As I have previously noted in Welfare for the well-to-do, the economics proposals of the Democrats in the so-called Inflation Reduction Act are those of people who understand virtually nothing about economics. Well, now even The New York Times is noticing what I said ten days ago.

Electric Cars Too Costly for Many, Even With Aid in Climate Bill

Battery-powered vehicles are considered essential to the fight against climate change, but most models are aimed at the affluent.

by Jack Ewing | Monday, August 8, 2022

Policymakers in Washington are promoting electric vehicles as a solution to climate change. But an uncomfortable truth remains: Battery-powered cars are much too expensive for a vast majority of Americans.

Congress has begun trying to address that problem. The climate and energy package passed on Sunday by the Senate, the Inflation Reduction Act, would give buyers of used electric cars a tax credit.

But automakers have complained that the credit would apply to only a narrow slice of vehicles, at least initially, largely because of domestic sourcing requirements. And experts say broader steps are needed to make electric cars more affordable and to get enough of them on the road to put a serious dent in greenhouse gas emissions.

Of course, most car buyers aren’t buying new cars anyway. In 2021, there were 58.4 million personal cars and light-duty trucks purchased in the United States, and 43.1 million of them, 73.8%, were purchases of used cars; only 15.3 million were new cars. In 2019, before the COVID panicdemic,^[1]No, that isn’t a typographical error; the ‘panic’ part of panicdemic is entirely accurate. the numbers were 59.1 million total sales, with 42.4 million, 71.7%, being used cars. The vast majority of Americans cannot afford to buy new cars, plug-in electric or otherwise.

High prices are caused by shortages of batteries, of raw materials like lithium and of components like semiconductors. Strong demand for electric vehicles from affluent buyers means that carmakers have little incentive to sell cheaper models. For low- and middle-income people who don’t have their own garages or driveways, another obstacle is the lack of enough public facilities to recharge.

Haven’t I said that before? And haven’t we noted General Motors suggestion that people not charge their electric vehicles too close to other cars?

One would think that a New York Times writer would know that, in densely populated cities, it isn’t just “low- and middle-income people” who might not have private garages and/or driveways. Private garages and driveways are, for the greater part, luxuries of suburban and rural areas, where people have enough space on their property for such things. Alas! So many small town and rural areas, where people do have the room for driveways and garages are also areas of lower income. People may live just as well as in wealthier cities, because the costs of living are so much lower, primarily due to housing costs, but costs-of-living differences don’t affect new car prices; a 2022 Tesla Model 3 costs just much in Mt Sterling, Kentucky as it does in Rochester, New York.

There are, naturally, other costs. As it happens, I have the private garage, complete with separate electric service, and the Knowledge, tools and skill to install an electric vehicle charging unit, but how many other people do? If someone has to hire an electrician to install that device, it could easily cost $2,000. The Federal Reserve Bank of Minneapolis noted that, just prior to the catastrophic economic response to the COVID panicdemic, 36% of Americans would have difficulty paying an unexpected $400 expense, while another 11% wouldn’t be able to pay it at all. Where are such people going to be able to pay $2,000 for an electrician to install a 220 volt, 50 amp circuit to run an electric car charger?

The bottlenecks will take years to unclog. Carmakers and suppliers of batteries and chips must build and equip new factories. Commodity suppliers have to open new mines and build refineries. Charging companies are struggling to install stations fast enough. In the meantime, electric vehicles remain largely the province of the rich.

I will admit it: I am somewhat shocked that the Times would even tell the truth about the economics of the Inflation Enhancement Reduction Act.

Only a few years ago analysts were predicting that electric vehicles would soon be as cheap to buy as gasoline cars. Given the savings on fuel and maintenance, going electric would be a no-brainer.

Instead, soaring prices of commodities like lithium, an essential ingredient in batteries, helped raise the average sticker price of an electric vehicle 14 percent last year to $66,000, $20,000 more than the average for all new cars, according to Kelley Blue Book.

And there you have it: the “analysts” had gotten it wrong . . . again.

This has been the problem all along with economic legislation in Congress and from the Administration, regardless of whether Democrats or Republicans were in charge: they never get it right! The economy isn’t a monolith, but 270 million economic actors taking literally billions of economic decisions every day, and those decisions are not always based on the things the professional economists believe they should be. Before I retired, I used to stop at a small bagel shop on my way to work, selected not because its prices were lower than the Dunkin’ Donuts a bit further down the street — they weren’t — but because it was on the right-hand side of the road and had an easy-in, easy-out parking lot, rather than Dunkin’, which was on the left-hand side, and in a somewhat more congested area.^[2]Alas! That independent bagel shop is gone now, possibly due to the panicdemic, but I also attribute its closing to losing me as a customer. Economically, it was a bad decision — by a whopping 20¢ a day — but convenience-wise, it was the correct one.

This new legislation, which the left are cheering — even as many say it doesn’t go far enough — will fail to live up to its promises, because such legislation always fails to live up to the rosy promises made to pass it. The government simply cannot control the economy, and when it’s led by so many economic dummies, so many people who, despite their claims, have no flaming idea how most Americans live, there simply isn’t a prayer that the government will get it right. We don’t know how badly the Inflation Enhancement Reduction Act will fail, but we do know that it will.