The CBO says we spend $7.5 Billion on green car subsidies but there is little if any benefit from it. Why do?

we support this?

What Is the Cost to the Government of Reducing Gasoline Use and Emissions by Providing Tax Credits for Electric Vehicles?

The direct effect of the credits is to subsidize purchases of electric vehicles—including purchases that would have been made even without the credits. Those people who purchase electric vehicles because of the tax credit use less gasoline and produce fewer emissions of greenhouse gases than would otherwise be the case. The cost to the government of those reductions in gasoline consumption and emissions can vary widely (see the table below).

However, the tax credits have other, indirect effects: Increased sales of electric vehicles allow automakers to sell more low-fuel-economy vehicles and still comply with the federal standards that govern the average fuel economy of the vehicles they sell (known as CAFE standards). Consequently, the credits will result in little or no reduction in the total gasoline use and greenhouse gas emissions of the nation’s vehicle fleet over the next several years. As a result, the cost per gallon or per metric ton of any such reductions will be much greater than the cost calculated on the basis of the direct effects alone.

4 Answers

  • 7 years ago
    Favorite Answer

    But don't you think that developing the technology now is more important for the long term benefit, even if the costs don't make any sense to us now?

    If we don't do it, then you can be damn sure someone else will, this country has the resources to be ahead of the rest, Chevy Volt tripled its sales in 2012, it may not be everyones ideal, but you can see where this would leave us if we discontinued development!

    The environment is not my real concern here, we depend on oil for just about everything you can possibly think of, using less of it means we have more time to develop something to partly replace it, although I think we are already way too late!!!

  • 7 years ago

    This is a complicated question, but consider that subsidies were announced (in 2008 by George W Bush) before pricing on electric cars like Chevy Volt and Nissan Leaf were announced.


    This allowed carmakers to set prices around the subsidies. In other words, no car company in their right mind would sell you a car at a reasonable price when they know you have a subsidy available.


    This is the dirty little secret of subsidies, they are not for consumers - they are for the car builders!


    The subsidies are offered to consumers so that the car sellers can sell their cars at a higher price.


    As twisted as this sounds, there is a purpose to this kind of subsidy - it increases the profitability of electric cars to carmakers, thereby creating an incentive to make them.


    The CBO report does not consider this issue the right way. Without incentives, automakers might not make the cars in the first place, thereby denying EVs to customers who would like to buy them, which would indeed affect overall gasoline consumption.

  • Anonymous
    7 years ago

    Doesn't matter : we need to develop that technology ASAP and the only way to do it is to work out it's bugs in the real world

    It's not like the government hasn't done that in the past w/ nascent technologies like aircraft nor is it unconstitutional

  • 7 years ago

    Actually .. they are a little more pointed in another article about that same time:

    "CBO on Electric Cars – Don’t Buy Them!"

    Source(s): TM
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