The Latest Threat to Electric Cars

Cities and states are leading the charge for electric vehicle adoption; powerful corporate interests—such as the Koch-backed fossil fuel industry—are doing whatever they can to stand in the way.

Car exhaust wafts around commuter traffic in Omaha, Nebraska, in February 2013. (AP/Nati Harnik)
Car exhaust wafts around commuter traffic in Omaha, Nebraska, in February 2013. (AP/Nati Harnik)

Cities and states are making electric vehicles, or EVs, more affordable and practical through rebates and tax credits, as well as by building charging networks. The fossil fuel industry, however, is wary of such commitments to clean energy technologies. Backed heavily by the Koch brothers—who made their fortune in oil—far-right organizations, such as the American Legislative Exchange Council, or ALEC, are working with the fossil fuel industry to attack state EV incentives in state legislatures. While the fossil fuel industry has certainly never been a friend of EVs, its opposition to state and local incentives to promote EV adoption could be especially harmful now, as President Donald Trump and congressional Republicans threaten federal support for EV technology.

The need for financial incentives

EVs are a critical part of future transportation in the United States, and they are becoming more affordable and functional. EV prices drop as battery technology matures, and as battery range continues to increase, EVs are becoming a comparable commuting car. Prospective EV owners, however, still rely on financial incentives to make EVs an affordable choice. State and local financial incentives are therefore essential to expanding EV adoption—especially at a time when the Trump administration is unlikely to take federal action to get more EVs on the road.

For the past seven years, consumers have enjoyed a $7,500 federal income tax credit that has allowed them to purchase EVs at an affordable price. And at one point, nearly half of states offered financial incentives for EV purchases. Depending on the state, some drivers receive thousands of dollars in tax credits or rebates through a state program, and in others, drivers receive special benefits, such as car pool lane access or a utilities rebate.

The fossil fuel industry’s corporate interests, however, are leading attacks on state subsidies for EVs,  promoting gasoline-powered vehicles. In Colorado, for example, the Koch brothers are backing a bill that would end tax credits for EVs. ALEC, a think tank financed by fossil fuel companies, is also backing the bill. The Koch-funded organization creates model legislation for states to use in crafting their own anti-EV bills. The Georgia legislature, for example, passed a bill with blatant similarities to ALEC’s model legislation, in an order that revoked the state’s $5,000 EV incentive tax credit and implemented a $200 EV registration fee. Following the fee implementation and tax credit repeal, Georgia saw an 80 percent drop in EV sales. Additionally, at a 2015 ALEC meeting, member legislators voted on a model state resolution that would discourage drivers from purchasing EVs.

Some state legislatures have simply let their incentives expire without renewal, including Illinois, Pennsylvania, and Tennessee. In other states, there is an active assault on EVs in the legislature. In March, Utah lawmakers voted to let the state’s tax credit expire. Additionally, since 2011, 10 states have implemented EV fees instead of offering incentives. These fees require EV owners to pay up to $200 when renewing their vehicle’s registration. Since the beginning of 2017, 10 additional states have introduced bills that require EV owners to pay fees. Lawmakers justify the fees by claiming they are in lieu of a gas tax for EV drivers.

Disincentivizing EVs will pull the plug on clean technology

Clean vehicle technology is not designed to raise revenue, but instead, it pushes the United States toward a more sustainable transportation system that neither pollutes the air nor depends on foreign oil markets. Instead of incentivizing drivers to purchase this clean technology, states are now punishing them with fees, and this has a chilling effect.

EV opponents have argued that the gas tax pays for road maintenance, and that by using alternative fuels, EV drivers are not paying for the roads they use. However, much more than the archaic gas tax pays for transportation infrastructure, and every taxpayer contributes, whether they drive or not, by paying income, sales, and property taxes. Some experts suggest that the gas tax is not effective or sufficient to fund transportation, and that as a country, the United States should shift to a mileage-based fee for all drivers. EV fees tie into an old way of thinking about funding transportation infrastructure, instead of effectively raising revenue or addressing congestion costs.

Imposing fees on EV owners while taking away their tax credits will put a damper on any momentum that EVs have gained in the vehicle market. By 2040, analysts predict that EVs could account for up to 35 percent of the market share, a huge increase from the approximately 1 percent market share that EVs currently occupy in the United States. However, the future of EVs in the U.S. vehicle market is far from guaranteed, and state incentives are critical to ensuring electric transportation has a future in the United States. Shifting to clean vehicles will help reduce pollution for everyone, but fossil fuel companies will lose money if fuel consumption drops. The Koch brothers and oil- and gas-funded groups such as ALEC have wielded their influence at the state level, pushing bills through state legislatures that make it more costly to own EVs.

While the fossil fuel industry might be satisfied with disappearing financial incentives for EVs, these vanishing policies will hinder critical efforts to get clean vehicles on the road. Without these incentives to help people afford EVs, clean, sustainable transportation will become merely a pipe dream.

Myriam Alexander-Kearns is a Policy Analyst on the Environment and Energy team at the Center for American Progress.

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Myriam Alexander-Kearns

Policy Analyst