to meet education, public safety, or infrastructure shortfalls.


And this income inequality is in the process of getting worse. States like California and Oregon are instructing utility companies to build thousands of EV charging stations … and have utility customers foot the bill. So not only are middle-class tax dollars being diverted to offset EV purchases, but utility bills are going to rise in order to help the rich keep their EVs charged.


In times of widespread deficits, policymakers should not be taking billions from taxpayers to help the wealthy get a better deal on EVs. As The Washington Post editorialized:

If electric vehicles are the wave of the future, they’ll have to survive on their own economically sooner or later. It should be sooner. Car corporations, billionaire entrepreneurs and their well-heeled customers have received enough assistance from the rest of us already.