Editorial: Unplug electric car subsidies
Next time you write out the check for your car payment, think about this: You're not only paying for your car, you're helping to buy vehicles for some of the richest people in America.
American taxpayers chip in up to $7,500 for each electric car sold, and nearly 80 percent of those subsidies go to purchasers who make more than $100,000 a year.
President Donald Trump, in a snit with General Motors Corp. over announced plant idlings and layoffs, is threatening to kill the handouts. GM is the second largest beneficiary of the subsidies, behind Tesla.
He should do it — not to punish GM, but because the subsidies distort the market and are unfair to taxpayers. And they aren't working.
The electric car subsidies were intended to create a market for costly vehicles that serve a public good — they don't emit greenhouse gases, a primary contributor to global warming.
But even the generous down payment from the federal government isn't enough to lure motorists out of their internal combustion cars and trucks. Electric vehicles account for just 0.5 percent of vehicle sales, a figure that is not growing.
The $2 billion subsidy program is capped at 200,000 vehicles per automaker. After that threshold is reached, the subsidy is phased out over the next calendar year.
Tesla, with its all-electric fleet, maxed out in June. GM, with its Bolt offering, expects to hit the limit by the end of this month. Both companies are asking for the cap to be raised.
If it isn't, GM and Tesla will be competing next year with automakers such as Nissan and Ford Motor Co. that will still enjoy the full subsidy on their electric offerings, giving them a sizable price advantage.
If the subsidies go away, that advantage disappears, and the market for EVs will be level.
Bills addressing the electric car subsidies are pending in Congress, and may well become part of any spending plan reached by lawmakers before the end of the year. One bill would lift the cap but phase out the subsidies by 2022, another would extend the subsidies for 10 more years, and a third would kill them now.
GM and Tesla are engaged in an intense lobbying effort to raise the cap. They've beefed up their Washington staffs and have been pushing the message that the EV market is still in its infancy and not ready to be weaned from the federal Treasury.
But Congress should cut its losses on this one. The electric car subsidies have not sent Americans rushing to the showrooms to purchase EVs.
All they've done is given an unwarranted taxpayer gift to consumers who can well afford to pay for their own vehicles.