Luxury Cars – Electric Car Quotas Have a High Cost
President Biden can’t mandate that we all drive electric cars, but he’s opening the gates to an electric Trojan horse. In a day-one executive order, Mr. Biden began the process of rescinding a Trump administration rule, the first step toward greenlighting California’s electric car agenda. California and like-minded states plan to impose electric cars through production quotas—whether drivers want the cars or not.
California regulators call it a “zero-emissions vehicle” standard, but green propaganda shouldn’t obscure what’s really going on. Start with federal law. It requires the transportation secretary to set national average fuel-economy performance standards for car makers at the “maximum feasible” level without restricting consumer choice. Instead of mandating a given technology, federal fuel-economy standards allow car makers the freedom to decide how best to improve fuel economy at the lowest cost.
To promote efficiency, federal law broadly forbids state regulations “related to fuel economy standards.” Courts have held that this law forbids electric car quotas and similarly meddlesome command-and-control policies that seek to dictate how car makers should meet federal performance standards. The Golden State argues that a special exception made for California regulations in the Clean Air Act should also be read into the federal fuel-economy law. But that law’s text says no. It forbids fuel-economy regulation by any state—no exceptions.
Next, the policy. Congress pre-empted state laws in 1975 because sprinkling policies like state electric car quotas on top of federal fuel-economy standards makes no sense. An electric car quota in California would force car makers to meet national fuel-economy standards using one of the most expensive fuel-efficiency technologies, undermining consumer choice and increasing costs. One study from 2019 estimates that state electric car quotas will cost an extra $400 for every new car nationwide by 2025.
Those costs won’t be distributed equally. The zero-emission vehicle standard is in effect a hidden regressive tax paid by ordinary car buyers to subsidize luxury cars for the wealthy. It takes $400 from the wallets of low- and moderate-income car buyers and hands it over primarily to six-figure-income electric car buyers, who enjoy many other subsidies, too.