How Biden Can Get the U.S. to Love Electric Cars
Since Joe Biden’s election last month, U.S. car companies have been stepping up one by one to support the limits on tailpipe emissions he has pledged to impose. A new spirit of cooperation between the industry and the government would be good news for the fight against climate change. But it’s also good news for automakers themselves: What they really need — and Biden can provide — is help building the U.S. market for electric cars and trucks.
Biden’s first order of business will be to settle the matter of those emissions limits. He has promised to go beyond even the standards set by President Barack Obama, which called for a yearly increase in average fleet fuel economy of 4.7%. Reaching that target alone would mean that by 2026, one of every four light-duty passenger vehicles sold in the U.S. would be electric.
President Donald Trump lowered this standard to just 1.5%. But he ran into trouble with California, which sets its own rules (and those of a dozen other states that follow its lead) and which has insisted on sticking to Obama’s path. Trump’s attempt to rein California in only sent the fight to court. At this point, dropping that case and reraising the standard would be the most effective thing Biden could do to reduce emissions without Congress’s help.
Beyond that, Biden is right to try to boost demand for electric vehicles. The simplest way to do so would be an economy-wide tax on carbon emissions. That would raise the price of gasoline and encourage consumers to buy greener cars without need of further regulation. In the bargain, it would accelerate the transition away from carbon in every other sector — power generation, manufacturing, construction, agriculture — while boosting innovation and long-term investment in clean energy. Unfortunately, Congress has resisted this elegant strategy for years, and doesn’t seem poised to start supporting it now.
The next-best option for Biden is to expand electric-vehicle tax credits. As things stand, Americans can claim a credit of up to $7,500 if they buy an electric car, and each automaker can sell up to 200,000 qualifying vehicles before the credit is phased out. That adds up to about 1.9 million eligible cars. (Tesla and GM have already reached their cap.) Democrats have said they want to raise that ceiling to 7.5 million, increasing the cost of the credit from $14 billion to $53 billion. A big push from the White House, combined with pressure from automakers, could feasibly persuade a bipartisan majority to get this done.