Which incentives work for electric cars?
If you have been reading my articles for a while you probably noticed that I’m strongly against Governments subsidizing private transportation. In my opinion Governments should only invest in public transportation. When Governments subsidize private profits, one thing is for sure, the only incentive that exists is to keep the price of the product or service high. A cheap product doesn’t justify the existence of a subsidy…
Now some Germans are finally discovering that the recent 4.000 € incentive to buy electric cars decided by the Government is going straight to automakers pockets, it’s not used to drop the prices as it supposed to do. In Germany the incentive has a particularity of being supported in half by the State (2.000 €) and the other half by the automaker. Yet this doesn’t make it ok, because the German Government agreed with the automakers on paying half of the subsidy to make electric cars more affordable. Not to increase their profits.
This obvious conclusion is in a study of the Center for Automotive Research (CAR) at the University of Duisburg-Essen. The monetary incentive given by Governments to buy electric cars is only increasing automakers profit, not electric cars adoption.
It’s basics Economics. For example that’s why Public Health Care in Europe provide better services for less costs than Medicare in the USA, where the Government pays private corporations to provide health care services. The same happens in Education. Private Universities in the USA take advantage of public subsidies to charge ridiculous high amounts of money for a college degree.
This kind of subsidy also reinforces the myth that electric cars are intrinsically expensive, so they need to be subsidized. The truth is when automakers decide to mass produce electric cars in the same quantities of gas cars, electric cars will be cheaper to make. They have a lot less moving parts, this not only saves time and money in suppliers, but also in working hours, electricity and complex machines in the production lines. A production line that only builds electric cars is a lot simpler, efficient and faster.
But saying this kind of incentive actually hurts electric car’s adoption by keeping the prices artificially high doesn’t solve the problem. What kind of public policies work?
We need to acknowledge why automakers love gas cars and prefer them over electric cars.
Planned obsolescence. Gas cars by being way more complex they are more prone to failure. This increases automakers profits in maintenance and also keeps the driver more receptive to change his car for a new one to avoid problems.
But automakers sell cars, even if they prefer gas cars it’s better to sell electric cars than sell nothing. This is why the real incentive to get automakers serious about electric cars is making the task of selling polluting cars a lot more difficult.
Some measures that make selling polluting cars more difficult:
- Prohibit the circulation of polluting cars in cities
- Parking more expensive for polluting cars
- Toll roads more expensive for polluting cars
- Increase the price of fossil fuels
- Increase the VAT for polluting cars
- Use realistic methods to measure emissions and tax them accordingly
- Stop subsidizing wars for oil and show the public the real cost of these wars
- Increase taxes for the oil industry
Making gas cars harder to sell it’s what countries like Norway are successfully doing. In Norway the Renault Zoe (battery included) is cheaper than the Renault Clio…
To accept these measures, people must be informed that alternatives to gas cars already exist. Electric cars are not only good alternatives, actually they are better.
The electric car revolution to work, must be accompanied by renewable energy revolution. What car can be better than one powered by renewable energy? Specially if a company can produce the electricity in your own country or even better, you do it at home.
When automakers feel that selling polluting cars is getting more and more difficult they’ll finally embrace electric cars.
Not every politician has bad intentions regarding public policies. Sometimes they are just badly informed or advised. Even in some electric car’s supporter communities public monetary subsidies are seen as needed and these communities sometimes influence public policies in the bad way with their advice.
Fortunately some media in Germany is reporting this fact. I don’t know about other countries, but if I was a tax payer in France I would be scandalized with the situation there. It can go up to 10.000 € in public money straight to automakers pockets for each electric car sold and the prices remain ridiculously high.
What do you think? Am I wrong? What are the public policies you find more efficient to make the transition from gas to electric cars?