Bloomberg has an article on electric cars, which illustrates some of the advantages of carbon taxes over regulation:
New Breed of EV Promises 700 Miles per Charge (Just Add Gas)
It runs on batteries 95% of the time, but a gasoline engine can recharge them for longer hauls, easing range anxiety.
EV sales growth has slowed in recent months, partly due to consumers having anxiety about being unable to find a place to recharge their cars. This new type of EV would greatly reduce that problem. At the moment, these cars are available in China, but not the US:
It’s unlikely US car buyers will see anything like that on American roads anytime soon because President Joe Biden is seeking 100% tariffs on Chinese cars and former President Donald Trump is threatening even tougher protectionist measures to keep Chinese-made EVs out. So if American consumers are to gain access to technology that might provide a transition to the electric future, it will be up to the automakers in the US—and their regulators—to pave the way.
What about producing this sort of car within the US? Here’s one issue:
Because a gas-fueled engine is used to extend the driving range of an EREV, it’s considered a hybrid, which the Sierra Club has said it no longer considers green technology. “EREVs could be a harmful distraction that could stall momentum in the crucial transition to zero-emission vehicles,” says Katherine Garcia, the Sierra Club’s director of clean transportation.
It’s unclear how US regulators will classify EREVs, but it seems unlikely they’ll be lumped with pure EVs, which, if made in North America, qualify for government incentives aimed at stimulating sales, such as a tax credit of as much as $7,500.
The “big decision for us as an industry and for regulators: ‘Is that an EV or isn’t it?’” Farley said of EREVs at the Bernstein Strategic Decisions Conference in New York in late May. “Customers are voting; they like these in-between solutions. We still have a lot of work to do with regulators because they’re not there.”
What is better for the environment, selling a few cars that are 100% emission free, or selling a lot of cars that are 95% emission free?
Governments are generally not very good at making this sort of calculation; hence “command and control” regulations often end up being relatively inefficient. In contrast, a carbon tax encourages consumers to make the decision that is best for the economy, including the external costs of emissions. If done right, carbon taxes can also make the overall tax system more efficient, by reducing other more distortionary taxes. Cynics will correctly note that it’s unlikely that other taxes will be reduced by an equal amount. But unless we slash government spending, we’ll need sharp increases in other taxes, and a carbon tax would allow those increases to be smaller. So the point still holds.
This reminds me of the debate about safer versions of cigarettes. Recall when regulators were reluctant to approve a cigarette substitute that was far safer than ordinary cigarettes, because it was not 100% safe. There’s an old saying: Never let the perfect be the enemy of the good.
READER COMMENTS
Dylan
Sep 12 2024 at 2:02pm
I don’t have Bloomberg, but I’m guessing there would be a discussion that these aren’t really new types of EVs at all? In fact, one of the first mass market EVs in the U.S., the Chevy Volt, was a plug in hybrid, also known as an EREV and was introduced back in 2010. I believe they qualified for subsidies, at least in the first few years of their product life. I think that they basically failed in the market because of added complexity and cost, without having that much extra benefit. The first generation only had a 37mpg rating when using the gas engine to recharge the battery, and could only 38 miles on the electric engine alone.
There’s been a lot of improvement in battery technology over the last 15 years for sure, and probably a lot of other tech related to EVs, so it is possible that these new Chinese EREVs are a much better deal than the GM version. I certainly agree with your overall point, that a carbon tax would be a much better solution than the grab bag of regulation and choppy incentives we currently have.
steve
Sep 12 2024 at 2:48pm
There are a number of plug in hybrids. IIRC BMW made (makes?) a plug in that had a small ICE that was used solely to recharge the battery. Most plug ins just have a smallish battery so you get 30-60 miles on battery then they switch over to the ICE. Regardless, Scott is correct. The purists are wrong. We dont have the chargers and wont for a long time to support a high level of EV ownership. Hybrids are the logical bridge.
I follow bakery tech moderately closely and it is improving rapidly. There is no guarantee it progresses at the same rate but its not unreasonable to believe that the tech is good enough that TVs are clearly superior to ICE cars in most ways, but chargers will stay an issue for quite a while.
Steve
Scott Sumner
Sep 12 2024 at 3:29pm
The vast majority of the time I drive less than 50 miles a day. If I had a hybrid, I’d probably rely on batteries at least 90% of the time.
nobody.really
Sep 13 2024 at 10:05am
We have truly become a nation of couch potatoes.
Ahmed Fares
Sep 12 2024 at 3:44pm
There’s been an exciting development in EV battery technology which changes the economics of EV ownership. It has to do with the initial factory charging of an EV battery.
EV Battery Makers Have Been Doing It Wrong This Whole Time
Warren Platts
Sep 12 2024 at 3:59pm
A tariff on Chinese products is a carbon tax once you consider that Chinese CO2/GDP is like 3.5X that of the USA.
Scott Sumner
Sep 12 2024 at 9:25pm
No, it’s nothing at all like a carbon tax. And the CO2/GDP ratio is an utterly meaningless data point, for all sorts of reasons. You are in way over your head.
Knut P. Heen
Sep 13 2024 at 9:58am
Range anxiety? This does not work. I drive a Tesla and having a longer range only means you recharge less often. Sometimes this means recharging at home rather than along the road which saves you some money, but this is mostly the Peltzman-effect all over again.
If you recharge between 20 percent and 80 percent which is recommended, you can drive for 3-4 hours between each 20-minute recharge. It is usually a good idea to take a break anyway if you have been driving for 3-4 hours. Range anxiety is really about density of recharges along the road and planning. You can stop after 2 hours and recharge from 50 percent to 80 percent. No anxiety.
Jon Murphy
Sep 13 2024 at 10:11am
Doesn’t the range anxiety stem from not knowing whether there will be changing stations every 2-3 hours? I think it would depend greatly where you are in the country.
Or, like a situation where I find myself currently, after a major storm hits, not knowing when power will be restored.
MarkW
Sep 14 2024 at 10:03am
The worry is whether there’ll be charging stations, whether they’ll be in service, and whether you’ll be first in line (because, if not, your charging time could be a lot more than 20 minutes. And you can’t leave your car for long (particularly if you’re waiting for an open station). And your vehicle may not have enough juice to run the heat or AC while you’re waiting. The loss of convenience wrt ice vehicles on long trips is significant.
Knut P. Heen
Sep 17 2024 at 6:22am
Range anxiety is about how much is left on the battery. Some people panic. A bigger battery simply means you can drive longer between each recharge and that the recharge takes longer time. The anxiety will be the same when it sets in. The problem with frequent recharging is that you have to wait in line on days with heavy traffic. This may tempt you to recharge to 100 percent once it is your turn, and that increases the waiting time for everyone because recharging the last percentages takes disproportionately longer time.
Anyway, if you never drive more than 4 hour trips, you can probably get away with never having to recharge at a station.
MarkW
Sep 15 2024 at 8:56am
“What is better for the environment, selling a few cars that are 100% emission free, or selling a lot of cars that are 95% emission free?”
It’s not just that plug-in hybrids offer much better utility that pure EVs on non-local trips, but they also have the big advantage of needing much smaller batteries, which means that they can be lighter and less costly (batteries are heavy and expensive) and so many more such vehicles can be produced with a given amount of the lithium and other raw materials that go into batteries. And if a battery replacement is ultimately required, it is less likely to mean totaling the vehicle (and even if the battery is not replaced, a plug-in hybrid remains useful even after the original battery has very little capacity remaining). With a plug-in hybrid, you may not even need to bother with a charging station — regular household current can probably recharge the low capacity battery overnight.
Don Geddis
Sep 15 2024 at 3:29pm
How many hours are there between coming home in the evening, and leaving again the next morning? How many miles are driven in a typical day?
“Regular household current” is often sufficient for the vast majority of daily driving. Charging stations are not necessarily required. (And, for those with a garage, there is always the option of installing a 240V outlet to get much faster charging, even at home.)