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What Happens When Electric Cars Run Out of Taxpayer Juice?

Another of President Barack Obama’s visions for the future is about to have a head-on collision with reality—just as the Affordable Care Act did.
In his 2011 State of the Union address, Obama predicted the U.S. “would have a million electric vehicles on the road by 2015.” Um, no.
Even though his administration pulled every string it could to push its green energy agenda, there were only 286,390 electric plug-in vehicles (EVs), according to the Electric Drive Transportation Association.
Last October, Scientific American announced the country had finally reached Obama’s prediction. Since then, EV proponents have shifted into overdrive predicting how many EVs will be in use in the near future.
Edison Electric Institute projects 18.7 million EVs on the road in the U.S. by 2020. And CNBC reported last year that the International Energy Agency forecasts that 125 million EVs will be on the road worldwide.
The problem with these predictions is the taxpayer-provided honeypot of subsidies may be about to dry up.
The U.S. provides a tax credit of up to $7,500 for the purchase of a new electric vehicle. However, that tax credit begins phasing out after a carmaker produces more than 200,000 EVs, which Tesla and GM have.
In addition, President Trump’s 2020 budget calls for phasing out the tax credit completely. While Democrats and some Republicans are likely to resist that change, it raises the possibility that EV tax credits may soon be in the rearview mirror.
Will U.S. consumers buy EVs without the tax credit?
Actually, they don’t buy many now. According to Greentech Media, a Wood Mackenzie business, 26,440 EVs were sold in March of 2018.
By contrast, car manufacturers sold 556,000 cars and more than 1 million light trucks that month.
Tesla may not be that affected because it makes a beautiful electric car that appeals to high-income earners, who probably don’t need the tax break but get it anyway.
In addition, China, the largest market for EVs, may be cutting its subsidies. According to the Wall Street Journal, EV subsidies are being cut by more than half, from $9,830 to $4,100. And local governments may cut their subsidies by up to 50 percent.
Electric cars are at the cutting edge of technology, and the day may come when consumers, not just governments, are demanding carmakers produce more. But we won’t know for sure until consumers, not taxpayers, pay the full price for their EVs.