Despite predictions that electric vehicles (EVs) will soon be cheaper than gas-powered cars, a new study argues that the “socialized costs” of EVs, or the amount that is not paid by the buyer but by all Americans in the form of taxes, subsidies, and higher electricity costs, can sum to as much as $48,000 per vehicle over its expected 10-year life.
According to a report by Cox Automotive, the average selling price of a new EV has come down more than $10,000 this year, from $65,000 one year ago, and publications like Bloomberg and the New York Times have long predicted that, due to falling prices for battery inputs like lithium, EVs will soon be cheaper to buy than internal combustion engine vehicles (ICEVs). Much of the current pricing also reflects seller discounts as unsold EVs get backed up on dealer lots.
An average EV, with a current sticker price of about $53,000, would cost about $100,000, “if these subsidies were rolled into the retail price of the car instead of being socialized to the rest of us,” Brent Bennett, co-author of the report, told The Epoch Times.
'Socialized Costs' of EVs
This $48,000 per EV is paid by many Americans who can’t afford EVs. Given that the average income of an EV buyer is $150,000, or double the $75,000 median household income in America, this represents a substantial wealth transfer from less affluent to wealthier Americans.
“Within the $48,000 is what we consider to be socialized costs, to the taxpayer, to other people in your utility service area, or onto gasoline vehicles,” he said. These costs include federal and state tax rebates to EV buyers of up to $7,500 per vehicle, road maintenance costs that EV drivers don’t pay, capital costs to the electric grid which are distributed among consumers in the form of higher electric bills, and EPA greenhouse gas (GHG) credits and Corporate Average Fuel Economy (CAFE) credits paid by manufacturers of gas-powered cars and trucks.
The GHG and CAFE credits are government-mandated transfers, which carmakers that do not meet ever-tightening emissions standards must pay to carmakers that do. Because only tailpipe emissions are taken into account, this amounts to billions in payments from ICE carmakers to EV manufacturers, which are ultimately paid by buyers of gasoline-powered cars to subsidize EV drivers.
In 2022, for example, Tesla received $1.78 billion from such mandated transfers.
Higher Electricity Bills
The utility costs include capital expenses for new electricity generation, transmission and charging facilities, which are generally borne by consumers across the board in the form of higher electric bills.
“Because the power draw [of EVs] is so high, that puts extra strain on the infrastructure,” Mr. Bennett said. “EV charging will pull down as much electricity as a few homes, so eventually you have to upgrade your infrastructure to handle that.”
These utility capital costs are estimated at more than $11,000 per vehicle, the report states.
Electric utilities must build out their capacity to cover peak demand, and “special demand charges” are often assessed on industrial companies if their electricity use drives up peak demand. Some utilities, such as San Diego Gas and Electric, are now beginning to similarly assess EV owners for charging their EVs at home.
Regarding transportation infrastructure, EV owners also do not pay the cost of things like road construction and maintenance, much of which is currently paid by gas taxes. Failing to take any of these costs into account amounts to an enormous distortion by government of market prices in the automotive industry.
“EV advocates claim that the cost of electricity for EV owners is equal to $1.21 per gallon of gasoline,” the report states. “Adding the costs of the subsidies to the true cost of fueling an EV would equate to an EV owner paying $17.33 per gallon of gasoline.”
In addition, there is the cost of repairs and insurance. EV proponents argue that EVs are cheaper to maintain because they have fewer moving parts. However, EVs are much more expensive to repair if they are in an accident, which also makes them 23 percent more expensive to insure than ICEVs.
'Hybrids Are the Answer'
Many EV owners feel that the added cost is worth it because they are fighting global warming and EVs do not emit CO2 while they are on the road. However, hybrid vehicles may be a better option, when CO2 emissions from mining and refining of battery materials, as well as additional electricity infrastructure, are taken into account.
“Federal policy is pushing EVs over hybrid vehicles, even though hybrids offer a far more efficient way to improve fuel economy and reduce emissions,” the report states. “They use a much smaller battery, offer excellent driving range and performance, and don’t require any upgrade to our electric infrastructure.”
Toyota recently stated that for the amount of raw materials required to make one long-range EV battery, they could manufacture 90 hybrid batteries. In addition, Toyota estimated that in order to meet the expected demand for EVs, 300 new lithium, cobalt, nickel and graphite mines would be needed, with all the emissions, environmental damage, and toxic waste that comes with them.
“If we were concerned about emissions, then hybrids are the answer,” Mr. Bennett said. “But the ideology against fossil fuels is such that it’s almost more about the fuel than the emissions.”
“It’s more about net zero or bust, and therefore hybrids are bad, just like natural gas is bad because it continues to rely upon the existing fossil fuel infrastructure and we have to rip all that out and go completely electric,” he said.
Kevin Stocklin is a business reporter, film producer and former Wall Street banker. He wrote and produced "We All Fall Down: The American Mortgage Crisis," a 2008 documentary on the collapse of the mortgage finance system. His most recent documentary is "The Shadow State," an investigation of the ESG industry.