On June 17, President Biden hosted a Major Economies Forum on Energy and Climate, the third such meeting held by Biden during his presidency.
At the forum, which was held virtually, representatives from more than 20 governments, including China, the United Kingdom, India and Japan, discussed “urgent energy and food security concerns.”
Participants also outlined their commitments to battle climate change, including pledges to “reduce methane emissions, speed the commercialization of critical technologies, put more zero-emission vehicles on the road, decarbonize ocean-based shipping, and increase fertilizer efficiency and alternatives.”
According to a fact sheet published by the White House about the forum, at the event, Biden once again reiterated his commitment to dramatically increase the number of zero-emissions vehicles (ZEVs) on America’s roadways, especially electric cars.
Earlier this year, Biden announced that his administration has set a goal for half of all new light-duty vehicles sold in 2030 to be ZEVs, including “battery electric, fuel cell electric, and plug-in hybrid vehicles.”
At the Major Economies Forum, the Biden administration said that the U.S. government will achieve this ambitious plan by imposing far-reaching regulations that will force car companies to sell more electric and other “green” vehicles. Some of these regulations have already been put in place.
“To advance this goal in the United States, the Environmental Protection Agency and Department of Transportation have, working closely together, finalized stronger vehicle standards through 2026 and are now considering ambitious standards to at least 2030,” a White House statement noted.
Biden’s policy forcing manufacturers to produce zero-emissions vehicles will raise the cost of owning and driving a car, hurting lower- and middle-income families the most.
Zero-emissions vehicles remain expensive for many, and the purported financial benefits associated with owning one are much lower than some people think. This may explain why a study released in 2021 found that Americans considering an electric vehicle (EV) purchase have an average household income of $150,000, more than double the U.S. median income.
There are several reasons electric vehicles are more expensive to own than traditional gasoline-powered cars, but the biggest is the purchase price. The average price of a new electric vehicle sold in February 2022 was $60,054, compared to $45,596 for all vehicles. But these figures are somewhat misleading because the average cost of all vehicles includes expensive electric cars too. Further, these figures fail to show that it’s possible to purchase used gasoline-powered cars for much less than most of the lower-end electric vehicles available.
For example, a review of used cars available on the popular online retailer Carvana shows that in the Atlanta metropolitan area, the most affordable used electric vehicle available with a model year of 2018 or newer is about $50,000, and most are well above $60,000. Conversely, there are hundreds of used traditional vehicles for sale for less than $20,000.
Advocates for Biden’s plan to impose zero-emissions vehicles claim that these price differences are mostly offset by the costs associated with running these cars. For example, a recent NBC News report claimed that “energy costs” are “where EVs have a clear and growing advantage.”
“For example, the new Volkswagen ID.4 SUV, which starts at about $40,000, gets 250 miles per charge,” the NBC News report claimed. “With the average residential customer paying about 14 cents per kilowatt, it costs roughly $11 to fully charge the battery. Also, some customers qualify for discount charging rates. A comparable VW Tiguan SUV, which starts at about $26,000 and gets 26 mpg, would cost about $38 to fill up at $4 a gallon. If you drive 12,000 miles a year, you could expect to spend around $550 to power the ID.4, compared to $1,900 for the Tiguan.”
Arguments such as these are common but deceptive. For starters, there are many gasoline-powered SUVs that perform better than the 26 mpg vehicle included in the example used by NBC News. For instance, the 2022 Nissan Rogue averages 33 mpg, and the 2022 Toyota Highlander, a non-plug-in hybrid, gets 36 mpg. And there are dozens of non-SUVs that perform even better. A 2022 Honda Civic is rated at 42 mpg on highways.
Further, although the national average electricity cost is about 14 cents per kilowatt, as NBC rightly reports, electricity prices vary substantially by region. In many parts of the United States, electricity prices are much higher than 14 cents per kilowatt.
In New England, the average cost of electricity is 24.5 cents per kilowatt. In California, the largest state by population, the average cost is 26.71 cents per kilowatt. And these costs would be higher if half of all Americans were using electric vehicles because electricity consumption would necessarily skyrocket.
Once you factor in all of these considerations, it becomes clear that in many regions of the United States, including many of the most populated areas, the everyday cost of using a gasoline-powered car is equal to or lower than an electric vehicle.
It is also important to keep in mind that gasoline prices are at historic highs. In May, the average retail price of gasoline was $4.54. In May 2020, when President Trump was president, the average price of gasoline was $1.96. If Biden were to embrace pro-energy reforms, including policies that would substantially increase domestic oil and gas drilling, there’s no reason why energy prices couldn’t fall to Trump-era levels, especially once the conflict in Ukraine ends.
It is likely that electric vehicle manufacturers will continue to decrease the cost of production for EVs in the coming years. But if the government were to allow a truly free and fair marketplace and embrace commonsense energy policies, gasoline-powered cars would remain the more affordable option for many years to come, perhaps even many decades.
The Biden administration knows this, but, in the end, it will pursue whatever course is required to reduce carbon dioxide emissions, regardless of how painful it is for American families.
Justin Haskins (Jhaskins@heartland.org) is director of the Socialism Research Center at The Heartland Institute and a New York Times bestselling author.