Key Takeaways
The reality of the demand for electric vehicles does not at all meet up with current supply and production plans for EVs.
The most accurate answer for why EV mandates are being implemented is simply because they are politically beneficial.
EV mandates are meant to create votes, not cars.
Despite their growth in recent years, EVs only account for a little over 1% of the total number of vehicles on the road, and sales growth is slowing as the future of EVs looks bumpier than ever.
Just a few days ago, the House took steps to block an attempt by the Biden Administration to require that at least two-thirds of new cars produced by 2032 to be electric vehicles. One of the largest problems with EVs that green activists, environmentalists, and politicians never mention is quite simple: most consumers don’t want them. Edmunds found a 42% gap between the average price of a gas-powered car and an EV. Naturally, consumers notice this large price differential between ICEs and EVs, and, as the data shows, this gap is prohibitively expensive in the minds of consumers for them to be willing to purchase an EV.
Not only is the demand side for EVs quite rocky, but the supply side is, too. Many car manufacturers, from Volvo to Ford to GM and numerous others, are scaling back or completely ending their EV production. Other companies, including Lucid Motors and Renault, are missing their predicted EV targets due to slowing sales. Needless to say, the reality of the demand for electric vehicles does not at all meet up with current supply and production plans for EVs.
Yet, if consumers do not want to own EVs, why are they always on the front page of the news? Why are EVs, a category of vehicle that makes up less than 2% of all vehicles on the road today, so prominent in our political discourse? Why are EVs, which are almost double the price of an average car, being pushed so hard by governments around the world? The answer is found in the classic Latin phrase “cui bono,” or who stands to gain?
The question of why EV mandates are being implemented has escaped the minds of too many people. The naive answer may invoke that markets are “selfish” or that car companies are not internalizing the negative externalities of carbon emissions, so the government is stepping in to fix these externalities. However, this view fails to view “politics without romance,” as the late economist James Buchanan wrote. The most accurate answer for why EV mandates are being implemented is simply because they are politically beneficial. EV mandates are not primarily designed to create jobs, reduce emissions, or even create electric vehicles; that is only a secondary consequence. Instead, EV mandates are meant to create votes for the politicians enacting and supporting them.
Politicians are in a constant state of competition with one another. Every vote cast, every policy supported, and every speech given are all part of a politician’s calculus about getting into or staying in office. If a lawmaker slips up by saying the wrong thing or supporting a piece of legislation that his constituency hates, he risks being ousted during the next election cycle. To garnish more support, politicians can promise a better future and more jobs for their electorate. EV mandates do just that. EV mandates promise a future with less carbon emissions is possible; thus, a cleaner and safer future is ahead. Additionally, jobs are often promised as a part of an EV mandate. Ultimately, the political push for EVs allows politicians to concentrate benefits on politically connected interest groups such as environmental groups, companies that stand to benefit from subsidies and tax breaks, and constituents of congressional districts that may play a role in the production of EVs. However, these promises and concentrated benefits come at a cost to everyone else as these policies restrict choice in the automobile market, preventing consumers from choosing the options they deem to best suit their needs.
Furthermore, politicians have a significant incentive to systematically overestimate EV production targets. The greater the number of EVs expected to be produced, the greater the number of jobs announced from EV mandates, which means more votes. If the President announced that their EV mandate would “realistically create only a few thousand jobs and vehicles while significantly raising the costs of buying a car,” this would likely be met with little public support. However, if the announced EV mandate were going to reduce the costs of getting a car, lower carbon emissions, create tens of thousands of jobs, and save the planet, no one would doubt this would generate much support among the voting public. Much like how truth is the first casualty in war, so too is it in politics. Voters’ minds are short, and often, the consequences of, or even the full implementation of, these mandates will happen far past election day. Since businesses, not politicians, are in charge of meeting EV targets, they will shoulder the burden of not meeting EV targets. If or when EV producers fail to meet the production targets, politicians can shield themselves from responsibility and possibly gain extra support from voters for bringing in EV producers to a congressional hearing and scolding them for not meeting desired production targets. In today’s political atmosphere, this is not hard to understand given that the vast majority of voters who support “green” initiatives are also the same voters who support “tough on business” policies.
While EV mandates to some look like an effective way to promote green alternatives and plan the economy, both theory and current EV demand and production plans show this is in fact the opposite case. While some may say that EV mandates are to promote production, this, too, is not the case. EV mandates are meant to create votes, not cars.
