Are Electric Vehicle Incentives Much Too Low in 2015?

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Critics of renewable energy and electric vehicles often call foul on government subsidies designed to help these budding industries along. According to new data, it’s a drop in the bucket compared to the trillions spent on oil and coal subsidies, with a sizable chunk of that support going to pay for health care and related costs. In light of the staggering statistics on the real costs of burning fossil fuels in America, EV incentives appear far too low in 2015.

A study released May 18 by the International Monetary Fund (IMF) revealed just how much fossil fuel industries are subsidized by governments around the world. According to the stats, governments worldwide will spend $5.3 trillion this year supporting these industries in everything from tax breaks to infrastructure investment and the cost of oil-spill cleanups and related health costs. The IMF attempted to include the entire scope of fossil fuel industries and their impact on society.

A report in The Guardian outlined the frightening implications of the data collected by the IMF. If governments around the world decided to end subsidies for the fossil fuel industries, global carbon emissions would fall by 20%. As far as fatalities linked to air pollution, the study revealed the number of premature deaths would be reduced by 50% with an end to the subsidies, enough to save 1.6 million lives every year. (The World Health Organization counted 7 million premature deaths linked to air pollution in 2012.)

The coal industry was the biggest benefactor of governments around the world and accounted for about half ($2.7 trillion) the associated costs while oil netted about one third the subsidies ($1.8 trillion) and gas the remainder. Investments in renewable energy industries, capped at $120 billion, are puny in comparison. These statistics are enough to rethink U.S. policy on green vehicle incentives as state governments decide how to handle EV tax credits.


In Georgia and Illinois, lawmakers recently decided to embrace austerity by cutting electric vehicle incentives offered to new car buyers. As a result, the tax credits offered to consumers on top of the $7,500 federal incentive are phasing out in 2015. Georgia lawmakers went the extra mile and actually added a tax on electric car purchases to make up for lost gas revenues while approving incentives for local Mercedes-Benz employees who hope to lease company cars at a discount.

The effects of policies like Georgia’s will cost the public untold amounts in the coming years in terms of air pollution, the increase in premature deaths, and the corollary cost in state health care as well as lost income by employees who are too sick to work. It’s hard to see how that is better than a $5,000 incentive that will get a pure electric vehicle on the road.

Despite the myths that circulate about electric vehicles, the U.S. grid offers a much cleaner mode of transportation when drivers get around in an EV or plug-in hybrid. The technology has not caught up to gas cars and cannot provide the range necessary to make them viable in the mainstream. However, as a second car or primary car in urban environments like Atlanta’s, electric cars make perfect sense.

Electric vehicles really just need a boost in state or federal vehicle incentives to quicken their rate of adoption. As GM proved with attractive deals on the Chevy Spark EV in April, it actually is about the money. Governments may think they can’t afford to shell out cash for this purpose but, as the IMF study showed in grisly detail, there are much worse ways to spend state money. Gas is just not as cheap as you think.