Electric Vehicle Sales Plummet Without Taxpayer Subsidy

Nissan Leaf photoFor years NLPC has reported that the “market” for electric vehicles was anything but free and competitive against traditional gasoline-fueled automobiles. Instead it is “all hype and subsidies.”

The evidence could not be any clearer than what has happened in Atlanta. As Watchdog.org has reported, since a $5,000 state tax credit expired on July 1, sales of “zero-emission” electrics such as the Nissan Leaf have plummeted. Whereas monthly sales averaged 915 in 2015 until the year’s midpoint, sales in the month of August fell to 148, according to vehicle registration data compiled by R.L. Polk & Co.

“It was essentially taking money that would have been paid into taxes in Georgia and a subset of people were getting their car paid for,” said state Rep. Chuck Martin, a Republican, to Watchdog.org.

The steep drop was expected after the tax credit expired, but gasoline prices that are approaching $2 per gallon were not, which probably exacerbated the fall even more. It’s yet another example of government policy attempting to modify behavior via the tax code, for dubious public benefit.

Besides the $5,000 from Georgia, buyers also could take advantage of a $7,500 federal tax credit. Thanks to that enormous subsidy, according to the Georgia State University Center for State and Local Finance, drivers were able to lease the $30,000 Leaf for three years for an absurdly low $60 per month.

“We haven’t been selling Leafs because people are environmental,” said a north Georgia auto dealership sales manager to Automotive News back in June. “We’ve been selling them because of the state credits.”

Nonetheless the eco-activists of the Peach State, who are disappointed with the expiration of the electric vehicle incentive, tried to make the case that the tax credit delivered environmental improvements.

The tax credit “was an economic benefit to the state; it was an environmental benefit to the state; it helped jobs because all of a sudden we had people putting in charging stations and things like that,” said Don Francis, coordinator of Clean Cities-Georgia Coalition, to Watchdog.org. “And all of that was taken away in one fell swoop.”

Contrary to Francis’s claim, the wealth transfer from taxpayers to a special class of automobile drivers – many of them well-heeled, who can afford such limited-range, non-essential vehicles without a tax break – delivered no public benefit at all: economic, environmental or otherwise.

In March 2014, as Rep. Martin sought to pass legislation to eliminate the credit, he estimated that the cumulative loss to Georgia taxpayers could reach $30 million. Also, according to the Georgia State University Center for State and Local Finance, had the tax credit remained it would have cost state and local governments $6.2 million in gas taxes in 2016. Those lost revenues have a significant impact on the maintenance of the state’s transportation network, with electric vehicle drivers using roads and thoroughfares virtually for free.

“Savvy Leaf drivers can simply turn their old vehicles in at the end of that lease and repeat the process — leading potentially to years of cost free, state-subsidized driving,” Rep. Martin said earlier this year to the Web site ScienceLine.

As for the environment, the incentive to spur greater use of electricity-powered vehicles reaped no benefit either. That’s because about 70 percent of Georgia’s electricity is generated by coal and natural gas, while another 25 percent comes from nuclear – the bane of many more environmentalists, even though it doesn’t emit greenhouse gases.

And the jobs derived from ancillary economic activity that Francis touted, such as the installation of charging stations, only represent the redirection of financial resources taken from other parts of the Georgia economy and directed into the electric vehicle sector. Besides, the cost of the polluting electricity required to power the Leaf is not being paid for by the user either! Last year Nissan instituted its “No Charge to Charge” program in Atlanta, which gives free access to more than a dozen “quick-chargers” (the only kind anyone would want to use) for two years.

Thus the resource used to “fuel” the electric vehicles – again, mostly powered by coal and natural gas – is dependent on subsidies also. Amusingly, when the tax credit was implemented in 2001, it was supposed to reduce the cost of “zero-emission” vehicles. And the original intent of the policy was to lower the amount of greenhouse gas emissions that cause alleged global warming; therefore the millions of dollars expended for this program produced exactly “zero” environmental benefit.

Meanwhile an economic sector was built on the house of cards that was nothing more than government subsidies, which are easily be eliminated by politicians who constantly change their minds. Meeting market demand with products that people desire to buy, based upon what they actually cost, is a much better way to do business.

Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.