The 23,000 buyers who pre-ordered the $70,000 Tesla Model X may have been better off buying a Honda.
Tesla claims its next electric vehicle will offer “the most elegant and powerful charging system in the marketplace.” The Model X that will debut in 2018 is expected to be a best-seller. Although Model X buyers may cringe at the $70,000 price tag, they justify their purchase on moral grounds. After all, electric cars are supposed to save the environment. However, in a new NBER working paper, economists Stephen Holland, Erin Mansur, Nicholas Muller, and Andrew Yates show electric cars are not as “green” as the public is lead to believe.
The popularity of electric vehicles is partly due to a $7,500 government subsidy offered to individuals who purchase such a car. Eight states provide additional subsidies for buying an electric vehicle. These payments are defended on the grounds that encouraging people to buy electric cars results in “decreased reliance on imported oil, insulation from oil price shocks, and a reduction in environmental impacts.” Contrary to this assumption, the new research shows that electric cars are in most cases, bad for the environment. Forget subsidies, the environment may benefit more from a tax on electric vehicles.
In terms of environmental effects, the study notes that electric cars are not truly emissions free. Seventy percent of electricity is generated from coal or natural gas. Moreover, comparisons of emissions from electric cars and gas-powered cars are misunderstood.
When gas-powered cars release emissions, they do so within their immediate area. When electric cars use electricity to charge their motors, the power is generated at power plants, which could be located miles away from the vehicle. Air pollution damages depend upon where emissions are released, so electric vehicles driven in one place lead to environmental externalities in another.
Benefits from electric cars are entirely dependent upon whether an area has a power grid that is less polluted than its airspace. For example, in Los Angeles, gasoline damages are large, but electric damages are comparatively small. Driving an electric car in Los Angeles does benefit the environment. But in the Midwest, where coal-driven power grids are prevalent, and damage from gas-powered vehicles is small, choosing to drive an electric car has a negative environmental effect. The researchers find that in only 12 states does driving an electric vehicle benefit the environment. On average, driving an electric car has an environmental benefit of negative 0.5 cents per mile. To put this number in perspective, driving a 2014 electric Ford Focus creates $724 more in environmental damages over its driving lifetime than driving a 2014 gas-powered Ford Focus.
