A recent report found that a disproportionate amount of gasoline consumption can be traced to a relatively small number of "superusers." The authors of the report discuss how that insight could be applied to electric vehicle subsidies.
Metz and London add importantly to the policy conversation. I'm an owner of a plug-in hybrid and an EV, powered by the solar array in the back yard, both of which are driven only a few thousand miles per year. I'm not accustomed to feeling guilty about my choices, but then again...
One thing I haven't seen mentioned is that It takes a much larger battery pack to power a Hummer EV (247 kWh) vs. a Tesla Model 3 (54 - 82 kWh). To the extent that battery production is a limiting factor, a policy that has the effect of subsidizing vehicles similar to the former seems unwise.
I can't help but wonder if the best policy isn't to simply subsidize new energy technologies on the front end to help them realize economies of scale, and beyond that price the external costs of CO2 emissions with a steadily rising fee on carbon with proceeds returned to the people. It's simple, elegant, transparent, and largely free of perverse incentives.
At one point, someone says folks in the data are using multiple thousands of gallons but their net income is $20,000. I think I'm surrounded by "superusers" and many are contractors or gig workers who write off miles, gallons, lift kits, engine mods, trailers, garages, sheds, offices, lord knows what else to drive their net income down. I think some even form their own non-profits or churches for more deductions.
At another point, average "superuser" miles per day is mentioned as within typical EV range. Average is not the determinant of choice, it's the maximum and where that happens. In HVAC we have the heating or cooling design day. It might be 30F average in the winter, but the design temperature is -10F. My peeps want to take that same work truck to the boonies of southern Utah or northern Idaho. Somewhere a Ford dealer from Montana was interviewed and she described this same dynamic as limiting the appeal of the F150 Lightning.
I still think PHEV/REx vehicles with 50+ish miles BEV range should be a much bigger part of "the solution." Folks always ask me "Why didn't GM make a Volt SUV?" When Steve Burns was describing his initial rationale for the Workhorse W150 range extender drivetrain, he described utility fleet usage. Daily mileage was typically 50-100 miles, but a few times in every vehicle's life it was sent 500 miles help respond to another utility's blackout. He bemoaned that many "incentives" only covered "zero emission" vehicles. I know all the objections to PHEVs as " bridge" but maybe the perfect shouldn't be the enemy of the good.
We are starting at near zero market share for EV in high use cases. Police are moving to EV's as they are expected to save money but that is also with nudge for the environment from local governments. So how to get the most folks to prove EV are the lowest cost to own? And that fast charging is not an issue in terms of work flow? Incentives will likely first resonate with folks with more ideal match (so urber drivers 50,000 miles per year but all short distances and near urban areas well serviced by fast charging or van delivery... or trucks will like use cases. Montana might not have high percent of likely use cases but EV will evolve to meet their needs, providing strong demand is proven for early use cases with best fit to EV. The problem with Hybrids is folks don't charge them and cost of ownership (repairs, fuel and vehicle life) are too close to gas only vehicles.
Another excellent podcast--provocative and interesting. I had one question after listening to the podcast.
How can one determine how many super-users of fuel are subsidized by expense accounts? Many professionals who drive extensively get reimbursed by the organizations that employ them. The limits of reimbursement are generally those set by the IRS, and increase with the cost of gas. With prices of gas being so high, reimbursements are now at over 55 cents per mile. I did not check the current rate, but it is over that.
Many of the super-users may well be paid for driving those distances. They should not also be eligible for the suggested payments, as it provides a double dipping scenario. The entire IRAS/business reimbursement regime should be examined and realigned to meet the needs of a green economy. It currently does reward people with efficient vehicles--okay to a point, but those subsidies go to the most professional and higher earning members of the public.
If a single parent is driving in S. CA some 120 miles a day, it makes a big difference if that person is a low paid reporter getting a reimbursement of $65 a day for mileage over one who does not. Even a less efficient gas guzzling smaller SUV can get by on that subsidy just fine. There may be little or no incentive to trade off the vehicle for EV payments that could be steep for an equivalent vehicle.
Now, if the same reimbursement could be obtained after buying the EV, then it would subsidize the payments in a double dipping manner, as a non reimbursed person would not get that subsidy.
This shows us once again, how disrupting an entrenched system can have unexpected consequences and result in injustices that are not intentional, but just as real. These issues too often become mired down in politics and continue to disadvantage some people while others reap considerable rewards.
Interesting point on the impact that accountable reimbursement plans have on incentives and perceptions of what's fair. If I understand what you're saying, then it seems like the unfairness already happens regardless of the structure of the EV incentives if everyone, EV owners and superusers alike, can claim a business expense of 58.5¢ per mile driven for business purposes.
Has there been any research done on converting existing gasoline vehicles to EV? So you don’t have to necessarily buy a new vehicle? There’s would be a tremendous environmental upside.
For super users (and anyone) the government should not offer cash incentives. Instead fund 75% of extended warrantees to 300,000 miles on battery and drive train (cheap compared to the proposed incentives) for high performance batteries. This drives the risk for commercial high use folks to near zero. Offer to fund 75% of 500,000 mile warranty if an LFP battery is used. The offer would expire by 2025. Why do this instead of EV discounts? It is cheaper and encourages high gas use cases, increases confidence for all users. Second, offer free public EV charging for 2 years. This targets high gas users and would be cheap as most folks will charge at home as it is easier.
Yes, and they do not pay the gas taxes for use of the roads. One possibility would be to reimburse them at an EV rate--lower than the gas rate, and have a mileage tax to pay for the road use. An EV is typically heavier than a similar ICE vehicle, so does more damage to roads due to the weight. But, as I have stated previously, we need to move away from such vehicle use altogether, as the road/bridge system is unsustainable--especially if you read the new IPCC report.
When it comes to policy, I don’t like policy that divides people into desirable and undesirable cohorts. Particularly if the people who want to change their behavior in support of the policy are deliberately labeled undesirable by that policy and maliciously excluded from the social and financial good that policy is purportedly promoting.
Politically a policy change from a simple and universal policy (current) to a complex and targeted policy (proposed) seems custom designed to divide and subdue voter coalitions that would support the policy while showering all the policy benefits on voter coalitions that would oppose the policy. This approach does not seem like it will have good political outcomes for those who support the policy.
In other words, this seems like a good policy approach to turn potential consumer users of EVs into opponents of EVS while also rewarding opponents of EVs for “owning the libs” (all the lines angry they’re socially and fiscally banned from inclusion in the EV subsidy) without actually converting many of those opponents of EVs into EV users
I don’t disagree that a more targeted subsidy could in theory be more efficient but I think a subsidy such as this that is orders of magnitude more complex than a universal subsidy will also have orders of magnitude lower levels of uptake and orders of magnitude higher more corruption in the process of obtaining one. Simple subsidies are more difficult to game and more obvious to game, a complex subsidy that puts yet another gigantic information asymmetry into car dealerships hands will be massively gamed and as a result very little or none of the complex subsidy will ever matriculate to car buyers, all the benefit will accrue to the dealerships.
For example, we were going to purchase a Ford Mach E or a Volkswagen ID4 in the summer of 21 , but every Ford and Volkswagen dealership within 200 miles had put a “market adjustment” of $4000-10,000 on every electric vehicle because by doing so, they were harvesting the federal/state rebate savings for themselves preventing consumers from realizing the savings of the rebate and also making their cars cost the same as the No-rebate Tesla. (This was the before times, before the Republican/media inflation hysteria was promulgated)
After a few weeks of research, I discovered If you hired a “car broker” who could order directly from the manufacturer and wait a few months for delivery you could “theoretically” avoid the market adjustment but this also sounded somewhat shady.
As a result, we just ordered a Tesla (our third choice) because we’d have to wait no matter what and we were so disgusted by ford and Volkswagen gouging to eliminate the rebate we didn’t want to give them out business (ironically, they forced us to the higher price range).
As I understand the proposed highly complex subsidy would have screwed us again. We sold our second car when we ordered the Tesla and for six months became a one car household while we saved and waited on the order (made possible by work from home for then). Because this subsidy would dispense value based on displacing a replacement car because we were technically adding a car at time of purchase, This subsidy would target responsible long term planning people like us who care about the climate and make sacrifices to make a difference in our lives for exclusion because we are the wrong sort of people and the government should use policy to tell people like us “fuck you! because of your long term planning behavior and consumer choices, your purchase is a net negative or of no value to us, we’re excluding you from a social good because your responsibility is repulsive to our policies.”
On a level of pretty math and happy actuaries I am sure this policy is a joyful miracle. On the people level once implemented, it seems to be destined for disaster.
Money talks, if super users haven’t converted to EVs it’s because the current subsidies are too low and/or because part or all of the current subsidy is being captured by car dealerships and very little benefit flows to the purchaser. Subsidy capture is far more significant an issue currently than imprecise subsidy targeting, but nothing in the proposal addresses subsidy capture, meaning the proposed subsidies are also destined to be captured.
Real reform would involve some subsidy targeting, subsidy capture reform, and large increases in the subsidy (double or triple) along with fee schedules that make purchasing a gasoline car more expensive.
If folks had a $24,000 subsidy available for cars with a final sale price of $40,000 or less AND all new gasoline cars had a state/federal $240 climate fee added to their price you would get a massive amount more uptake of EVs, for example. A small climate fee could probably have a big psychological effect.
I'm not sure I accept the idea that the current subsidy system is simple and universal. I can't tell you how many clients I've had who are confused and disappointed to learn they don't get a federal income tax credit for their new Tesla anymore.
Makes sense. At some point soon we'll buy a Chevy Bolt to replace our now range-limited 2011 Nissan Leaf. We could keep the Leaf but we use our second car very minimally, so we'll sell the Leaf so someone else can be actively driving electric, even if just in the city and keep the gas Honda. Impact's more important than purity these days, so Coltura's point on super-users seems right on target.
Metz and London add importantly to the policy conversation. I'm an owner of a plug-in hybrid and an EV, powered by the solar array in the back yard, both of which are driven only a few thousand miles per year. I'm not accustomed to feeling guilty about my choices, but then again...
One thing I haven't seen mentioned is that It takes a much larger battery pack to power a Hummer EV (247 kWh) vs. a Tesla Model 3 (54 - 82 kWh). To the extent that battery production is a limiting factor, a policy that has the effect of subsidizing vehicles similar to the former seems unwise.
I can't help but wonder if the best policy isn't to simply subsidize new energy technologies on the front end to help them realize economies of scale, and beyond that price the external costs of CO2 emissions with a steadily rising fee on carbon with proceeds returned to the people. It's simple, elegant, transparent, and largely free of perverse incentives.
At one point, someone says folks in the data are using multiple thousands of gallons but their net income is $20,000. I think I'm surrounded by "superusers" and many are contractors or gig workers who write off miles, gallons, lift kits, engine mods, trailers, garages, sheds, offices, lord knows what else to drive their net income down. I think some even form their own non-profits or churches for more deductions.
At another point, average "superuser" miles per day is mentioned as within typical EV range. Average is not the determinant of choice, it's the maximum and where that happens. In HVAC we have the heating or cooling design day. It might be 30F average in the winter, but the design temperature is -10F. My peeps want to take that same work truck to the boonies of southern Utah or northern Idaho. Somewhere a Ford dealer from Montana was interviewed and she described this same dynamic as limiting the appeal of the F150 Lightning.
I still think PHEV/REx vehicles with 50+ish miles BEV range should be a much bigger part of "the solution." Folks always ask me "Why didn't GM make a Volt SUV?" When Steve Burns was describing his initial rationale for the Workhorse W150 range extender drivetrain, he described utility fleet usage. Daily mileage was typically 50-100 miles, but a few times in every vehicle's life it was sent 500 miles help respond to another utility's blackout. He bemoaned that many "incentives" only covered "zero emission" vehicles. I know all the objections to PHEVs as " bridge" but maybe the perfect shouldn't be the enemy of the good.
We are starting at near zero market share for EV in high use cases. Police are moving to EV's as they are expected to save money but that is also with nudge for the environment from local governments. So how to get the most folks to prove EV are the lowest cost to own? And that fast charging is not an issue in terms of work flow? Incentives will likely first resonate with folks with more ideal match (so urber drivers 50,000 miles per year but all short distances and near urban areas well serviced by fast charging or van delivery... or trucks will like use cases. Montana might not have high percent of likely use cases but EV will evolve to meet their needs, providing strong demand is proven for early use cases with best fit to EV. The problem with Hybrids is folks don't charge them and cost of ownership (repairs, fuel and vehicle life) are too close to gas only vehicles.
Another excellent podcast--provocative and interesting. I had one question after listening to the podcast.
How can one determine how many super-users of fuel are subsidized by expense accounts? Many professionals who drive extensively get reimbursed by the organizations that employ them. The limits of reimbursement are generally those set by the IRS, and increase with the cost of gas. With prices of gas being so high, reimbursements are now at over 55 cents per mile. I did not check the current rate, but it is over that.
Many of the super-users may well be paid for driving those distances. They should not also be eligible for the suggested payments, as it provides a double dipping scenario. The entire IRAS/business reimbursement regime should be examined and realigned to meet the needs of a green economy. It currently does reward people with efficient vehicles--okay to a point, but those subsidies go to the most professional and higher earning members of the public.
If a single parent is driving in S. CA some 120 miles a day, it makes a big difference if that person is a low paid reporter getting a reimbursement of $65 a day for mileage over one who does not. Even a less efficient gas guzzling smaller SUV can get by on that subsidy just fine. There may be little or no incentive to trade off the vehicle for EV payments that could be steep for an equivalent vehicle.
Now, if the same reimbursement could be obtained after buying the EV, then it would subsidize the payments in a double dipping manner, as a non reimbursed person would not get that subsidy.
This shows us once again, how disrupting an entrenched system can have unexpected consequences and result in injustices that are not intentional, but just as real. These issues too often become mired down in politics and continue to disadvantage some people while others reap considerable rewards.
Interesting point on the impact that accountable reimbursement plans have on incentives and perceptions of what's fair. If I understand what you're saying, then it seems like the unfairness already happens regardless of the structure of the EV incentives if everyone, EV owners and superusers alike, can claim a business expense of 58.5¢ per mile driven for business purposes.
Has there been any research done on converting existing gasoline vehicles to EV? So you don’t have to necessarily buy a new vehicle? There’s would be a tremendous environmental upside.
For super users (and anyone) the government should not offer cash incentives. Instead fund 75% of extended warrantees to 300,000 miles on battery and drive train (cheap compared to the proposed incentives) for high performance batteries. This drives the risk for commercial high use folks to near zero. Offer to fund 75% of 500,000 mile warranty if an LFP battery is used. The offer would expire by 2025. Why do this instead of EV discounts? It is cheaper and encourages high gas use cases, increases confidence for all users. Second, offer free public EV charging for 2 years. This targets high gas users and would be cheap as most folks will charge at home as it is easier.
Yes, and they do not pay the gas taxes for use of the roads. One possibility would be to reimburse them at an EV rate--lower than the gas rate, and have a mileage tax to pay for the road use. An EV is typically heavier than a similar ICE vehicle, so does more damage to roads due to the weight. But, as I have stated previously, we need to move away from such vehicle use altogether, as the road/bridge system is unsustainable--especially if you read the new IPCC report.
When it comes to policy, I don’t like policy that divides people into desirable and undesirable cohorts. Particularly if the people who want to change their behavior in support of the policy are deliberately labeled undesirable by that policy and maliciously excluded from the social and financial good that policy is purportedly promoting.
Politically a policy change from a simple and universal policy (current) to a complex and targeted policy (proposed) seems custom designed to divide and subdue voter coalitions that would support the policy while showering all the policy benefits on voter coalitions that would oppose the policy. This approach does not seem like it will have good political outcomes for those who support the policy.
In other words, this seems like a good policy approach to turn potential consumer users of EVs into opponents of EVS while also rewarding opponents of EVs for “owning the libs” (all the lines angry they’re socially and fiscally banned from inclusion in the EV subsidy) without actually converting many of those opponents of EVs into EV users
I don’t disagree that a more targeted subsidy could in theory be more efficient but I think a subsidy such as this that is orders of magnitude more complex than a universal subsidy will also have orders of magnitude lower levels of uptake and orders of magnitude higher more corruption in the process of obtaining one. Simple subsidies are more difficult to game and more obvious to game, a complex subsidy that puts yet another gigantic information asymmetry into car dealerships hands will be massively gamed and as a result very little or none of the complex subsidy will ever matriculate to car buyers, all the benefit will accrue to the dealerships.
For example, we were going to purchase a Ford Mach E or a Volkswagen ID4 in the summer of 21 , but every Ford and Volkswagen dealership within 200 miles had put a “market adjustment” of $4000-10,000 on every electric vehicle because by doing so, they were harvesting the federal/state rebate savings for themselves preventing consumers from realizing the savings of the rebate and also making their cars cost the same as the No-rebate Tesla. (This was the before times, before the Republican/media inflation hysteria was promulgated)
After a few weeks of research, I discovered If you hired a “car broker” who could order directly from the manufacturer and wait a few months for delivery you could “theoretically” avoid the market adjustment but this also sounded somewhat shady.
As a result, we just ordered a Tesla (our third choice) because we’d have to wait no matter what and we were so disgusted by ford and Volkswagen gouging to eliminate the rebate we didn’t want to give them out business (ironically, they forced us to the higher price range).
As I understand the proposed highly complex subsidy would have screwed us again. We sold our second car when we ordered the Tesla and for six months became a one car household while we saved and waited on the order (made possible by work from home for then). Because this subsidy would dispense value based on displacing a replacement car because we were technically adding a car at time of purchase, This subsidy would target responsible long term planning people like us who care about the climate and make sacrifices to make a difference in our lives for exclusion because we are the wrong sort of people and the government should use policy to tell people like us “fuck you! because of your long term planning behavior and consumer choices, your purchase is a net negative or of no value to us, we’re excluding you from a social good because your responsibility is repulsive to our policies.”
On a level of pretty math and happy actuaries I am sure this policy is a joyful miracle. On the people level once implemented, it seems to be destined for disaster.
Money talks, if super users haven’t converted to EVs it’s because the current subsidies are too low and/or because part or all of the current subsidy is being captured by car dealerships and very little benefit flows to the purchaser. Subsidy capture is far more significant an issue currently than imprecise subsidy targeting, but nothing in the proposal addresses subsidy capture, meaning the proposed subsidies are also destined to be captured.
Real reform would involve some subsidy targeting, subsidy capture reform, and large increases in the subsidy (double or triple) along with fee schedules that make purchasing a gasoline car more expensive.
If folks had a $24,000 subsidy available for cars with a final sale price of $40,000 or less AND all new gasoline cars had a state/federal $240 climate fee added to their price you would get a massive amount more uptake of EVs, for example. A small climate fee could probably have a big psychological effect.
I'm not sure I accept the idea that the current subsidy system is simple and universal. I can't tell you how many clients I've had who are confused and disappointed to learn they don't get a federal income tax credit for their new Tesla anymore.
Makes sense. At some point soon we'll buy a Chevy Bolt to replace our now range-limited 2011 Nissan Leaf. We could keep the Leaf but we use our second car very minimally, so we'll sell the Leaf so someone else can be actively driving electric, even if just in the city and keep the gas Honda. Impact's more important than purity these days, so Coltura's point on super-users seems right on target.
Just wanted you to know how much I'm enjoying these snippets of possibility.
Totally agree. Just subscribed because I appreciated them so much. It’s like Nixon going to China for climate optimism.