Energy Musings - May 29, 2024
EVs and politics seem to go together. But maybe the age of respondents to a WSJ survey on political affiliation and views on EVs explains the divide. It may partially explain EVs' problems.
Religion, Politics, and Now EVs Off-Limits?
The old expression that it is best not to talk about religion and politics because they can generate emotional responses may need updating in today’s highly divisive world. Steven Center, head of U.S. operations for Kia, suggests maybe the list of topics off-limits should include electric vehicles.
The comment was in a Wall Street Journal article about how political views had entered the world of EVs. The observation was part of a survey the paper had commissioned to assess EV opinions by political persuasion. The table below highlights that conservatives favor internal combustion engine (ICE) vehicles and dislike EVs, while their view about hybrid vehicles falls in between. Liberals, on the other hand, like all vehicle types about equally.
Political affiliation seems to shape views of EVs, but age of respondents may play a role, also.
The political divide over vehicle type is noteworthy. Collectively, it shines a light on the problems EVs face. Recent research by Sam Peltzman, economics professor emeritus at the Booth School at the University of Chicago, shows that age has much to do with political persuasion. Younger people are liberal, but they become more conservative as they age. Peltzman’s research suggests that by age 45, people considered liberal have drifted far enough right to no longer be considered liberal.
Unfortunately, the liberal/conservative survey data does not consider respondent ages. If the liberal respondents were weighted heavily toward younger respondents, possibly they lack the financial resources to buy expensive EVs. They may also not own homes or live in facilities allowing the installation of their battery charging outlet, forcing them to use commercial charging stations that increase the cost of the electricity needed. It creates additional obstacles as they must visit a charging station and remain during recharging, which can be a hardship.
Such issues were high on the list of reasons why the respondents to the survey have an unfavorable view of EVs. Cost is the highest problem with charging station availability being the second most cited problem. These are economic challenges that will need more time to be addressed.
The federal government’s efforts to build a larger nationwide charging network are going slowly. According to Autoweek.com, since the programs became law two years ago, only eight charging stations have been built. There was $7.5 billion in funding for charging stations approved through two initiatives - $5 billion through the National Electric Vehicle Infrastructure program and $2.5 billion in Charging and Fueling Infrastructure discretionary grant funding via the Infrastructure Investment and Jobs Act. While the Biden administration loves to spin the numbers about the success of their EV initiative, Americans remain worried about range anxiety and charging availability. Those concerns are evident in the data from the WSJ’s survey.
Among the challenges EVs face, political views rank low.
Interestingly, political views, climate change, and Chinese concerns did not rank high on the list of reasons why respondents had unfavorable views of EVs. The unfavorable issues need addressing soon if the EV transition is to be sustainable.
Another issue lurking in the background is the end of the free-ride EVs in supporting the highway infrastructure. In California, the largest EV market in the nation, Caltrans, the state’s transportation agency, is expanding a test program for a new way to fund highway maintenance. Caltrans officials have noted that the fuel tax revenue from ICE vehicles is drying up as EVs claim a greater share of California’s vehicle fleet and ICE vehicles become more fuel-efficient. In ten years, Caltrans projects there will be a deficit in highway tax revenues. Today, the state spends $8 billion annually on its highway system, but it will need $4.4 billion in funding from other sources within ten years.
The test program will charge drivers three cents per mile driven. While the participants must still pay the 58-cent per gallon California fuel tax, they are offered gift cards of up to $400 as an offset during the six-month test. For owners of new ICE vehicles meeting the current federal fuel-efficiency standard of 33 miles per gallon, the test program will be the equivalent of a 99-cent-per-gallon fuel tax. When the 2026 standard goes into effect, that cost will soar to $1.47 per gallon for ICE vehicles meeting the standard.
Caltrans is also looking into raising the annual fee for EVs. The $100 fee represents about a third of what the typical California ICE driver pays in fuel taxes annually. EVs will need to pay more to support the state’s highways.
Interestingly, Iceland has successfully converted much of its vehicle fleet to EVs. It is also suffering from underfunding of its highway maintenance expenditures. As a result, the government has instituted a mileage charge to raise highway maintenance funds. The program started on January 1st, a year ahead of the planned start date due to the growing shortage of highway funds. EVs are paying the fee, too.
Once the fee went into effect, EV sales in Iceland fell by 50%. Dealers had anticipated a decline of 15%-20% based on projected economic issues, high interest rates, and the road tax fee, but they were surprised by how much more the decline has been. Will California experience a similar EV buyer revolt if the state adopts a mileage tax?
With Iceland providing a template, it will be interesting to see what emerges from the Caltrans test program. Mileage taxes and higher EV annual fees are the latest issues confronting EV sales.